The new payroll tax took a big chunk from ours. Retailers are nervous as discretionary spending is lost first. How about you?
How much smaller was your paycheck?
My husband and I both get paid tomorrow and have been wondering the same thing. It probably won't look too bad initially in my paycheck as I had an $80/paycheck deduction taken out every week in 2012 that just ended, so I'm betting they'll mostly cancel out (at first glance, not in reality). And absolutely, discretionary spending is dialed WAY back in our house until we figure out the impact of the taxes.
Not a huge chunk, honestly (I work in nonprofit, so there isn't a ton to take). Then again, I'm the kind of person who wants to raise taxes to pay for better CPS, better health care, and more services for the mentally ill (sick to death of hearing people whine about violence but then not being willing to pay a cent more to actually do anything about it). So, I don't complain when my citizenship costs a little more. Yes, it is true that the money taken out of my check this time isn't going to those things I listed, but in general, we don't pay as much as most countries who actually have their society together. So, a few bucks doesn't seem like anything to rage about. Anyone who lives by spending 100% of their paycheck has lots of worries, not just a 2% cut.
Your social security tax (OASDI portion) will increase from 4.2% of gross pay to 6.2% of gross pay. So you should be able to figure out exactly how much your net pay will decrease.
I plan to spend more money on my credit card to make up for the difference. That way I don't have to forfeit any current consumption.
We are curious as well because my hubby's employer also switched us to a high deductible HSA from the pay everything plan we were extremely fortunate to have for many years. We have opted to max that out since we have little kids and lots of non-preventative healthcare going on. Between the payroll tax, HSA contibutions and social security tax being back in (we hit the max on that in the late fall usually so that we haven't had to pay it the last couple months), we are expecting a significantly smaller net paycheck. We will certainly cut back on spending (and already have) as a result. We are just fortunate that we can tolerate a bit of a reduction in our take home pay. It will be much harder for other folks out there.
you can't have everything..
those dollars will fund social security so that it doesn't have to be cut for people who have spent a lifetime earning it...
so people who haven't won't have to worry but by the time they reach the age to collect the program they haven't yet invested much in .. it will be there for them :)
I agree with you, Job. In fact, I would be completely fine if people who make over the $110k max like us were taxed through the end of the year for SS. For us, it is just a couple of months and we would be ok without that money. We have relatives who rely on Medicaid and SSI for healthcare and cost of living so I absolutely believe in those programs. What is harder for us this year is the HSA. It is a big change from an out of pocket perspective (and because of our current healthcare costs being high), but we will adapt because we don't have a choice. At least we have insurance. We are very fortunate.
skeeter: you have to qualify that. the payroll tax was at 6% for a long time before obama and the republican congress cut it last year. it's simply returning to a sane pre-recession rate.
This feels like a setup, but wasn't "congress" split? House Republican controlled and the Senate Democrat(ic) controlled?
kayo, it's now up t $113K and it is per earner, not per household (just so people know).
Also, I would be all for removing the cap on contributions if withdrawals were not capped as well.
smitty: the cap is still too low.
and the payroll tax holiday was a compromise. it had a sunset provision. and the sun has now set.
time to pay up. the party is over.
i don't know about the rest of you
but i didn't enjoy the party enough to want to continue it
smitty: still having trouble with nouns and adjectives, eh?
remedial english might help.
Smitty do you understand the SS formulas provide a pittance in return after $4,768/month that is factored at 15%. The first $791 contributed is factored at 90%.
And over $791 and less than or equal to $4,768 is factored by 32%.
do you understand that when the financial market wipes out your 401K, social security is what you have left?
Hooper's post #14 contains some information that I don't think many Americans understand with respect to the mechanics of the benefit calculations.
This article is largely opinion that many would disagree with. But if you read only the hard data portions, you will see what Hooper is saying.
Redblack's post #8 is also correct. I did not intentionally try to mislead anyone by not including the history. It was actually two years ago that the cut was made - both 2011 and 2012 had the decreased rate. Now we're back to the same rate as 2010 and before.
Quesara, thank you for post #3. Good points.
Mine was completely pathetic, but I have other factors at play, too:
-Payroll tax increase
-My company previously paid employee health insurance premiums in full, but as of 1/1 we pay a portion
-I now pay the premium for my three-month-old son; the premium increased 1/1.
-I owed back-premiums for his insurance for the time I was out on maternity leave.
-I started maxing a dependent-care FSA.
-And I'm contributing to an HSA again, after two years off.
I also suspended 401(k) contributions while I was on leave. Need to start those again. So that's another 15% gone.
Quesara, you can be cute and say no one should live beyond their means, and 100% of the paycheck. But reality is that some people are stretched to that limit not by their own choice, but by trying to survive in a tight economy where consumer prices increases are all over the place. Basic substances, not to mention utility increases over and over, tax levies, property taxes, payroll taxes, health care, food, energy, etc. For some people, its a lot more than "a few bucks doesn't seem like anything to rage about". Those people are living on the edge and to that I ask, "Where does it stop?"
I didn't think Quesara was being "cute" at all. My interpretation (right or wrong) was the exact opposite of yours, I Wonder. I'm one of those people living on the edge, and I'm not complaining. By edge, I mean earning around $20k per year.
What's truly ironic (not the right word - disgusting is more like it) is that the ones who usually rage the most are not the ones living on the edge, but the ones furthest from it.
the economy is tight
but cutting the safety net out from under yourself isn't going to help anyone if things get worse...
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