President Barack Obama insists that his fiscal cliff deal did not raise taxes on the middle and lower class. In Washington-speak, he was correct, but as most working Americans have just discovered, that was not the whole truth.
Last Friday was the first paycheck of 2013 for millions of working Americans, and most were surprised to see they were paying more to the government than they were on their previous check. While the income tax rates on paychecks did not change, Americans are losing more out of their checks because of something President Obama did not do.
A memo sent out last week from Dallas County, Texas to their over 6,500 employees (included in the attached slideshow) warned that their January 4 paychecks would reflect a higher social security tax rate. It explained the tax hike in simple language, something most politicans and the media did not do when the fiscal cliff deal was announced.
The memo states "This week's US legislation contains a long list of tax provisions related to payroll...One provision has an immediate impact on your paycheck. The social security payroll tax cut of 2.0% expired. The employee portion of social security withholding was restated to 6.2% from 4.2 % with all payroll distributions after December 31. The expired tax cut increases taxes on salaries by 2.0% for all American workers."
The memo then provides examples of what the tax hike will mean for employees. A worker making $35,000 a year would see $26.92 more in taxes on their paycheck every two weeks. That amounts to nearly $700 more in taxes each year for a worker in the middle class the President promised to protect from higher tax rates. Technically, the President can claim he did not raise taxes; he only failed to renew the cut in taxes he signed into law two years ago.
The rise in taxes is especially hard on Dallas County employees, who received a 2% pay raise in November after not receiving a raise for four years. Now, that raise is gone.
Victor Medina writes for Yahoo News and his political blog WhenLiberalsAttack.com. His other writing credits include The Dallas Morning News and SportsIllustrated.com. He has served as a Dallas County election judge and on the Board of Directors of The Sixth Floor Museum. You can follow him on his blog, VictorMedina.com or on Twitter at @mrvictormedina. He can be reached by email at email@example.com. To be notified of future stories by Victor Medina, click the SIGN UP or SUBSCRIBE button at the top of this page.
Source: Dallas County payroll memo