Ok, so what's the deal with the payroll tax cut

[Chico Man]

It's only on the first 115k of income.. so this is a lower-class / middle class tax increase.. right?

I guess I have to pay a few hundred more dollars a month in taxes now.. I'm not very happy about that. I have another 30+ years before I'd collect social security and I'm sure it will have been raided / stolen / worthless by then anyhow.

Won't this be a huge problem for lower and middle class earners heading into 2013?

[Honeycombe8]

1. Not sure I follow you. It's not a cut if it increases the taxes.

Did you mis-speak?

I haven't read anything about payroll tax changes going forward, in this new deal.

[Chico Man]

3. The "Cut" has expired

So it's now an increase.

My first check stub for 2013 was posted online.. my SS withholding went from $175 to $258. So I guess it's real.

That's my two tanks of gas every two weeks.. GREAT!!

[Honeycombe8]

8. Yeah, bummer. Still, if we want to get, we have to pay. It goes to help make SS solvent in thefuture

The ones over the cap...they don't have to pay it 'cause there is no chance they'll ever get enuf in benefits to recoup that. That's the way SS is designed.

[Chico Man]

10. Yeah I hear you

Time to head back to the budget drawing board... I'll figure it out.

[fadedrose]

11. Sorry Chico Man

I really am.

But this is the right place to ask for tips on how to save a bit here and there. Only buy stuff on sale, cut some of your bundles down, clip coupons....welcome to the club...

[Chico Man]

12. It's going to be tough...

Unfortunately there is no coupon for Child support. I think my only option is to move again to save on rent. It sucks for the whole family.

[fadedrose]

14. Really sorry....that child support is a killer

and involves possible jailtime in some states until the kid(s) get to be 18.

I hope you'll be okay.

[Honeycombe8]

16. Ooooh. Child support. Rough.

But hopefully they'll help take care of you in your old age.

Food: Dry goods, like spaghetti and beans, are one of the most value groups of food you can buy. Lots of vitamins & minerals and protein and fiber, and they're very cheap. Not to advise you, but just to make sure you know. Apparently a lot of people aren't aware of this.

Any non-necessity should be looked at twice. (contract cell phones, higher cable level, expensive gas, cars that don't get great mileage, beef, pork, eating out, etc.)

When I was unemployed earlier this year, I figured out how to live as cheaply as possible. It's hard. It starts with not buying anything that is unnecessary...then buying something you want but don't need, in moderation, and which doesn't cost that much.

Good luck.

[Chico Man]

18. I've been doing it for two years

Unfortunately I didn't take into account the temporary cut, as my child support kicked in about the same time as the cut was put in place.

I changed jobs twice, nearly doubling my income, lived off rice and beans for quite some time. No cable, efficient car, rarely eat out.. etc etc. I used mint.com to track my spending to the penny, and was able to pay off 50% of my student loans and all of my credit card debt.

Rent seems to be the place in a budget with the most wiggle room for me, so I lived in a not-so-good apartment but that backfired after 3 break-ins and the loss of my laptop and Christmas gifts for my kids. So I moved into a much nicer and more expensive place, for safety if not anything else, and that killed my ability to save.

I certainly make enough to afford a mortgage but now I don't make enough to put any significant savings away for a down payment.

I've actually moved 8 times since 2007. What's a 9th?

[Delphinus]

20. And think twice

about moving into a house. There are advantages and disadvantages - definitely do some weighing.

[Honeycombe8]

41. Is it possible you're paying too much in child support, considering your circumstances?

Not to cheat the kids. You have to provide for the children you brought into the world. But if you seriously can't live, then maybe the amount is too high considering changed circumstances?

I feel for you. It will get better, though. All things pass, they say.

[PSPS]

21. According to my math ...

As I recall, the "tax holiday" was 2%. Is that right? If so, your $83 increase equals a gross paycheck of $4,150. You seem to imply that this paycheck covers 2 weeks. If so, your annual gross income is $108K.

How can $83 really be a big deal to someone making that much money? 96% of the country gets by on less than that.

[Chico Man]

22. Child support, student loans,

Cost of living.

You can make assumptions, but trust me, it makes a huge difference.

New tires on my car are paid with savings. God forbid something unexpected happens. I only have so much savings, and 180 bucks a month less is making it much harder to get ahead.

