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PayRoll Tax Extension necessary.. Or we are facing a painful 2012...
2011 Nov 16, 5:17am 2,162 views 3 comments
by LAO follow (0)
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LAO
@
2011 Nov 16, 6:38am
Look, this "tax reduction" is a travesty.
Ending it now during a recession will just cause people to stop contributing to their 401ks or saving money on their own...
SS is screwed either way... without major reforms all 20-30 year olds won't even get back what they now contributing to SS.
Wait til the middle class gets out from underwater on their homes and the economy improves before pulling out the rug on this tax deduction.
This the same argument everyone gives for a temporary tax reduction. Move along, nothing to see here. Everyone paid 6.2% out of their end for many years until this year and nothing catastrophic will happen if we go back to it.
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If Obama can't get his payroll taxes at the very least extended.. and ideally lowered to 3.1% from 4.2% currently.. (down from original 6.2%). Then look out below...
Starting Jan. 1st, 2012, if nothing changes, A family household earning $110K a year... will essentially get a PAY CUT of $2200! That's equal to a monthly car payment! Or a really nice family vacation...
If you think that $2200 will go unnoticed by the middle class... you are mistaken. Most to compensate will just lower their 401K contributions.. (crushing the stock market). Or cutback on spending/saving when they see their paychecks each month dropping by $183 a month.
If you think 2011 was a bad year for consumer spending... 2012 will be horrendous without payroll tax cut extension or increase.
I don't know how Republicans can be for maintaining Bush Tax cuts for the rich and allowing taxes to rise on the vast majority of those households making under $110K a year.
This lapse will raise taxes 2% on the middle class, while the top 1% won't be affected at all.. Because it won't change the tax rate on any income earned over $110K.
This won't help home sales at all in 2012 either... It will pinch household budgets even further... possibly causing more foreclosures.
#housing