Bigger Paychecks on the Horizon?
DC Argues Over Jobs Plan that Includes Payroll Tax Cut
As the debate over the economy keeps running, so does Washington’s bickering and feuding.
President Obama wants to put Americans back to work by having the government spend money fixing and building roads, bridges and schools. Republicans want to cut taxes and slash business regulations. They say that will lead to economic recovery.
One idea that both sides could agree on is Obama’s plan to cut payroll taxes for most workers’ paychecks. That money is typically spent immediately, instead of having people wait for a refund in the mail.
The payroll tax cut idea goes like this: Normally, workers and their employers pay 6.2 percent of their first $106,000 in earnings into Social Security. The $106,000 figure (called the wage base) is set to rise in 2012.
In 2011, the 6.2 rate was cut by 2 percent for workers. (It stayed the same for employers.) The cut expires at the end of this year, and Obama’s plan would reduce the tax by half – to 3.1 percent for workers and their employers for 2012.
So, if you make $50,000 a year, you’d save an extra $500 in 2012 compared to this year. Seems like a nice chunk of change to go toward buying goods and services and getting the economy moving again.
Like everything in Washington, ideas often go to waste as the casualty of the two sides’ constant political warfare. As the jobs debate heats up, we’ll see how it impacts the paychecks we bring home.
Another way to keep more of your paycheck is to resolve your back tax debt with the IRS. If you have back taxes, the IRS will come at you with a wage garnishment, taking a big piece of your hard-earned paycheck out of your wallet. But a good tax attorney can help you stand up to the IRS and get a bigger paycheck on the horizon.