Delaware payday: What the FICA?
January 11, 2013By Rob Tornoe
Here is Rob's commentary.
Today you'll probably receive your first paycheck since President Obama and the brave members of Congress worked together to protect small businesses and the middle class from tax hikes.
So naturally, you're probably wondering why your paycheck is less.
It's just the latest disappointment from a dysfunctional government that can't seem to get out of its own way when it comes to the nation's problems.
The tax hike comes from a failure to extend the payroll tax holiday, passed by President Obama back in 2010, which temporarily cut workers' payroll tax from 6.2 percent to 4.2 percent. So despite what the President proclaims, your taxes DID go up on January 1 - they went up 2 percent. In fact, everyone in the country will see their taxes go up, completely wiping out an entire year's worth of wage gains.
Change you can believe in.
It's also regressive, since it only applies to the first $113,700 earned. A person making $1 million pays $7,049 in payroll taxes, the same as a person making $10 million or $100 million. So once again, we're balancing the budget on the backs of the working class and poor.
It gets even worse for small businesses, the so-called "entrepreneurs" every politician seems to trip over to please. Since payroll taxes are split between employer and employee, most small business owners are being walloped with a 4 percent tax hike - 2 percent on the employee side, and 2 percent on the employer.
I know, the payroll tax holiday was never intended to be permanent, and it cost the government hundreds of billions of dollars in its two years of existence. But there were many options open to make up the same revenue to prevent an underfunding of Social Security. Remove the cap on payroll taxes, institute a financial transaction tax, remove tax subsidies and loopholes - just some of the ways we could have truly protected the middle class and our small businesses in a volatile economy.
Next up for these problem-solvers is the debt ceiling crisis, where the big idea to solve the crisis is to mint a $1 trillion dollar coin.
Rob Tornoe is a political cartoonist and a WHYY contributor. See more of his work at RobTornoe.com, and follow him on twitter @RobTornoe.