Payroll Tax Holiday Expires [AUDIO]
Leaders in Washington managed to avoid putting the country over the dreaded “fiscal cliff,” but the last-minute agreement failed to include a perk Americans have been enjoying for the past two years.
The Social Security payroll tax holiday, enacted in 2010 to put more money in consumers’ wallets and stimulate the economy, was not extended into 2013.
Instead of devoting 4.2% of their paychecks to Social Security, workers are again contributing 6.2% of their earnings.
A family earning $100,000 per year will see $2000 less in 2013 ($6,200 vs. $4,200 to be paid in payroll taxes). Doing the math paycheck-by-paycheck, someone earning $50,000 per year will see an estimated 80 dollar drop each pay period.
“It’s a tank of gas, maybe two,” said Monroe resident Heather Matisoff, who had just loaded her car with groceries. “We really have to cut back – maybe shop more locally, instead of driving a little further.”
Jay Smith of Freehold said he’s struggling already, and dealing with even less money per check “is ridiculous.”
“You’re going to make us work 80 to 90 hours a week just to pay our bills and put clothes on our kids? That’s not right,” Smith said.
Other comments from New Jersey residents:
“Maybe we won’t be able to do the fun things that we want to do with extra money.” – Bonnie, Freehold
“That’s an electric bill. That’s a food bill, every week.” – Phil, Millstone
“That’s what? Seven less gallons of gas per month? – Bob, Jamesburg
Immediate effects to consumer spending can be expected with the sudden revisit of a higher payroll tax. However, the long-term effects may not be as tangible, as Americans have been contributing a larger amount for years before the holiday was put into effect.