Tuesday, January 1, 2013

A Minor Musing About The Certainty Of A Middle Class Tax Increase

The Washington Post points out that Americans who depend on a paycheck will have a tax increase under the deal that Vice-President Joe Biden and Senator Mitch McConnell negotiated.
The deal negotiated by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) addresses a separate tax — the income tax — and would prevent tax rates from increasing for all but the wealthiest Americans. But both sides have decided to leave the payroll tax out of the agreement.

Unlike income taxes, which rise along with a worker’s income, the payroll tax is a fixed percentage of an employee’s salary. Allowing the tax cut to expire increases taxes on salaries by 2 percent for every American worker. Up to $110,100 a year in salary is subject to the tax.
First, I have to admit that I'm ambivalent about about the payroll tax holiday lapsing. I don't like the idea that my paycheck is going to be decreased 2%, but I realize that payroll taxes affect social security benefits.

The thing that really bugs me about the end of the payroll tax holiday is that Mitt Romney and others of his ilk can smile their plastic smiles and chuckle woodenly that the 47% got what was coming to them, more taxes. Meanwhile, Romney et al. will be setting up another tax shelter in the Caymans.

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