Okay, here's the deal. For those paying attention, your benevolent president gave you a tax break two years ago. Well not exactly. What he did do was reduce your FICA contribution by 2% and thus he called that a stimulus. (feel stimulated yet?)
Never mind that all that was actually done was a deferred payment and accountability to social security. In essence, we deprived the already strapped SSI fund of the funds that it desperately needs to survive. Of all the places to tamper with the money SSI was the least intelligent path to pursue, but I guess when you get to sit in your shorts in the treasury and throw the people's money up in the air and exclaim whee? This type of result should be expected.
So now, that bit of lunacy is about to expire and as a result, the clamor has begun to try and save the 'tax break.' First things first people, this is not a tax break. This is literally borrowing from Peter to pay Paul, except in this instance, we (the American taxpayer) are both Peter and Paul. That is the problem with these liberal scams. they are all aimed at the weak minded and those who could care less about consequences, just as long as they get their piece of the pie.
The holiday season has just begun, but Congress might have already settled on your gift: a return to higher payroll taxes, starting Jan. 1, 2012.The question that should have been asked is how much has it already cost you. So why do I continue to hear this old sitcom theme song ringing in my ears?
The payroll tax funds Social Security and Medicare. You may recognize it from your pay stub as FICA (Federal Insurance Contributions Act). The payroll tax is normally 12.4 percent of your gross pay. You pay half (6.2 percent) and your employer pays the other half. The tax is charged on every dollar of salary or wages up to a maximum of $106,800 per year.
But at the end of 2010, Congress enacted a 2 percent payroll tax reduction for employees as part of a larger compromise to extend the Bush-era tax cuts. That reduction expires on Dec. 31, and unless Congress reconvenes and changes something, your paycheck could be 2 percent smaller in 2012. If you make $50,000, you will keep $1,000 less in 2012 than you did this year.
According to estimates, the impending 2 percent reduction in take-home pay will cost the average American family close to $83 per month. That’s a week’s worth of groceries, or nearly two tanks of gas for the car.