Why your paycheck is getting smaller, no matter what

http://money.cnn.com/2012/12/30/news/economy/payroll-tax-consumer/index.html

by pebb • 14 years ago

20 32 14 years ago

money.cnn.com

greenyoda3• 14 years ago

Everyone knew that the 2% cut in the Social Security tax was a temporary measure designed to boost the economy. The fact that it's expiring as planned is not a surprise, and hardly newsworthy.

enraged_camel2• 14 years ago

I don't think most people even knew that there was a 2% cut in the Social Security tax, much less the fact that it was temporary. I mean, let's face it: very few people follow politics with any kind of intellectual vigor. Sound-bites are easier to digest than actual details like this, which is why their coverage in the news has value.

MaysonL• 14 years ago

People may not follow politics, but the do follow their paychecks.

thrownaway2424• 14 years ago

Everybody knew that the Bush top-bracket rate cuts were temporary, too. And yet the entire argument revolves around extending them. Nobody is arguing that we should extend the lower rates on payroll. That is remarkable.

ericdykstra• 14 years ago

It's interesting how temporary tax cuts always seem to expire, but temporary taxes never seem to.

jaggederest2• 14 years ago

It's actually the thin end of the wedge for cutting social security entirely, in my opinion. Once people are comfortable with the concept of 'adjusting' social security for 'emergencies', it becomes more palatable to overhaul it entirely.

MRSallee3• 14 years ago

It's not newsworthy that your paycheck may be substantially lighter in a couple of weeks?

greenyoda3• 14 years ago

Not if you already knew about it.

fruchtose2• 14 years ago

Unfortunately, this is wishful thinking in American politics. There is no such thing as a temporary tax cut. In the eyes of Americans, there are only two kinds of changes to taxes: cuts and raises. A temporary tax cut is nothing more than a tax cut followed by a tax hike in the view of our wisest statesmen. This gives license to pundits to accuse Obama of raising taxes--because the cuts are not permanent. I remain dumbfounded that some believe that taxes should decrease monotonically from year to year, no matter the circumstances.

greenyoda3• 14 years ago

There were certainly new taxes created under Obama, such as the tax on medical devices that was part of Obamacare.

hippich• 14 years ago

Even if government extend this payroll tax cut, your annual raise (if such thing exist where you work) will hardly cover inflation rate (or in my case will be less then inflation rate.) So you are loosing anyway. The only way to keep up - sharp existing skills or get new ones and change jobs.

w1ntermute2• 14 years ago

> Concern over these tax hikes are already holding shoppers back.

> During the holiday shopping season, between Oct. 30 to Dec. 24, shoppers spent just 0.7% more than they did last year, according to a MasterCard Advistors SpendingPulse report released last week.

Has anyone stopped to consider that maybe we should stop wasting so much money during the holiday season? I thought that Christmas was supposed to be about spending time with loved ones, not about blowing thousands of dollars on unnecessary gifts. All the consumerization of the holiday season does now is funnel more money to Chinese factories. Only a fraction of the revenue goes to retail workers in America.

Ideally, that extra payroll tax money would be used for constructive purposes, such as rebuilding badly worn-out infrastructure, which could also put countless unskilled laborers in America back to work. But we all know it'll most likely be wasted on killing more Arabs or on corporate welfare, thanks to constant lobbying and large campaign donations from big business and the military-industrial complex.

noibl• 14 years ago

> I thought that Christmas was supposed to be about spending time with loved ones, not about blowing thousands of dollars on unnecessary gifts.

Did you really? I guess that means you don't have kids.

> Has anyone stopped to consider that maybe we should stop wasting so much money during the holiday season?

Actually lots of people, since before Dickens, and often with ironic reference to the basic moral tenets of Christianity. And yet here we are. Like the Diamond Jubilee of Queen Elizabeth II, it is what it is.

