Fiscal Cliff Deal Attacks Lower,- Middle-Class, Entry-Mid Level Grads

http://blogs.wsj.com/economics/2013/01/01/payroll-tax-cut-expires-how-much-more-will-you-pay/

The fiscal cliff deal reached by the White House and Senate Republicans wouldn’t extend the payroll-tax holiday. The biggest hit to 2013 growth appears likely to come from this tax break’s expiration on Monday.

 

The workers’ share of the Social Security payroll tax had been lowered by two percentage points for the past two years, to 4.2% from 6.2%, amounting to an annual income boost of $1,000 for a typical U.S. family earning $50,000 a year. It provided an increase of as much as $2,202 this year for a worker earning $110,100, the maximum wage subject to the payroll tax.

The end of the tax break would effectively raise taxes for all wage earners next year, a potential surprise for many despite the expected extension of most individual income-tax rates. That would mean the highest tax burdens since 2008 for most U.S. households, before the Obama administration pushed a tax credit in the 2009 stimulus law and the payroll-tax break.