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By Catholic Online (NEWS CONSORTIUM)

10/22/2012 (2 years ago)

Catholic Online (www.catholic.org)

Tax cut expiring because nobody seems to have noticed it.

A stealthy tax increase is about to cut your pay by 2 percent as of January , 2013. Technically, the politicos say, it's not a tax increase, but rather the expiration of a tax cut, but with neither party willing to do anything about it, if will feel like an increase to you.

The effect of the tax increase would be similar to a doubling of the price of gas.

The effect of the tax increase would be similar to a doubling of the price of gas.

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

10/22/2012 (2 years ago)

Published in Business & Economics

Keywords: Social Security, tax cut, tax holiday, increase, taxes, Paul Ryan


LOS ANGELES. CA (Catholic Online) - In case you hadn't noticed, you've been putting two percent less of your pay towards social security. A payroll tax holiday has reduced your liability from 6.2 percent for social security to 4.2. Democrats say this has helped the economy, by giving workers a little more take home pay each month - about enough to buy a tank of gas or so.
However, politicians say the cut, which averages about $20 per week for the average worker, is unlikely to be noticed by taxpayers, so it isn't politically cost effective.

In other words, because you're unlikely to notice the cut and thank your local politician for it, they're happy to make you start paying it again. 

Despite the consensus to allow the cut to expire, at least two entities have come out in favor of collecting your money, Paul Ryan and AARP. Ryan referred to the cut as "sugar high economics" when it was proposed. While AARP says Social Security needs the revenue. 

To be fair, the cut came with a government pledge to replace the money due to social security, but that money was never cut from elsewhere meaning the government had to borrow the difference and add to the national debt to keep the payments flowing into the social security fund. 

Republicans wanted to see the tax cut expire a year ago, while Democrats fought to keep it for
another year. However, with the elections near and neither side feeling like they're benefiting politically from the issue, everyone in Congress seems happy to let the cut expire. 

Ultimately, the cost to you, the taxpayer, is a two percent reduction in your take-home pay, or as stated previously, about the cost of a tank of gas every month for the average worker. Another way to look at it is to imagine the cost of gas doubling in price as of January 1st. 

Of course, you could probably bet that would get a lot of attention.  


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