JONESBORO, AR
(KAIT) – Congress may have struck a deal earlier this week to avert careening
off the so-called fiscal cliff, but most Americans will still end up paying
higher taxes in 2013.
The American
Taxpayer Relief Act of 2012, passed on New Year's Day to avert the fiscal cliff,
included measures to prevent income tax rates from increasing on the middle
class.
Most of the nation's
160 million workers, however, will still take home smaller pay checks this
year.
That's because the
legislation did nothing to stop a two-year temporary cut in the Social Security
payroll tax from expiring this week.
"You're going to
see an additional two-percent Social Security tax withheld," said Sherry
Stringer, an accounting partner at Jones & Company, Ltd., in Jonesboro, "so
I think some people are going to be pretty surprised because they thought this
was all fixed. It was maybe for most people on income taxes, but on Social
Security tax, you're going to see your check go down."
Stringer has gotten
a lot of calls recently from clients worried about the changing payroll taxes.
In 2011 the federal
government temporarily lowered the payroll tax, which funds Social Security.
The tax went from
6.2 percent to 4.2 percent in hopes that this would help boost the economy by
giving workers a little extra money.
With the economy
improving, Congress decided to let the payroll tax revert to the pre-stimulus
level of 6.2 percent, which means workers will pay two percent more in payroll
taxes.
The latest estimates show that workers making $50,000 will
pay an extra $1,000 in payroll taxes this year. That equals about a $38
reduction in pay on a bi-weekly pay check.
"[That pay cut] will be noticeable in people's pay checks,"
Stringer added.
Some workers worry this tax cut has come at an inopportune
time and will negatively affect their spending habits in the months ahead.
The latter is certain, according to economics professor Dan
Marburger at Arkansas State University in Jonesboro.
"We will see in our pay checks a little less money,"
Marburger said. "I think the average person is going to pay $1,000 more in
taxes this year. That's obviously going to vary by income class, but it's going
to be a hit that you'll notice."
Marburger said the payroll tax increase was unavoidable
because everyone knew it was temporary.
"We are going to be helping the senior citizens with their
Social Security benefits," he said. "That's what the money was there for and so
I don't expect the payroll tax increase – we may not like it as consumers and
citizens, but I don't think it's going to hurt the economy much."
Copyright 2013 KAIT.
All rights reserved.
Allcontent ©Copyright 2000 - 2013 WorldNow and KAIT, aRaycom Media Station.
