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Did you feel the increase on you payceck as of Jan 1st?
I did, ouch!
That technically was not a tax increase. That was the resumption of the current payroll tax. Beforehand, there was a holiday on the payroll tax and only half was charged.
Hi,
Honestly, no one can decide on another persons Paycheck if it’s a big hit or not. I don’t get paid a lot and I’m not a book keeper so I couldn’t tell you other peoples numbers.
From my check a whole $13 was deducted.
The payroll tax was 6.2%, lowered as part of an economic stimulus plan a number of years ago to 4.2%. It got extended several times. It did not get extended for 2013. In short, the tax holiday is over. Of course, if you are only paying this tax for a couple of years, you never knew it was higher to begin with. I think it was above 8% at one point.
Stop draying a kup. Ask the person who gives you your pay check if you really must know.
In this case, the tax went back to the original rate for SS and Medicare. I’m not sure about anything else.
The payroll tax is not officially a tax since it is officially considered a premium towards social security, which is officially not a government program but is a type of insurance annuity (okay, if it was a real insurance program, it would be closed down immediately as a ponzi scheme, but that’s a different matter). Even though the tax is highly regressive, the Congress didn’t object since after all, it isn’t a “tax”.
Remember, being a politician is to learn how to put your hands in someones pocket without calling it theft. They’re really quite clever at it.
If it looks like a duck… When I am forced to pay it off my paycheck – it is still a “tax” and not a premium. I CHOOSE where to pay my insurance premiums.
The payroll tax is not officially a tax since it is officially considered a premium towards social security, which is officially not a government program but is a type of insurance annuity
It shares all the characteristics of a tax, and none of the characteristics of an annuity.
You don’t choose to pay it, and you don’t get back what you put in. They take based on a percentage of income, and they give you whatever they decide to give.
You may call that whatever you want, if we are playing semantic games. You may even call it a klurg, if we are playing Dr. Seuss games. But I’m playing the English game, so I’ll call it a tax.
popa_bar_abba: You found a solution. Quick, phone Jack Lew. He’s the designated scapegoat this year. Having Dr. Seuss replace Lord Keynes as the source of economic policy – brilliant. Perhaps they could have a platinum klurg. Then they could get the Cat in the Hat to clean up the mess (something he is very good at). Horton hearing the Who is definitely preferable to hearing the President and Congress trash talking instead of negotiating. But avoid the “Oobleck” since we all know where unwise government policies lead when they get out of control.
There is NO ONE to blame!
You were paying 6.2% towards SS for YEARS! in 2011, Obama lowered that to 4.2% for TWO YEARS.
The two years are now up and the SS tax reverted back to 6.2% like it was for the past 10 years before!
This is not even a political issue, just an expiration of a recent tax break.
GeshmakMan: Obama can neither raise nor lower taxes. The last time our chief executive tried to raise taxes by himself (assuming you are in former colony other than New York, which was Dutch at the time), it ended up in him losing his head. The Congress sets the tax rates – this goes back 800 years, and is pretty much set in stone.
The 2% increase in the payroll tax (on the middle class and lower), and the other tax increases (on the upper middle class and high), were all enacted by the Congress. While they were called the “Bush tax cuts” that were somewhat allowed to expire, they were also enacted by the Congress.
And we go over the upcoming fiscal cliff, it is the fault of the Congress. Indeed, if you get a solid majority in Congress (meaning a bi-partisan one), Obama has absolutely no say in the matter. The president sets the tone and has the famous “bully pulpit” – but he isn’t all that powerful.
Not to get off-topic, but if we do go off the cliff, then the opposite of what the GOP wants will happen. Once we go off the cliff, it’s the President’s responsibility to prioritize the bills. He will determine which bills to pay and which to postpone.
Akuperma – yes I am aware of that, my point was that there is no “blame” here as this whole SS tax issue was a reversal of a prior tax break, regardless of who actually signed off on it.
For many years until Jan 2011, employees paid 6.2% of their salary to SS Tax, for 2011 and 2012, employees paid 4.2% of their salary to SS Tax. In 2013 it reverted back to the 6.2%.
Thank you though for the crash course in how Washington works – much appreciated!!
OnlyTheTruth: If someone is paying less payroll tax (yes i too call it what it is: a tax increase) its because they are making less. If they are making less, than those few dollars do mean something, and it adds up. If they are making alot more and their taxes are alot more, yes its still alot of money, although they may be able to afford to ‘not really feel the pinch’.
Poster. How long are you in the work force earning a pay check, on the books that is?
If G-d only wants 10%, why does the IRS want more?
That’s because G-d uses it wisely.
As akuperma points out, this is the end of a two-year payroll tax holiday, not an increase as such. There’s an article on the Forbes website (“Dear America: Your Higher Payroll Taxes Are Not The Result Of A Tax Increase”) that explains it nicely. Before you blame Obama, consider that the end of the payroll tax cut was not one of this issues of debate during the Fiscal Cliff negotiations — both parties supported it. Neither party thought it wise to continue the payroll tax holiday — it’s hard to run around like Chicken Little saying that Social Security is going broke while simultaneously saying that we should continue paying less money into the system.
For those of us who are self-employed, the tax goes up double (since we’re paying both the employer’s and employee’s contribution).
yehudayona – However it turns out the increase (compared to last year) in the payroll tax is more significant than the other taxes that were increased (or rather, whose reducations were rolled back). The change as a percentage of disposable income was greater for the middle and lower class, than the affluent. While the affluent tend to fund investment, the less than affluent are the consumer. From a macroeconomic perspective, this was not a good idea.
Indeed, the whole idea of a payroll tax is probably unwise. It penalizes work and encourages people to avoid employment, and at the same time makes it especially expensive to higher poorly paid workers who barely do enough work to justify their employment. The only candidate who addressed this was Herman Cain with his proposal that would abolish payroll taxes and add a federal consumption (sales) tax.
January 2011 you didnt notice the 2% increase in your take home pay?
The payroll tax is stam regressive — you don’t pay it for income earned over some limit (somewhere north of $100K). I’ve heard almost nothing about eliminating this limit.
I agree that from the perspective of growth, the end of the payroll tax holiday is a bad idea, but how do you solve the Social Security problem otherwise? Make the retirement age 80?
Unless your friend is over 65, I think you mean Medicaid, not Medicare.
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