The Increase in the Payroll Tax. How’s it Hitting You?
It seems like a rhetorical question but I’m wondering if it's possible that anyone could be in favor of the increase in the contribution we all make into the Social Security fund.
That is, in the face of the tax we all pay going from 4.2% to 6.2%, is it possible that some are actually in favor of the increase?
According to some of the more active letter writers to the editor of the local papers over the weekend…many seem to be in favor of it.
However the topic of conversation in the gym over the weekend was, “…did you look at your paycheck this week?” (After all, for most of us, the upcoming paycheck will be the first one of the year reflecting the new rate.)
Well I haven’t…but I’m awaiting the eventual sticker shock that will come with it.
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
And that’s what we’re all awaiting.
The eventual pondering of what we’re going to have to do without once the reality sets in that there’s fewer dollars in our salary.
What will it mean for you? No restaurants or movies for a while? Cutting down on the food bill? Maybe having to work more hours (if more hours are available) just to try to make up the difference.
Fewer dollars in the economy means spending is reduced, jobs can be lost, and whatever recovery we were in the midst of is now reversed.
So I ask, how could any one be in favor of the increased tax rate?
Feel free to comment below.