Jack Andrews and his wife no longer enjoy what they call date night, their once-a-month outing to the movies and a steak dinner at Logan’s Roadhouse in Augusta, Ga. In Harlem, Eddie Phillips’s life insurance payment will have to wait a few more weeks. And Jessica Price is buying cheaper food near her home in Orlando, Fla., even though she worries it may not be as healthy.
Like millions of other Americans, they are feeling the bite from the sharp increase in payroll taxes that took effect at the beginning of January. There are growing signs that the broader economy is suffering, too.
Chain-store sales have weakened over the course of the month. And two surveys released last week suggested that consumer confidence was eroding, especially among lower-income Americans.
“You got to stretch what you got,” said Mr. Phillips, 51, a front-desk clerk and maintenance man for a nonprofit housing group who earned $22,000 last year. “That little $20 or $30 affects you, especially if you’re just making enough money to stay above water.” So he has taken to juggling bills, skipping a payment on one this month and another next month.
“I’m playing catch-up each month,” he said. “You go to the supermarket and you can’t spend what you used to.”
Jack Andrews has it slightly better than Mr. Phillips. He earns a bit more than $40,000 a year manufacturing ceramics in a local factory, but because his wife, Cindy, is disabled, he is the sole breadwinner. Something had to give now that he is earning about $800 less a year, or $66 a month, and it was the couple’s monthly night out.
The tax break, which was pushed by the White House to stimulate spending in 2011 and extended in 2012, was always supposed to be temporary. But with pressure building in Washington to reduce the deficit and politicians fighting bitterly over whether to raise taxes on the very rich, the question of how the increase in Social Security taxes would affect the poorest workers did not seem to garner much debate on either side of the aisle.
“I don’t see any reason to consider supporting its extension,” said Timothy F. Geithner, the Treasury secretary, in testimony last year. Even Nancy Pelosi, a reliable liberal who leads the Democratic minority in the House of Representatives, was for letting it expire.
The higher rate applies to all earned income up to $113,700. For a household earning $100,000 a year, the two-percentage-point increase means an additional $2,000 a year in payroll deductions. Economists estimate that the payroll tax increase will reduce disposable income by about $120 billion and shave half a percentage point from economic growth in the first quarter — a significant blow given that the economy is expected to expand only 1 to 2 percent in the first half of 2013.
“If you wanted to design a policy to squeeze the spending of lower- and middle-income households, raising the payroll tax is the way to do it,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors. “It’s very regressive.”
Originally posted by FlyersFan
We went to H&R Block and had our taxes done last week. All the preparers were talking about how they expect a lot of upset people next year when the Obamacare TAX kicks in .. and all the people who think they are getting free health care will instead get hit with tax penalties because they didnt' go out and buy the product (health care) mandated by Obama.
Expect lots and lots of ticked off people next Feb-Apr when they go to do their taxes.
Originally posted by newcovenant
reply to post by neoholographic
This is going to be hard to understand but he put forth a list of aspirations, things he was going to try and accomplish. We couldn't elect him without knowing the agenda but no one expected all of it get done in either his first 4 years or his presidency. Anyone who thinks so doesn't know how politics or Washington work.
Originally posted by GogoVicMorrow
reply to post by neoholographic
I am a libertarian through and through, and so don't believe raising taxes on anyone, but there is a catch. If they aren't going to do the other things that must be in conjunction with lowering/maintaining a tax rate then screw it and raise the taxes on the rich.
If they can't cut out the garbage spending and taxes are going up then raise them on the people that are certain not to go hungry because of it.
I mean, you are really seeing a government push their limits. The problems are clear and the solutions are obvious and the cause and lack of solution is due to one thing and one thing only MASSIVE GOVERNMENT CORRUPTION. Put me in office with people that aren't bought by corporations and I will fix the government and economy. 1 year to solve the problems, 8 to 10 years and guaranteed to not only be solved, but booming.edit on 9-2-2013 by GogoVicMorrow because: (no reason given)