Tweet
Originally posted here:
http://exiledinhollywood.blogspot.com/2013/01/congratulations-on-your-pay-cut-happy.html
YES—I got a pay cut, you got a pay cut, we all get pay cuts, not just the people making over 400K—despite the countless media reports saying the “Fiscal Cliff deal” will not raise taxes on middle income and working poor. The L.A. Times wrote about this, and there are differences between their online version of the story, and the version that showed up yesterday in the print edition of the newspaper.
L.A. Times….Workers To See Smaller Paychecks
What’s interesting is that the print edition of the L.A. Times is titled “Workers to see Smaller Paychecks”.
In the online edition of the times, the headline says “Consumers to see Smaller Paychecks.”
In the print edition of the Times, there is a graph showing how much more Uncle Sam is going to ding you this year, based on your income.
20-30K: 297$
30-40K: 445$
40-50K: 579$
However, the online version of the story, linked above, has no such graph.
Someone I know asked me, “What did Obama say?”
So I looked it up.
Here are part of his remarks in his “Happy New Year” speech:
Happy New Year, everybody.
A central promise of my campaign for president was to change the tax code that was too skewed towards the wealthy at the expense of working middle-class Americans. Tonight we’ve done that. Thanks to the votes of Democrats and Republicans in Congress, I will sign a law that raises taxes on the wealthiest 2 percent of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America.
I want to thank all the leaders of the House and Senate. In particular, I want to thank the work that was done by my extraordinary Vice President Joe Biden, as well as Leader Harry Reid, Speaker Boehner, Nancy Pelosi and Mitch McConnell. Everybody worked very hard on this and I appreciate it. And, Joe, once again, I want to thank you for your great work.
Under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up.
Is it me? Or is that an out-and-out, disgusting lie?
Well, what the hey…it’s good for Wall Street!!!
From Prairie Fire News:
“The Stock Market gained over 300 points yesterday on the news a “deal” had been reached. Did you feel the warmth of the trickle down?”
17 Comments
Obama was talking about income taxes, not payroll taxes. Payroll taxes do not enrich Wall Street or Congress: they fund Social Security.
The withholding rate was temporarily cut, the cut expired, now we’re back where we were before.
If you are correct, in the long term returning the payroll tax to where it was, is a good thing in keeping Social Security solvent. Recall the payroll tax (a misnomer in my opinion) was temporarily cut a couple of years ago. I and a lot of others concerned about Social Security were not happy about that reduction. The cut weakened its viability in the long term giving those that want to destroy it the argument: “See, you will never collect from SS. It will be bankrupt by 20xx. We should dump it and go to a private plan”.
And to those knuckleheads that think privatization is so great, I ask, how much did your 401k tank in 2008? Imagine if your 401k was the only source of income for retirement and you lost 20-50%. What do you do for retirement funds? Yeah, the private sector is soooo much better and efficient than the Government. Oh let’s not forget the money that would be taken from your fund to pay bonuses to Wall Street executives that poorly manage your money. Remember, we can vote for our bosses of Social Security (Congress and the President), you have no say over who manages your money in a financial institution. And if you think annual board elections are the same thing, I say what have you been smoking.
No, as justasking says @1, it’s a truthful statement, albeit a carefully worded one.
But let’s drop the “it was always temporary” schtick. If the expiration of the Bush tax cuts was a tax hike, so is the expiration of the payroll tax cut. With unemployment at 7.8%, Obama is raising taxes. Austerity for
allsome!So we all got screwed. The payroll tax holiday, which in my opinion, should not have been enacted in the first place, was taken away. Sucks big-time, yeah, and is a horrible start for the New Year.
But I love the panache, the very brio, of the LA Times in selecting – out of the millions of Americans impacted by this – the poor little Briones character, who “… weathered the downturn in the economy well, working more than he needed, going on a vacation to Norway with his family and eating out at lunch from time to time.” A trip to Norway was the downside for him? I cry copious tears for his kids, who might miss a piano lesson now and then.
Gawd.
And we wonder why the “left” in this country is so useless? With accepted “media coverage” like that, it’s a goddam GUARANTEE.
I’m a public employee in Ohio and pay into the Public Employees Retirement System. I never got a payroll deduction decrease. The flip side is I won’t get a payroll deduction increase, either.
So it’s simply not true that everybody got a tax increase. Besides, the “tax cut” was just another gimmick to defund Social Security so the corporatists could find some excuse to get rid of the program in the future. And the cut wasn’t that much. Not even noticeable for most people; certainly not a lifestyle-changing event.
More smoke and mirrors, more incrementalist garbage, that’s all.
