"Come January, will 160 million American workers owe a) more than; b) less than; c) the same as they've been paying in payroll taxes this year?
The answer will be revealed when lawmakers decide in the next few weeks if they will let a one-year payroll tax cut expire on Dec. 31.
The impact on your wallet: If the payroll tax cut expires, workers in 2012 will pay the extra 2 percentage points of their income up to the wage cap, which next year will be $110,100.
That means low-income workers will pay several hundred dollars more than they're paying now, while high-income workers will pay roughly $2,340 more."
The full article is available here.
If you had done what I did with this year's Social Security payroll tax holiday, place that extra cash into a retirement account, which I have done with a Roth IRA throughout 2011 (though I have changed the investment method I was using for the account when I began), you won't feel like you've taken a hit. Sort of.
Why? It's simple: if you had done this, too, then if this holiday is not extended into 2012, in terms of your disposable income you won't notice any difference. If you've gotten used to having those additional funds as discretionary income, however, you're going to get pinched (for that reason, I expect the politician types to sort out their differences on this point and put through another holiday in one form or another - the electorate will freak out if they have to cancel their Netflix subscriptions because of a return to a 6.2% Social Security withholding rate).
Should the Social Security payroll tax holiday be extended again, then get in on this idea if you haven't already! It's good in the near-term for the reason given above, that you really can't count on having this additional money in your net pay down the road, and because Social Security is a sinking ship. While you have the chance to build a little more of your own retirement, you should.
0 comments:
Post a Comment