[FreeJoe]

30. i am going to set aside some time

I am going to set aside some time later to see if I can muster up some sympathy for someone living alone on a six figure income struggling to pay his social security. It will be a fun challenge.

[Chico Man]

31. I have two kids, not living single

I pay child support and am required by law to have three bedrooms and feed and clothe them, at my house and theirs.

Divorce wasn't my idea, but women do have free agency.

You sound as if you think I don't deserve my income. That's pretty sad. If you only had a clue.

[FreeJoe]

39. Sorry about the divorce

I'm not commenting on whether you deserve your income. I have no idea whether you do or not. What I am questioning is how much sympathy you deserve. From what people have inferred from your comments, you earn more than DOUBLE the median household income. Obviously, I don't know the particulars of your financial situation, but I wanted to express a little incredulity over your implications that you are financially downtrodden when you are earning (even if it is entirely deserved) more than DOUBLE what most HOUSEHOLDS (not people) are making.

How do you suppose a post from someone complaining that their top 10% income makes it hard for them to pay their fair share of social security looks to someone earning well below the median? Or someone depending on those meager social security checks?

I hope that you find a way to adjust to the end of the temporary tax break and enjoy and appreciate your substantial income.

[Dawgs]

2. The deal is Obama, and many blue dogs, would rather cut payouts to save it.

We need many, many, more progressives in Congress.

[Yo_Mama]

4. The 2% payroll tax cut is gone, so FICA increases by $400/$20,000 of wages

Someone earning 100K would pay $2,000 more in FICA next year, someone earning 50K would pay $1,000 more next year.

The wage cap for next year is $113,700, so that's where it ends, at $189.50 in additional taxes each month.

Some one earning the average wage of 36K would pay about $60 more in federal taxes a month in 2013. A household with annual earnings of 50K would pay $83.33 more in taxes per month. It will be felt in the economy.

Generally you start to see real world economic effects from changes in household spending power from $10-$15 a week. So this definitely qualifies.

[Chico Man]

5. Thanks for the info

My first stub of 2013 was just posted online.. I lost 84.24 for every two week pay period. That hurts.

[Yo_Mama]

6. Uh- you just told everyone exactly what you earn

You might want to be more careful about personal info?

Yes, it's going to impact spending and economic growth - the current estimate of just this provision is about -0.5% of GDP (i.e. GDP growth will be slowed by half a percentage point in comparison to continuing the cut). It affects everybody with earned income, so the impact will be widely felt.

[Chico Man]

7. Well not precisely

Because you don't know how much over the cap I earn. But I guess you can guess since it does hurt the bottom line.

[Freddie]

15. If you have health insurance or a flex medical or dependent care plan

That is not taxed for FICA or fed taxes, it comes out of your gross pay first and then the taxes are calculated.
I'm a payroll admin & first thing tomorrow I have to change all the tables. But thank God I don't have to change them to take more federal tax out of everyone too.
Look at the lower FICA we paid for 2 years as a gift, it was meant to be temporary.

[dkf]

23. Oh so all the tables are going up?

Do you have any instructions regarding the income tax rates?

Who do you get that from?

[Freddie]

25. The tables change annually

To reflect changes in the withholding allowance etc. The last time the tables changed significantly was in 2009 for the Making Work Pay credit and they changed back in 2010. If we had truly "gone over the cliff" there would have been an increase in withholding to reflect a return to pre-Bush Tax Cut rates for everyone which is now not happening (yay). Every year the FICA cap goes up (not by enough IMO) and this year I have to re-set the rate to 6.2%.
Go to IRS.gov and look for the 2013 Circular E if you want to figure out your next paycheck in advance (or ask your friendly payroll admin!)

[dkf]

26. Thanks!

[oldhippie]

17. Well, gee. If your earnings are over the SS cap .....

.... most of us here would like to see you pay more. I certainly haven't seen any sentiment for lowering the cap.

Sorry your paycheck is going down. Nobody likes that.

[Chico Man]

19. Cost of living..

And my child support quickly normalize that pay, as I'm sure is the case for loads of people in this area.

(Not that I'm whining about child support.. don't get me wrong). But I'm not living a life of luxury over here.

[oldhippie]

29. Sound like the tax rates need an adjustment for ....

... local cost of living? I imagine a lot of people would like that, but the administration details of coming up with the indexes would be enormous. I don't see it ever happening.

