Your Paycheck Changed – Here’s What’s Going On

So you notice your paycheck looked a little different, didn’t you.  A little smaller.  Do you want to complain?  Maybe you’d like to get hot under the collar at President Obama’s “secret, middle-class tax hikes (brought up in the comments below the article, not in the article itself)?”  Allow me to save you some embarrassment.

Your paycheck decrease was due to a recent increase in the payroll tax (you may see it on your paycheck as the line item “FICA.”)  This is a tax that is not income tax, and all wage earners pay this tax.*  Why did the powers that be increase the payroll tax?  Travel with me using the power of glissando, through the murky depths of time, to an era before remembering; January 2011.

Chromatisch Glissando detail from glissando.jpg by Tjako van Schie at nl.wikipedia used under the Creative Commons Attribution-Share Alike 2.5 Generic license

♪♫Glissando!♫♪

Yeah, that’s right; January of 2011.  Unemployment was skyrocketing, occupiers were not yet occupying, and there was an economic malaise in the air.  President Obama enacted a payroll tax holiday for employees by reducing the payroll tax for employees from 6.2% to 4.2%.  The rationale was that, by temporarily reducing the payroll tax, families would take more money home.  It was hoped that this money would be spent, which would act as a stimulus to the economy, and reduce the severity and duration of the recession.

Now, the payroll tax holiday  started under President Obama ends under President Obama.  This was the plan all along, so I’m surprised anyone else is surprised.  If you want to complain that the payroll tax has reverted to its previous rate (which has been in place since 1990,) then do complain.  Just be forewarned, if anyone who has been conscious of the FICA before 2011 hears you, they may not think highly of your intellect.

Hopefully I saved you some embarrassment.  You’re welcome.

*  There’s more to it than that.  If you want more specific details, point your internet machine to Social Security, and enlighten yourself.

Advertisements
This entry was posted in Current Events, Economy, Taxes and tagged , , , , , . Bookmark the permalink.