Tuesday, January 15, 2013

Payroll taxes kick in -- ugh


So the shakeout from the fiscal cliff hits first today for me, with my first paycheck of 2013. You'll have to trust me when I say that it's 2.9% lower; I can't quite figure where the difference is, but it's mostly under the Social Security line item on my paystub, because the payroll tax cut has expired:
Workers’ share of the Social Security payroll tax, which had been temporarily cut from 6.2 percent to 4.2 percent for two years, was immediately snapping back to the higher level. 
The result is smaller paychecks for all wage earners, with the country’s economic recovery still sluggish and unemployment stubbornly high. A worker making $50,000 in 2013 will take home $38.46 less per two-week paycheck, or $1,000 per year.
A look back tells me that I didn't expect the payroll tax cut to be extended, and I was wrong. Well, I guess my payments to my bookie will be a little lower this month. (kidding kidding)  Here's hoping that the extra money is going straight into some pharma retiree's pocket for a job well done.

5 comments:

  1. You didn't really block out the pay amounts if you left the final two digits AND gave us the % difference, right?

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  2. The SSI increase isn't great, but bankrupting SS isn't the way to get the economy going.

    Based on Europe, austerity doesn't balance the budget or make the economy run well. Lowering taxes didn't do it (otherwise I would have thought we would have had a more robust economy when the Bush tax cuts kicked in). No one wants taxes raised or government spending cut (or not enough of each to make a passable agreement). I guess we really do get the government we deserve.

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    1. Lowering taxes (in particular Federal) and austerity may not work because they don't really affect the underlying disincentives to create work.

      Does lowering taxes take away a business owner's headache of accounting for what is their taxable income? Does it really take away all the regulations and paperwork they have to comply with? Lowering Federal taxes still does not affect local, state, gas, phone.....you name it, taxes either.

      A tax cut may still not make up for the liability and discipline a person would take on in the current environment.

      Austerity may also make it harder for businesses to comply with regulations if cuts are made to government personnel that handle the paperwork.

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    2. Social Security has the trust fund going for it, it has money and is funded for the next few decades without problems. We have to deal with the immediate problems of high unemployment and stagnant wages before even thinking about a problem which may or may not hit us decades from now.

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  3. This whole debacle reminds me of that episode of The Simpsons in which Future Lisa is the president.

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