Have you been watching the presidential debates? I have. I’ve heard both sides trot their “tax plans” out and I’ve heard a lot about what both Governor Romney and President Obama say they’re going to do with taxes if elected. Here’s something I haven’t heard—what about the payroll tax holiday?
What’s that you ask? The payroll tax holiday is the 2% tax cut we got back in 2011 and it got extended for 2012. Nobody’s talking about protecting it now. That means you can pretty much expect your taxes to go up starting with your first paycheck in January. How much? Well, if you make $30,000 a year and get paid once a month—your pay would go down by $50 per paycheck.
Here’s a link to the Kiplinger calculator so that you can figure out exactly how much this will affect you and your paycheck: http://www.kiplinger.com/tools/Social_Security_payroll_tax_increase_calculator/index.php
Full disclosure here: I thought the payroll tax holiday was a big mistake in the first place. That’s money that goes into the Social Security fund—you know the one the tax policy wonks keep saying is going to go bankrupt? So we’ll take money from that fund? I wasn’t happy with that.
But now that everyone has gotten used to that 2% “tax holiday”, when your first paycheck in January comes and it’s a little lighter, you’re certainly going to feel like you’ve had a tax increase, even though technically, it’s not an increase.
Seriously, it’s not considered to be a tax increase because it’s an “expired tax reduction.” And that’s why both sides can say they are not raising taxes—they’re just letting this reduction slide into oblivion.
Personally, I’m just not that sophisticated. I like plain language. Taxes are going to go up or they’re going to go down, or they’re going to stay the same. I know that come January, our taxes are going to go up no matter what the politicians call it.