Happy New Year! Do we know where we’re going? Does our government?
Turn on the news and all you hear is the blame game—it’s the other guy’s fault. I was listening to the news and the politicians were “posturing”. They weren’t solving a problem—just posturing how they’ll explain their votes. No matter what happens, there will be losers. I’m not sure if there will be any winners. It seems that no matter what happens we’ll all be losers.
That said, real people like you and me still have to get up in the morning and go to work. We still have to pay our rent and mortgage. We still have to feed the kids. Life goes on.
Unlike the Mayan end of the world clock, remember we’re all supposed to be dead now right? The “fiscal cliff” isn’t going to be the end of the world. It will be a pain in the behind. That’s for certain. But life will go on.
So, starting this month, pretty much no matter what Congress decides, your paycheck will be lower. Your take home pay will be lower because the “payroll tax holiday” is now gone. That was that 2% reduction in payroll taxes that we’ve had for the last two years. If Congress doesn’t pass anything, our withholding will be higher too. We’ll be going back to the tax rates from the year 2000.
Here’s an example: let’s say you make $600 a week and claim no exemptions. In 2012, your federal withholding would be $75.45. Starting in 2013, your federal withholding will be $90.67. Plus, there will be an extra $12 taken out for your payroll tax—that means your weekly take home pay will be about $27 less a week than it was before. That’s going to take some getting used to.
Of course, everybody will have a different situation, that’s just one example. The point is, you’re still going to work, and you’ve still got bills to pay. Those of us in the middle class, the ones who make the world go ‘round, we’ll still be grinding away. Like I said, the world won’t end with the fiscal cliff. But it’s not going to be very pleasant.