By now, almost everyone who earns one has received their first paycheck of 2013. Depending on your income bracket and your budget the reality of what the expired Payroll Tax Cut means to you is starting to hit home. 2% more out of your paycheck probably didnâ€™t sound like much in the abstract when you hear it on the news, but now that the actual numbers are staring you in the face, the reality is something else entirely.
One night this week, just after dark, our doorbell rang, not a common occurrence for this empty nest. It was the young man who does handy work for us. Bob, not his real name, is sincere, hardworking, and trustworthy. He holds down a full-time blue collar job managing a small warehouse, helping his â€œmoonlightingâ€ customers at night and on weekends. Heâ€™s single, has his own apartment, and drives a beautiful extended cab truck that is his pride and joy. Weâ€™ve come to know him well enough to know heâ€™s not a party boy; he keeps a schedule and a budget.
When Bob stepped inside I could see how upset he was. Pam, he said, Iâ€™ve stopped by to see if you have any extra work for me. I got my paycheck today and the new taxes are going to cost me over $100 a month. Iâ€™m not sure what to do.
What I didnâ€™t have the heart to tell Bob is that our fist paycheck came, too, and the amount our budget will have to be adjusted is a bit more than $100 a month. We do know what we have to do: We have to cut back on discretionary spending like how much we give to charity, how often we go out to dinner, and how much we use services such as a handyman.
This story is playing out across the country at every income level. Yes, there is a segment of the population that will be much less effected than others. The $1200 a year loss that has Bob in a panic is pocket change to some, but for most of us the impact of this change in income has consequences.
The ripple effects are already a topic of conversation across the blogosphere and social media: The hash tag, #YourPaycheckIsLowerThisWeek has been one of the top trends on Twitter, and no less than liberal bastion MSNBC posted an article titled “Americans Feel Austerity’s Bite As Payroll Taxes Rise”
Iâ€™m no economist but if I read the situation in Washington correctly, better buckle your financial seatbelts because unlike Thelma & Louse, we may not have gone over the fiscal cliff, but this is just the first mile on a very bumpy road ahead.
What does the Payroll Tax Increase mean to you?