Higher earners due to pay more in payroll tax - WSMV Channel 4

Higher earners due to pay more in payroll tax

Posted: Updated:
NASHVILLE, TN (WSMV) -

If your paycheck looked smaller this week, blame the fiscal cliff. A last-minute deal in Congress might have kept our income taxes from going up, but it didn't stop another increase that will have most of us receiving smaller paychecks.

All of this has to do with the payroll tax, which is the money withdrawn to benefit Social Security.

The rate went up Jan. 1, and the nonpartisan Tax Policy Center estimates 77 percent of American workers will receive less in their paychecks. That's something that doesn't seem to sit well with the vast majority of taxpayers.

Here's how it breaks down:

• Those making $40,000 to $50,000 a year can expect to lose about $48.25 a month.

• Make $100,000 to $200,000 and expect to lose $148 a month.

• And if you're lucky enough to make more than $1 million, you'll be losing more than $14,000 a month.

"I feel it's a lot of bull," said taxpayer Terry Reeves. "It's terrible timing. I can't afford any more taxes. Not on what I make."

As the new year began, a two-year-old decrease in the Social Security payroll tax expired.

So instead of paying 4.2 percent, most workers now pay 6.2 percent.

It might mean billions in revenue for Social Security, but taxpayers like Richard Balfour don't seem to think it will change much.

"Really, you know, I'm paying more for nothing. It doesn't fix the problem of Social Security," he said. "This isn't rocket-science. It's really not. And why they can't do it is really a head-scratcher."

The lower rate may have padded paychecks in the past two years, but it cost the federal government about $240 billion.

This year, Social Security stands to benefit at our collective expense.

"Not real thrilled that I'm going to be paying more and it's not even going to fix the insolvency of Social Security," Balfour said.

"If you want to pass a law that lowers taxes, pass a law that lowers taxes. Don't do it with a contingency that X-years down the line, it become null and void," Reeves said.

Copyright 2013 WSMV (Meredith Corporation). All rights reserved.

Powered by WorldNow
WSMV
Powered by WorldNow CNN
All content © 2014, WSMV; Nashville, TN. (A Meredith Corporation Station) and WorldNow. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.