The GOOD tax hike hidden in the fiscal cliff deal

January 1, 2013
By

Payroll tax cuts will expire:

Taxes will rise on the middle class even if this deal passes, because it doesn’t include an extension of the payroll tax holiday. That means that the paychecks for more than 160 million Americans will be 2 percent smaller starting in January, as the payroll tax will jump from 4.2 percent to 6.2 percent. And a huge number of those hit will be middle class or working poor (Two-thirds of those in the bottom 20 percent would be affected by a payroll tax hike.).

Obama had proposed extending the payroll tax holiday, or something similar, in the first phase of the negotiations. But he dropped that demand weeks ago as his stimulus proposals shrunk rapidly. He’s not revisited the idea since then, and Republicans didn’t want it in there in the first place.

So whether this particular deal passes or not, it’s basically a given that the payroll tax holiday is going away, which means a $115 billion fiscal contraction this year directly from the pocketbooks of ordinary Americans. To put that in perspective, the sequester cuts that are so dreaded would cut about $110 billion this year — more or less the same amount.

This is a good thing because payroll taxes are already too low to fund Social Security and Medicare. Shaving a third off the Social Security tax would have simply dug the hole deeper.

7 Responses to The GOOD tax hike hidden in the fiscal cliff deal

  1. artist on January 1, 2013 at 11:44 am

    The GOP should tell Ogabe to GFH and walk away.

    Then when the debt ceiling comes up, NO.

    Time to force what we all know is coming. BRING IT NOW.

  2. Samuel Youmans on January 2, 2013 at 6:11 am

    The actual payroll tax increase I believe is not one third, it’s one sixth. The payroll tax holiday did not extend to employers.

  3. If you are going for best contents like I do, simply pay a visit
    this site every day as it gives feature contents, thanks

  4. It’s a shame you don’t have a donate button! I’d without a doubt donate to this excellent blog! I guess for now i’ll settle for bookmarking and adding your
    RSS feed to my Google account. I look forward to fresh updates and will talk about this blog with my Facebook group.
    Chat soon!

  5. Discount New Orleans Accommodations on July 9, 2013 at 5:52 pm

    Does your website have a contact page? I’m having a tough time locating it but, I’d like to send you an email.
    I’ve got some creative ideas for your blog you might be interested in hearing. Either way, great site and I look forward to seeing it develop over time.

  6. wiki-brands.com on August 1, 2013 at 3:35 am

    Hi there, I discovered your web site by way of Google whilst searching
    for a related matter, your site got here up, it seems to be great.
    I’ve bookmarked it in my google bookmarks.
    Hi there, just became alert to your weblog through Google, and located that it’s really informative.

    I’m gonna watch out for brussels. I’ll be grateful in
    the event you proceed this in future. Numerous people will probably be benefited out of your writing.
    Cheers!

  7. Some Exclusive Hotels Worldwide on August 1, 2013 at 12:30 pm

    Hi to all, how is all, I think every one is getting more from this web
    page, and your views are nice in favor of new people.

Leave a Reply

Your email address will not be published. Required fields are marked *