Tax increase will be painful
The nation avoided going over the so-called “fiscal cliff,” but not without injury.
In the 11th-hour deal, Congress failed to renew the 2 percent decrease in the Social Security payroll tax, which means taxes will go up for everyone who gets a paycheck.
The Social Security tax is deducted from the paycheck of every wage earner. The expiring tax reduction will cost people with a median household income of $50,000 about $1,000 more annually. A person earning the $7.25 state minimum wage will pay about $300 more.
This is a bad time to raise the payroll tax. The economy is limping along. The November jobless rates for Fulton, Montgomery and Hamilton counties were 9.7 percent, 9.7 percent and 10.5 percent, respectively. These are high percentages.
Extracting more money from wage earners not only hurts them but the economy in general, since people will have less money to spend. The 2 percent taken from all wage earners amounts to millions of dollars removed from the private-sector economy.
The people who will suffer most from the payroll tax increase will be low-income earners, and many of them are our hardest-working citizens.
The 2 percent tax break didn’t have to last forever, but extending it for another year would have been beneficial.