The headlines all talk about taxes being increased, as a result of Obama and Boehner scheming, for those earning over $400,00 per year, perhaps $1 million per year. Nothing for you to worry about, right? Not so fast. Little discussed is the fact that the payroll tax is very likely to go up. Letting the payroll tax rate revert to the old 6.2% from the current 4.2% would raise government revenue by about $125 billion next year, equivalent to 0.8% of total U.S. economic output, according to J.P. Morgan Chase.
WSJ estimates that it will mean an average tax increase of about $1,000 a year for the typical American household making about $50,000 annually.
“I think some people could be in for a pretty rude awakening when they get that first paycheck of the year,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets, according to WSJ.
Don't forget that the cost of employer-provided health insurance plans is rising, so employers will attempt to shift more of that cost to employees by having them pay more "out of pocket"-- so your effective take-home pay will be reduced by the amount you must contribute to your health insurance plan to remain a participant.
ReplyDeleteThis is brought to you by the legislation known as Obamacare.
Cutting the payroll (or work) tax was one few good ideas Obama had, and it is one of the few real tax cuts that Obama and Democrats generally would have a tough time opposing. Besides showing their political stupidity, the fact that cutting has gotten so little support from Republicans shows that there is much truth to the charge that Republicans care little for the middle and working class Americans who would greatly benefit from its cutting (and preferably permanent elimination). Capping the raising of income tax rate for upper income people is important, but it isn't the only issue of concern for people who truly support smaller government and free enterprise. Where are the small government Republicans on eliminating payroll taxes?
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