Skip to comments.Big Trouble in the Little Social Security Payroll Tax Cut
Posted on 03/25/2011 1:22:56 PM PDT by unspun
Those of you still collecting a paycheck should have noticed an increase in what you took home starting in January of 2011. Unless you got a raise, you might not notice the difference. However, we did, and when my husband asked the payroll department at his company what caused the difference, all they could tell him was the tax rates were different. Of course I immediately wondered what was done, but could find no answers. Then my husband came across a small article in our local paper taken from the Wall Street Journal that told about the social security rate cuts for 2011.
The 2011 tax rate is 4.2 percent for employees, 6.2 percent for employers, and 10.4 percent for self-employed people. These rates apply to earnings up to the maximum taxable amount ($106,800 in 2011).
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced 2011 Social Security tax rates for employees and self-employed people by two percentage points, from 6.2 percent to 4.2 percent for employees and from 12.4 percent to 10.4 percent for self-employed people. Without further changes in the law, these tax rates will return to 6.2 percent and 12.4 percent, allegedly beginning in 2012.
The payroll tax reduction temporarily gives employees extra take-home pay. The tax rate r eduction allows a worker earning $50,000 to take home an extra $1,000 over the year and a worker making $80,000 would take home $1,600. This reduction of the payroll tax levied on most workers is intended to accelerate economic recovery by leaving more than $100 billion in employees' wallets over the next year - money they would presumably spend. S'cuse me, but I think we're at an all time unemployment rate high, and I don't see signs of recovery like the Obama loving media...
(Excerpt) Read more at gulagbound.com ...
Reduction in SS tax means 2% more in my pocket. That doesn’t come close to covering the increase in gasoline prices and health care that our beloved fuhrer has foisted on us.
How is this different from the expiration of Bush Tax Cut?
I thought most people would know it (less take home pay) is coming (i.e., ‘tax increase’ on the middle class) in Jan?
Not me. I increased my contribution to my 401(k) by two points, so now that 2% of my salary is actually going towards my retirement instead of being flushed away in the government ponzi scheme.
If you haven't done it yet, increase your contribution towards your 401(k) or set that money aside for an IRA. Most of us will be lucky if we receive any Social Security check at all 30 years from now.
It’s that would’ve gone to the Social Security [dis]Trust Fund which is bankrupt anyway. This very small refund of our own money is brought to you be der Fuhrer Hussein 0bama to show the peasants that he ‘feels your pain”, (not for political reasons so that he can later claim he cut taxes).
I was just reading about the Weimar Republic... I think we might need to start writing about Whybama America.
Unless you got a raise, you might not notice the difference. However, we did, and when my husband asked the payroll department at his company what caused the difference, all they could tell him was the tax rates were different. Of course I immediately wondered what was done, but could find no answers. Then my husband came across a small article in our local paper taken from the Wall Street Journal that told about the social security rate cuts for 2011.If Kelleigh and her husband were really taken by surprise at the reduction of FICA withholding and the resultant slight increase in take-home pay at the beginning of the year, and if it really took as much effort as she described to ascertain the source of this new windfall, then they just don't pay much attention to current events. I doubt that many FReepers were caught by surprise like she and her husband were.
Good for you.
The federal taxes on my pension went up $31.50 a month as of January 1st.
If you think like a socialist, this tax cut makes sense. For one, it is a tax cut to everyone, since everybody that works pays into SS, unlike income tax. For another, it is progressive, since the most you can get is about $2000, so it is not a, “tax cut for the rich”. I’m surprised that some Dem didn’t think of this sooner. Oh, wait, they NEVER cut taxes.
Same here. Why was that? I thought the Washington Weinies extended the tax rates Bush had put in place years ago.
I've contacted my Congresscritter (Rohrbacher) and suggested that he propose that when the tax rate goes back to 6.2% from 4.2%, the extra 2% does not go into the General Fund, but goes into an individual account in the employee's name. ... I've heard nothing in return.
This is the reason for the tax increase as explained by the NYS Comptroller's Office:
"Due to the recently passed Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, the IRS has released new federal income tax withholding tables for use during 2011.
The American Recovery and Reinvestment Act of 2009 (Making Work Pay Credit) which became effective on April 1, 2009 expired as of December 31, 2010. As a result, this credit is no longer reflected in the new 2011 federal income tax withholding tables.
These recent changes may result in an increase in your monthly federal income tax withholding."
Texas retired teachers also are losing $30+ per month because witholding tables were increased. Because there are fewer deductions allowed, fewer people will be getting a refund on 2010 taxes. You can bet there will be fewer deductions next year.
If your experience is the same as mine, you’ll get a response in about ten months—long enough to have forgotten why you wrote—and your response will very obviously be talking about something you didn’t write him about.
But I think your idea is excellent. I wish I’d thought of it.