That’s right, I agree with most posts here in that I won’t complain about the end of the payroll tax cut.
That was enacted two years ago by Obama, and it begins the process to defund Social Security. The 30% (correct?) contribution to ss that was lost to ss was then made up by the federal budget, so that the federal budget was now paying into–and therefore linked to–social security (something FDR made a point of avoiding). So, good thing the entire shenanigan has ended. (If Obama had wanted to give us a tax cut two years ago, it should have been an income tax cut, coming out of the budget rather than social security.)
Also, the payroll tax cut ending is not a tax increase, just a reversion to the former social security taxes before Obama cut them.
Overall, I think it is a good thing Bush tax cuts ended for everyone earning over $400,000. ie. the top 1%. Be honest, those who earn $400,000 are not rich. They are probably lower Upper Middle classes, and it is good to get them on the side of those earning less than $100,000. BUT the top taxes are going up from 35% to only 39.6%. Weren’t they 47 percent before? Hence there is still not enough revenues to meet spending. And dividend and capital gains went up to only 20%? They are still not being taxed at income tax rates. No wonder there is not enough revenues still!
No one who is working at a job where their earnings are reported, should ever lose sight of the fact that due to Congress raising the Social Security Age of Retirement to 66 (and even to 67 for those born after 1954), there is a world of hurt.
Many people who work in trades that are hard on the body, (and I include nursing and teaching in those trades) must retire before 66 or 67. And notice – on this one Government Listing, a person ends up taking a full 7 percent deduction on their earnings for retiring early. And that deduction is for LIFE!All the discussion about the CPI Chained Social Security deductions obscure the Biggest Losing Factor for many retirees:
Full Retirement Age: If You Were Born Between 1943 And 1954
Your full retirement age is 66
Remember, the earliest a person can start receiving Social Security retirement benefits will remain age 62.
If you start receiving retirement benefits at age 62, you will get 75% of the monthly benefit because you will be getting benefits for an additional 48 months.
– age 65, you will get 93.3% of the monthly benefit because you will be getting benefits for an additional 12 months.
If you start receiving benefits as a spouse at your full retirement age, you will get 50% of the monthly benefit your spouse would receive if his or her benefits started at full retirement age. If you start receiving benefits at
age 62, you will get 35% of the monthly benefit instead of 50% because you will be getting benefits for an additional 48 months.
age 65, you will get 45.8% of the monthly benefit instead of 50% because you will be getting benefits for an additional 12 months.
How Your Social Security Benefit Is Reduced If you start getting benefits at age*
And you are the . . .
Wage Earner, the Retirement Benefit you will receive is reduced to
Spouse, the Retirement Benefit you will receive is reduced to
62 75.0% 35.0%
62 + 1 month 75.4 35.2
62 + 2 months 75.8 35.4
62 + 3 months 76.3 35.6
62 + 4 months 76.7 35.8
62 + 5 months 77.1 36.0
62 + 6 months 77.5 36.3
62 + 7 months 77.9 36.5
62 + 8 months 78.3 36.7
62 + 9 months 78.8 36.9
62 + 10 months 79.2 37.1
62 + 11 months 79.6 37.3
63 80.0 37.5
63 + 1 month 80.6 37.8
63 + 2 months 81.1 38.2
63 + 3 months 81.7 38.5
63 + 4 months 82.2 38.9
63 + 5 months 82.8 39.2
63 + 6 months 83.3 39.6
63 + 7 months 83.9 39.9
63 + 8 months 84.4 40.3
63 + 9 months 85.0 40.6
63 + 10 months 85.6 41.0
63 + 11 months 86.1 41.3
64 86.7 41.7
64 + 1 month 87.2 42.0
64 + 2 months 87.8 42.4
64 + 3 months 88.3 42.7
64 + 4 months 88.9 43.1
64 + 5 months 89.4 43.4
64 + 6 months 90.0 43.8
64 + 7 months 90.6 44.1
64 + 8 months 91.1 44.4
64 + 9 months 91.7 44.8
64 + 10 months 92.2 45.1
64 + 11 months 92.8 45.5
65 93.3 45.8
65 + 1 month 93.9 46.2
65 + 2 months 94.4 46.5
65 + 3 months 95.0 46.9
65 + 4 months 95.6 47.2
65 + 5 months 96.1 47.6
65 + 6 months 96.7 47.9
65 + 7 months 97.2 48.3
65 + 8 months 97.8 48.6
65 + 9 months 98.3 49.0
65 + 10 months 98.9 49.3
65 + 11 months 99.4 49.7
66 100.0 50.0
*If your birthday is on the 1st of the month, then we figure the benefit as if your birthday were the previous month.
