USA - Higher payroll taxes an unwelcome surprise in 2013

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USA - Higher payroll taxes an unwelcome surprise in 2013

DALE KASLER; The Sacramento Bee

Published: Jan. 16, 2013 at 12:05 a.m. PST? Updated: Jan. 16, 2013 at 6:54 a.m. PST
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While the ?fiscal cliff? compromise spared most Americans an increase in their income taxes, Congress allowed a temporary cut in payroll taxes for Social Security and Medicare to expire. The tax increase comes at a time when worker paychecks are already under pressure from rising health care premiums and ongoing furloughs in the public sector. For many, it is big enough to offset any recent pay raise.
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Little attention was paid to Social Security and Medicare tax increases, which loomed in the background of the debate. When the dust settled, Congress quietly allowed a pair of 2-year-old payroll tax cuts to expire as of New Year?s Day.

With that, Social Security taxes have gone back up from 4.2 percent to 6.2 percent. Medicare taxes have gone back up from 1.45 percent to 2.35 percent for higher-wage earners, starting at $200,000 for singles and $250,000 for couples filing joint returns.
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The nonpartisan Tax Policy Center estimated that 77 percent of U.S. households are affected by the higher payroll taxes.

?For someone making $50,000 a year, it?s a thousand bucks ? that?s significant,? said Perry Ghilarducci, a principal at Auvant Ltd. certified public accountants in Sacramento, Calif.

The higher taxes follow years of income stagnation for most Americans.
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Wages have grown only about 2 percent a year on average since 2009, according to the Bureau of Labor Statistics. Most years, pay raises for many Americans have barely kept up with inflation.

Read more here: http://www.thenewstribune.com/2013/...payroll-taxes-an-unwelcome.html#storylink=cpy

 

[Emily]

Re: USA - Higher payroll taxes an unwelcome surprise in 2013

?For someone making $50,000 a year, it?s a thousand bucks ? that?s significant,? said Perry Ghilarducci, a principal at Auvant Ltd. certified public accountants in Sacramento, Calif.

And now gas prices are going back up which hits the working middle class the hardest, too, just when they don't need it.

http://www.knoxnews.com/news/2013/feb/17/et-copes-with-stress-anxiety-of-protracted/

East Tennessee copes with stress, anxiety of protracted national recession
Laid-off residents grapple with stress, anxiety, depression

By Rebecca D. Williams
Posted February 17, 2013 at 4 a.m.
[snip]
"We see the sickest and the poorest in the Knoxville metropolitan region," Tennison said. "Research tells us that it's the middle class and working class who suffer most from mental health issues during a recession. They get laid off, or they are afraid they'll get laid off, and they become anxious and depressed.

"The upper classes cruise right through recession times without an increase in mental health problems. The lower classes seem to be at the same level they always are. But it's the middle class that doesn't get the services they need."...

 

[Emily]

Re: USA - Higher payroll taxes an unwelcome surprise in 2013

http://www.marketwatch.com/story/canada-entry-hits-target-net-outlook-disappoints-2013-02-27?link=mw_story_world

Feb. 27, 2013, 1:49 p.m. EST
Target sees sales softness, cautious consumer
Economic weakness, payroll tax increase hurt discounter?s customer
By Andria Cheng, MarketWatch

NEW YORK (MarketWatch) ? Target Corp. on Wednesday gave a profit outlook that disappointed investors, joining a chorus of other retailers including Wal-Mart Stores Inc. and Lowe?s Cos. in blaming economic factors for hurting consumer sentiment.

?We have a tempered view of the near-term sales environment,? Chief Executive Gregg Steinhafel said on a conference call. ?The U.S. economy is growing at a painfully slow rate and unemployment remains persistently high. While there are some encouraging signs in the housing market, volatility in consumer confidence, the payroll tax increase, and the rise in the price of gas all present incremental headwinds.? ...

The Department of Commerce stats, (haven't been able to find a user-friendly explanation of how they compute consumer spending), seems out of sync, or perhaps upper middle class people are actually spending so much that they are compensating for the loss of the working class pulling back. I doubt that, though.

http://www.marketwatch.com/story/worst-income-dip-in-20-years-doesnt-stop-spending-2013-03-01?dist=countdown

March 1, 2013, 11:10 a.m. EST
Worst income dip in 20 years doesn?t stop spending
Consumers keep at it despite tax increase at start of year
By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) ? Consumers increased spending in January for the third straight month, suggesting that a big drop in income and a tax hike at the start of the year only exerted a mild drag.

Consumer spending advanced a seasonally adjusted 0.2% last month, the Commerce Department said Friday. That matched the estimate of economists polled by MarketWatch....