Second Friday has passed us and it’s likely you’ve been paid. If you keep track of how much money you’re making, you may realize that it’s suddenly shrunk. My wife noticed almost $40 dollars missing from her paycheck (a small amount until you consider that’s over $1000 a year).
Why is my paycheck smaller?
Turns out, the middle and lower class took a good hit under the new tax deal. A fairly substantial tax increase occured when Congress decided to let the payroll tax-cuts end.
In 2010, payroll taxes dropped from 6.2% to 4.2%. This gave my wife (and many others) over $1000 dollars in kept income over the course of a year (think of the things that kind of money could do in an IRA or going towards a nice vacation). Now that money is going back to the US Government.
If my taxes increased, why does everyone say there are only tax increases on the rich?
Congress and the President can tell you tax hasn’t increased for the middle and lower class because no new tax occured. Instead, they just didn’t continue a 2-year-old tax break. Basically, they can lie if they word it right
Why should I worry about $100 or so a month tax increase?
Because over the course of a year, $100 dollars turns into $1200. And $1200 dollars buys a lot. Think of what would happen if you put that money into an IRA, towards the purchase of a home, or saved it up all year to spend at Christmas time (saving yourself from the dreaded Christmas debt).
I’m not bothered by a tax increase, but when Congress goes around saying it has only raised taxes on the super rich while allowing everyone’s taxes to increase 2%, they’re lying and that bothers me.