Originally Posted by
harryn
Social Security / Payroll Tax Change
The first thing that strikes me about the law that so many politicians said would not increase 97% of American's taxes - is that it increases (total) taxes on most Americans, at least as far as I can tell.
The most obvious is the payroll / social security tax.
If you are an employee making an example $ 20 - 50 K, the largest tax you pay is in fact payroll / SS tax. In normal years, this is
- 6.5% paid by the employer
- another 6.5 % paid by the employee.
If you are self employeed like me, we get the joy of paying both sides of this tax, for a nice 13 % hit on income, before we pay income tax.
The main tax break most Americans received the past few years was a 2% reduction in the employee side of this tax. IMHO, this was the main boost the economy in 2012 and kept a lot of businesses solvent.
This tax break was eliminated in this grand deal, so the average American is going to "feel" like they got a 20 - 30 % tax Increase in 2013, rather than "no change".
Feel free to comment / let me know if I am mis reading this.