[geek tragedy]

9. It was never meant to be permanent. nt

[W_HAMILTON]

24. Yeah, just like the Bush tax cuts...

...almost all of which the Democrats just voted to make permanent.

Win!

[Warren Stupidity]

13. Huge problem? No. Just an annoying give away to the republicans.

As far as I am concerned all of FICA should be abolished and replaced with higher income, capital gains, dividends, and estate taxes.

[RomneyLies]

27. This is actually a good thing

The tax cut was off set by funds from the general fund, which tied Social Security to the deficit.

By allowing the cut to expire, Social Security is once again 100% a standalone program with at least 25 years of self funding.

[Chico Man]

28. I think the problem will be..

The middle class will not expect any tax increase if the cliff deal passes. It will come as a surprise.

I think the details won't make any difference.. Obama is going to get the blame for it.

[TheKentuckian]

33. Too bad. It was ill advised, at best.

I had no doubt that folks would use as wage substitution and become addicted.

It is easy to cut but hard to even restore mush less increase taxes.

Boneheaded, system damaging move.

I also think your Bush cuts should go away as should mine and I make WAY less than you. Not even close.

[Chico Man]

34. I used to make a bad salary

I worked pretty hard to get where I am today. Not to say you aren't a hard worker.. But if a higher salary was something you wanted, I'd say there are infinite ways to get there. If that we're not the case, I'd say America has failed.

If I were to lose $800-1000 a month due to increased taxes, that would be fairly disastrous for me. Not that I wouldn't survive, but the economic ripple effect with such drastic changes would not be pretty.

I guess you feel personal austerity is where we should head... Talk about eliminating the middle class. Workers (including me) should enjoy some level of comfort in their life. If you are unhappy with your salary, take a risk and see if you can do something about that. If you are content, don't complain and compare and wish pain on those better off.

[TheKentuckian]

42. I do better than many and believe my taxes should go up not for austerity but to fund our government

in a sustainable fashion so that government can be a more effective tool for the many. I didn't complain about my salary at all nor yours.

We have a spending problem, outside of the military we don't do nearly enough. That means some revenues are required. We have a five trillion dollar infrastructure deficit, that is no modernization. That is getting what we have to code. Are we just going to let the shit fall apart? Are we going to fall far behind the rest of the world? Are we going to make college accessible? Are we going to care for our elderly? Will we continue to have millions of homeless, even millions of homeless children? Are we going to invest in new technology in a substantial way?

My priority is not low taxes. That has nothing to do we how happy I am with my wages since I'd increase mine as well.

[MzShellG]

35. I know what you mean......

I knew it was temporary but I'm not happy about it. The only reason I don't blame Prez Obama is because I know the details. It still doesn't sit well with those of us who struggle just to pay the basic necessities. Ughhh.

[Warren Stupidity]

32. The payroll tax is hugely regressive and is the worst part of the SS system.

[RomneyLies]

37. Wrong

The payroll tax is actually a contribution to your future SS payments. That's why you are ENTITLED to your Social Security, yu've already paid for it.

Calling it a tax is a misnomer.

[Warren Stupidity]

38. No it isn't. It is not that at all, and according to the government collecting the tax it is a tax.

For example, the social security administration, on its website, has a page explaining the Social Security and Medicare "Tax Rates". Here: http://www.ssa.gov/oact/progdata/taxRates.html

I guess they got it wrong too?

And here from the same website, they explain "FICA", and they explain that they are of course "taxes",
but that one can view them as contributions to "the social insurance system" (note not, as you stated "your future SS payments".) There is no direct link between your FICA tax payments and your future payouts from SS and medicare. You do not pay into "your account" you pay into the general trust fund. You aren't paying for your future benefits, you are funding the trust fund and its current payouts and surplus accumulations for future payouts.

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/392/~/what-is-the-meaning-of-fica

[Blue_In_AK]

36. It was temporary and never should have been put in place

to begin with, in my opinion. Now people have come to rely on it and see letting it sunset as if it's a tax raise, much like the wealthy are feeling about the expiration of their Bush tax cuts.

[Autumn]

40. Look at it as a savings account for your old age, unless someone bargains it away.

Believe me when you get old it comes in handy. We have all paid into it. Someone smart should have put a different tax break into play.