Your Paycheck is Decreasing. Regardless of Fiscal Cliff Deal, Payroll Tax Hike is Here.
As if Americans were not worried enough about the economy and paying higher taxes, they have an additional forgotten expense to frustrate and annoy them. This one is irrevocable, inevitable and execrable.
Payroll taxes which had been reduced from 6.2% to 4.2% expired. Payroll taxes were used to fund Social Security. The tax cut has cost about $120 billion each year. The Treasury Department has made up for the difference with money from general funds.
The payroll tax reduction was temporary to lure Americans into enjoying the additional cash in their wallets to spur spending, rather than encourage saving and growing their money (a non event with such ridiculously low interest rates). Was a boost provided to the economy? Yes. Good show. Many enjoyed the payroll tax cut, which applied on the first $113,700 in annual earnings. But the extra green we became accustomed to, we must now relinquish. Now it's belt tightening and headaches as we're slammed by shrinking paychecks and pensions. Is this tax hike to be regardless of any fiscal cliff, ditch or plain deal that Congress has spun out of their dog-eared and tiresome fumfering and flubberbustering? You betcha!
What is lost in the translation of the payroll tax hike? Monthly paychecks will have $50 less for those earning $30,000 annually. For those making $50,000, they will have to pay $1,000 more in taxes in 2013.
“The average person is going to be paying about $133 a month more in taxes,” financial planner Lauren Young told WBZ NewsRadio 1030 Wednesday.
For those with incomes totaling $113,700, their paychecks will shrink around $189.50. To the wealthy, it doesn't seem like a lot, but the psychological cost and fiscal blow may be enormous for middle class Americans' already paired spending budgets. That in turn can wreck an already shaky economic recovery.Continued on the next page