Social security payroll tax increases 2 percent after two-year reduction

Joshua Farmer

Taxes have increased by 2 percent – jumping from 4.2 percent to 6.2 percent – as the temporary employee tax cut provided by the Tax Relief, Unemployment Insurance Reauthorization and JobCreation Act of 2010 ended Dec. 31, 2012, according to the Huffington Post.

Associate professor of economics John Dawson said the two-year, temporary tax cut was used to give people “a little more money to spend.”

“It was never intended to be permanent, and so raising it back up is normal,” Dawson said. “Having less money affects everybody on some level, even if it doesn’t have a big effect for an individual.”

Multiplying the amount of money taken out of individual paychecks across the economy is a lot of money now being taken back by the government, Dawson said.

The tax increase “does not affect the long-term sustainability of the [Social Security] program” because all the projections for the “long-term feasibility” of the program were based on the original tax of 6.2 percent, Dawson said.

“I think the big misunderstanding about this is it’s being called a tax increase,” he said. “In a way it is, but to put it in the proper context you have to recognize it as simply raising the tax back to what it always was and was supposed to be.”

Theresa Davis is a housekeeper for Frank Hall and said the tax increase could hurt her because her income is the sole income for her home.

The loss of money makes a difference on spending money on food or gas, Davis said.

“I’ve already paid in enough to make so I can draw $995 a month,” Davis said. “If I work until I’m 72, it’s less than $1,200 a month to live off of, and I don’t know if it’s going to be there.”

Senior public relations major Meghan Frick said she works two jobs, making “just above” minimum wage to support herself.

She said the difference in her paycheck was “startling.”

“For people at that end of the spectrum, every dollar counts” Frick said. “The amount of money I lose to payroll taxes now is enough to pay my electric bill for two months. The deductions may seem small to Congress, but they matter to me.

Story: STEPHANIE SANSOUCY, Senior News Reporter