Related Information
Estimate Your Life Expectancy
Retirement Benefits By Year Of Birth
Benefits For The Surviving Spouse By Year Of Birth
Note: If you qualify for benefits as a Survivor, your full retirement age may be different.
###############
AND OF COURSE this is all set up with that psychological imperative operating – you friggin’ schmuck – if you were a better, stronger person, you wouldn’t be copping out of the work force at 64 or 65, but waiting till you are 66 or 67.
Very well stated, Ohio Barbarian. Very well stated.
If anyone wants to see what the Payroll Tax (OASDI) rates have been historically, here is a listing from the Social Security administration that goes back to 1937. Remember the OASDI number is paid by both the employer and and employee. So the current 6.2% works out to 12.4% when the Employer contribution is added. See:
http://www.ssa.gov/oact/progdata/taxRates.html
Austerity kind of reminds of of Goldfinger.
Bond: Well, if you explode it in Fort Knox, the, uh, entire gold supply of the United States will be radioactive for… fifty-seven years!
Goldfinger: Fifty-eight, to be exact.
Bond: I apologize, Goldfinger. It’s an inspired deal. They get what they want ‑- economic chaos in the West ‑- and the value of your gold increases many times.
Goldfinger: I conservatively estimate ten times.
Actually, allowing the payroll tax to go back to its original rate is better for social security in the long run. The president said income taxes not payroll taxes.
It’s quite disturbing that progressives are now calling expiring tax cuts “pay cuts.”
My sentiments are the same as many of the other commenters here.
Interesting exchange at yesterday’s Book Salon bluedot12 questioned the author, L Randall Wray who stated the restoration of the old SS rate would short term cost a million jobs and that the SS cannot run out of funds, i.e. the government will always be able to pay the IOU owed to itself.
I was not here for the Salon but had time to follow the whole post last night and would suggest others please find the time also.
What’s really disturbing is the casual way this 2% reduction in disposable income for the vast majority of workers is being treated.
First, media ignored it altogether, even though it represents a greater proportional reduction in disposable income for the working and middle classes than the increase in income tax for the rich and super rich will.
Then, when it was recognized, that, oh, most Americans will actually be taking home less money this year than last due to the expiration of the payroll tax holiday with no offset of any kind, and this might, just might, negatively affect the overall economy somewhat, and that proportionately the hit on the working and middle classes was much greater than that on higher incomes, all kinds of rationalizations were offered: it was only a temporary cut (so were the Bush income tax cuts); it will shore up Social Security; it is only 2% and “we” can afford it; and on and on.
No, a lot of people can’t afford it.
It won’t shore up Social Security, it merely means that taxes on the rich won’t have to be raised higher to make up revenue shortfalls in SS.
Can you raise income taxes to make up for revenue shortfalls in SS? I tought it was supposed to be self-funding.
Shortfalls in SS revenue (that are designated for payment of current benefits) are already made up by the general fund. General fund revenues come largely from income taxes, so the short answer is: “Yes.”
SS has a self-funding mechanism and mandate, but during the payroll tax holiday, there was a $120 billion (+/-) annual shortfall in SS receipts which was made up from the general fund dollar for dollar. There are expected to be annual shortfalls even with the full payroll tax assessment on workers. In other words, shortfalls in SS revenues can be and are made up from the general fund — which comes largely from income taxes. (You can call this “cashing in” the SS Treasury bonds, but the effect is the same.)
With the expiration of the payroll tax holiday, SS will collect an additional $1.2 trillion over the next ten years, almost all of it from the working and middle classes. Additional income tax collections from higher income taxes on incomes above $400,000 may amount to $400-600 billion over ten years, depending on how successfully upper income earners are able to avoid higher rates.
This $1.2 trillion removed from the disposable incomes of the working and middle classes without any kind of offset will negatively effect the economy as a whole. It is an austerity measure. Some households won’t have a problem losing 2% of their disposable income, but many will. Some will be joining the millions already being forced into poverty every year.
There are many ways to offset this reduction in working and middle class disposable income, from sending $1000 checks to every worker to something like “Making Work Pay,” but they were never considered more than momentarily (no doubt because the money would have to come from the general fund).
Wages have been falling for years and unemployment continues to be scandalously high. Cutting disposable income at in this economy — even for a good cause like SS — is going to cut demand further which is going to compound the already negative economic effects of the Perpetual Recession. It means the “recovery” will continue to be delayed, and what “recovery” there is will be anemic.
But the stock market is soaring, isn’t it?
Thanks for that addition of information to the discussion. In my case, the both of us are indie contractors, so the notion of a 12 percent plus Social security rate seems wonderful!