Could be devastating
So we avoided the fiscal cliff this week.
Before going out and popping the champagne, let us quickly throw some ice cold water on your celebration. If you work, you are going to be taking home a lot less income this year as neither Democrats, nor Republicans, did anything to prevent a 2 percent increase in payroll taxes from taking effect.
The tax had been 4.2 percent but as of Jan. 1, increased to 6.2 percent. President Barack Obama and Congress had lowered the tax the past two years, when it was a priority of the president’s to help combat the recession, but no one was advocating continuation of the reduction this year.
The impact, frankly, will be sobering for wage earners.
In statistics being reported by the Tax Policy Center, it would cost the average family about $579 a year. For workers earning the national average of $41,000, the increase would result in $32 less on every biweekly check.
Yes, the increase merely returns the tax to what it was two years ago. But at this point in a fragile economy trying to make a rebound, 2 percent could be devastating. Phasing it back 1 percent at a time would have seemed more responsible.
Unfortunately, for many who believed avoiding the fiscal cliff would retain their wages and taxes at current levels, that won’t be the case. And, in the growing divide in our country between the “haves” and “have nots,” it is another blister sure to be an irritant that could fester and get worse.
We agree with the president’s logic two years ago that the reduction was necessary. While we believe that indeed the country is emerging from the recession, we also believe it wouldn’t take much to bounce us right back there again. An increase at the percentage we’re talking about would seem to us to be such a negative catalyst.
We doubt there’s much any of us can do about the increase at this point. However, when you receive your first paycheck of the year, remember to send your thanks to President Obama, Sens. Levin and Stabenow and Congressman Benishek.
The Alpena News