> more money to Chinese factories ... killing more Arabs or corporate welfare

You seem to be saying that on the one hand, workers don't know how to spend their pay while on the other hand, neither does the government. So perhaps 'ideally' it's not such a bad thing to have the money end up in a part of the world where millions of people a year are actively raising themselves out of poverty on the back of export demand.

w1ntermute2• 14 years ago

> Did you really? I guess that means you don't have kids.

No, I don't. But I don't see how that's important. When I was a kid, I didn't receive extravagant presents, despite growing up in an upper-middle class family that could have easily afforded them without going into debt. I received useful presents, usually something that I practically needed or something constructive, such as new clothes or books.

> Actually lots of people, since before Dickens, and often with ironic reference to the basic moral tenets of Christianity.

Dense works of literature (or their film adaptions) clearly aren't an effective way of reaching the masses. Then again, perhaps most people are just too stupid to get the message, or too afraid of being the first to break social convention.

> You seem to be saying that on the one hand, workers don't know how to spend their pay while on the other hand, neither does the government.

Correct. But while people will (probably) always be stupid, I believe the government can and should be reformed so that it is more responsive to the needs of the people and less responsive to lobbyists and campaign donors.

taskstrike• 14 years ago

From a human perspective. Money really isn't "wasted" during the holiday season. Most of money is spend on your family as gifts anyways. As a kid, Christmas + birthdays were looked forward to because that when you got the toys you wanted for the entire year.

greghinch• 14 years ago

Wasn't the 2% tax cut on the side the employer pays? That means if you paycheck goes down because of it, your employer is pretty much a jerk.

jaggederest2• 14 years ago

Nope, it was only on the employee side of the tax.

MRSallee3• 14 years ago

I don't work in HR so I'm not familiar with how companies deal with this, but I would be surprised if it doesn't hit your paycheck somehow -- directly deducting it from your current pay may be less likely than factoring the added cost into funds available for annual raises.

chimeracoder• 14 years ago

> Wasn't the 2% tax cut on the side the employer pays? That means if you paycheck goes down because of it, your employer is pretty much a jerk.

In the short run, this would make a difference, but not in the long run - the incidence of payroll taxes has been shown to fall almost entirely (~98%) on the employees.

(For those unaware: the incidence of a tax[1] is a way of describing who really bears the burden, which is completely unrelated to who nominally pays a tax out-of-pocket).

[1] http://en.wikipedia.org/wiki/Tax_incidence

dothemath4• 14 years ago

It's the spending stupid. Even with tax rates going up and the cuts going into effect, we still spend more than we take in. Cut defense 100% and tax the rich at 100%, we still are not at a balanced budget. The federal government does not have an income problem, it has a spending problem.

zacharycohn• 14 years ago

If you're going to make statements, rather than opinions, please base them on facts. If you cut defense 100% and make no other changes, the budget would be balanced.

2012 deficit: $1.1T [1] 2012 military budget: $1.03T to $1.4T [2]

[1] http://www.gpo.gov/fdsys/search/pagedetails.action?packageId...

[2] http://en.wikipedia.org/wiki/Military_budget_of_the_United_S...

ryguytilidie2• 14 years ago

No no no, that doesn't fit into the whole republican narrative that taxes need to be lower and spending needs to be lower. How a moderator makes the comment that guy made just blows my mind. Complete and utter ignorance.

Edit: Just noticed his name was dothemath, head explodes.

dothemath4• 14 years ago

You must be right since you got your numbers from Obama's proposed budget that did not get even one vote in the House of representatives. If you are going to accuse me of not using the facts, than why resort to that piece of science fiction? I hope you understand the budget you just posted is not the actual spending that happened in 2012. It never became law.

dothemath4• 14 years ago

Just to end this silliness using your numbers in the budget. http://www.whitehouse.gov/omb/factsheet_department_defense

$553 billion was the amount Obama requested. Only half of the deficit.

Locke1689• 14 years ago

This is definitely not Hacker News.

I can see no way in which this gratifies one's intellectual curiosity.

Why your paycheck is getting smaller, no matter what

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