Shrinking paychecks possible

If your paycheck is suddenly smaller in January, don’t even think about blaming Obama.

A CNN report explains a portion of the president’s jobs plan, which Senate Republicans voted against:

“The largest measure in the (jobs) package is the payroll tax cut, which comes at a projected cost of $265 billion. Employees normally pay 6.2% on their first $106,800 of wages into Social Security, but they are now paying only 4.2%. That break is set to expire at the end of December. Obama wants to cut the tax in half, to 3.1%.”

So, let’s look at how this would affect a worker with an annual income of $80,000:

* If the current cuts EXPIRE at the end of the year, this payroll tax will be $4,960.

* If the tax cuts REMAIN THE SAME, this payroll tax will be $3,360.

* If this portion of Obama’s jobs bill PASSES, this payroll tax will be $2,480.

* If this measure in Obama’s jobs plan FAILS, $2,480 in payroll savings will be lost to the worker in the coming year.

* If you suddenly find your paycheck is smaller in 2012, be sure to write your Republican representatives in Washington a “thank you” note.


Sue said...

But isn't it true BJ, that this cut is not entirely a good thing because less money is going into the SS lock box? And now to cut even more like Obama wants? I'm not so sure I like it.

Jerry Critter said...

I agree Sue. SS is not the place to be cutting. It sets a bad precedence.

B.J. said...

Sue, Critter and all readers:

There are “spillover benefits” and “spillover costs” in any government prorram. People who have griped forever about government welfare programs overlook the “spillover benefits” – they pour money back into the economy. Right now, that is the important aspect of the current payroll tax cuts. But to answer Sue’s and Critter’s comments:

Here is an excellent analysis from Reuters with the headline: “Would Obama’s payroll tax cut hurt Social Security?” LINK:


Frodo, from Warm Springs Georgia said...

Sue and Jerry Critter both add value to the discussion. However, our entire historical experience in overcoming economic depression has been produced how? Aye, that is the rub, Herbert Hoover was too busy to visit with the Bonus Marchers and hard it is to imagine how different things might have been had he given them the money they felt they were promised.

Papamoka said...

I personally don't think that either party is looking out for the common working man or woman. At the end of the day we are screwed or about to be screwed. It seems to be a long term objective of both political parties and then blame the other for our loss.

We need a Teddy Roosevelt to come in with a big ass stick!

Hugs and love at ya BJ!