NEW CASTLE —
If one thing can be taken away from the fiscal cliff deal, it is this: Beware of tax cuts.
While President Obama and Republican congressional leaders were wrangling over taxes for the rich and taxes for the not-so-rich, there was seldom any mention of the Social Security payroll tax.
Under a measure pushed by Obama, the payroll tax was reduced from 6.2 percent to 4.2 percent for 2011 and 2012 as a way to put more money in the pockets of most wage earners and spur the economy. Never mind that Social Security is facing insolvency and its own fiscal cliff.
Taxes may not be popular, but Americans weren’t screaming or even whispering to have a temporary reduction in the payroll tax. Since most people have the tax deducted from their paychecks, they came to expect a certain net earnings over the years.
Then came the reduction of two percentage points, which actually was a tax cut of 32 percent. It essentially was a windfall, putting more money in people’s pockets as Obama wanted. And people adjusted their lifestyles accordingly.
So now the reduction is gone. But although the tax is going back to its original level of 6.2 percent, it works out to a 47 percent increase.
Yes, it’s true. Wage earners received a 32 percent cut, but now face a 47 percent increase.
Those with $50,000 in wages, for example, have been paying $2,100. They will now pay an additional $1,000, or a total of $3,100 for the year.
People making $40,000, will pay an additional $800.
What makes the increase particularly brutal is that it will come out of every paycheck, and will be noticeable immediately.
For the $40,000 wage earners who get paid every two weeks, for example, the deduction will mean about $30 less in their paychecks.
From some accounts, people are already expressing their displeasure, saying the increase will be difficult to deal with.
This is a great example of why taxes shouldn’t be cut unless it can be guaranteed that they will never go up again. But we know that there are no such guarantees.
Whether this temporary cut made economic sense may be up for debate. But from a people standpoint, it may have been the unkindest cut of all.
All About You ...
Related Photos
-
About John Manna: John covers politics for The News. His "Focus" column appears each Saturday.
Discussion
John K. Manna: Payroll tax rise will have impact on workers
- All About You ...
-
-
Culinary Conversation: No sour grapes — just all things lemon
The makers of a lemonade mix have one intention for their consumers — add water and enjoy. Those fine people may be interested to know I found another use for the canister.
-
Dave Ramsey: Move or set family boundaries?
“Dave Says" is a weekly column featuring financial advice from nationally syndicated radio host Dave Ramsey. His column is filled with timely, relevant questions and answers taken from actual letters and calls on Ramsey's radio program, “The Dave Ramsey Show.”
-
Lori Brothers: Body awareness can help manage stress
Are you an “inny” or an “outy”? I’m not referring to your belly button, even though the concept also applies there. I am talking about how you manage your stress. Do you internalize or externalize?
-
Sarah Stright-Hartley: Top trends for men as the weather warms
We frequently talk women's fashion around these parts, so today I wanted to give the men a bit of a shout-out. Men's fashions are less likely to change year to year, but there are still "trends" each season that men will find in stores. To the right you'll find some of the top trends for spring/summer 2013.
-
Your Tax Money: Four districts undecided on vo-tech budget
Four school districts are still deciding whether to support the Lawrence County Career and Technical Center’s 2013-14 budget. The New Castle, Wilmington, Mohawk and Ellwood City school boards are waiting until June to vote on the proposed spending plan as they contemplate a growing debt the center owes to six of its eight member school districts.
-
Making a Difference: Volunteers put up home for young mother, son in three days
The Blitz was on this weekend in New Castle. Habitat for Humanity had a “Blitz Build” for its latest Lawrence County house at the corner of Newell and Madison avenues in Mahoningtown. Over Thursday, Friday and Saturday, concrete block was laid for the basement, the ground floor was constructed, the roof was built and walls went up.
-
Culinary Conversation: A day in France— or close to it
Here’s some advice: If your spouse packs your lunch, never complain about the contents. I wasn’t actually griping. I just noted that it lacked excitement. The response from spouse was — our kitchen isn’t the Ritz Carlton.
-
Dave Ramsey: Avoid college loans if you can
“Dave Says" is a weekly column featuring financial advice from nationally syndicated radio host Dave Ramsey. His column is filled with timely, relevant questions and answers taken from actual letters and calls on Ramsey's radio program, “The Dave Ramsey Show.”
-
Lori Brothers: Be ready to stay healthy during storms
At any time during the spring and summer, we may get a signal from our local officials that there is inclement weather that can turn threatening. It is always important to pay attention during alerts to assure that your family, including your pets, are safe in the event of an emergency such as tornado, flood or power outage.
-
Sarah Stright-Hartley: Looking for stylish way to pack your possessions? It’s in the bag
One of the most personal things a woman buys is a handbag. It holds all of her prized possessions. So when shopping for a new bag, there are a lot of things to consider. Size, color, quality, fabric and length of use. Is she looking for something to use year round, or something that can be changed each season?
- More All About You ... Headlines
-
