Payroll tax cut expiration means less in your paycheck
All the talk about fiscal cliff, the combination of expiring tax cuts and across-the-board government spending cuts, has all but overshadowed what will affect the majority of Americans - the expiration of the payroll tax cut.
"We pay those guys to be out in front and solve problems before we ever get there, and now they're just kicking the can down the road."
Don Tubbs owns Tubbs Hardware in Bossier City. Employees like his will feel what 77% of other American households will feel this year - less money in their paychecks.
Tubbs says the government's wrangling over reaching a deal is frustrating as a business owner.
"I do have confidence in our country. I do have confidence in our people. I don't have much confidence in our federal government."
Social Security is financed by a 12.4% tax on wages up to $113,700, in which employers pay half and workers pay the rest.
For 2011 and 2012, President Obama and Congress reduced workers share from 6. 2% to 4.2%, saving an average family $1,000 a year.
That payroll tax cut, however, expired on January 1st.
"I run by business like I run my household. If I have more money going out than coming in, then I cut expenses. I downsize and make my household smaller because I don't have enough money coming in to take care of it. I don't see our federal government doing that."
Still, Tubbs says, life must go on, as will his small business, just with a little less in his employees' pockets at the end of each month.
"All I know to do is to just move forward. All we can do is just do the best we can do."
People making $30,000 a year will see $50 less a month in their paychecks.
Earners making $50,000 a year can expect about $83 less a month, or $1,000 less a year.
And if you make in the area of $113,700 a year, you'll see almost $190 less in your paycheck every month.
If you're a top wage earner, meaning over a million dollars a year, you'll see about $170,000 less in your paychecks, over the course of 2013.
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