Payroll Tax Left Out Of Fiscal Cliff Deal
CHICAGO (CBS) — The fiscal cliff deal didn’t deflect all paycheck pain. They will still be getting smaller.
When asked if the expiration of the two percent payroll tax cut will come as a shock to some people, Mesirow Financial’s Susan Schmidt said, “I think it will be because no one is really focused on it.”
Instated two years ago to spur on a lagging economy, lawmakers chose to leave it out of fiscal cliff discussions.
So, instead of paying four percent on the first $110,000 earned, workers will pay six percent.
In cold, hard cash on a $50,000 a year salary, it means instead of paying $2,000 year, wage earners will be out $3,000.
“It’s gonna take a hit on consumer spending,” said Schmidt. “The people living and looking at those paychecks are going to notice that it’s down.”
Many say that’s a definite punch in the pocketbook.
One person told CBS 2’s Dana Kozlov that “I really don’t like it because first of all, middle class people really not making it as it is because everything’s going up but your paycheck.”
Analysts say it may take a few weeks or months to really gauge how the payroll tax increase will impact the economy.
And there are bigger issues looming, like dealing with the debt ceiling, in just two months.