What am I missing with the payroll tax increase?

[Halbleib1]

Originally Posted by mikehn

We cant help it if we are high income earners. Thats just how it worked out. We have the right to enjoy the money we earn just like anyone else

Yes but I think the problem people have is when high income earners act as though they are going to be living in poverty because of a 2% increase. We are not high income earners and that 2% is not going to impact our standard of living. Some of those high income earners are acting as though they can not pay some of their bills so they will have to make cuts in order to do so. We will have less money to do what we want with but it was never meant to be perm. We were always told it was a temp thing. The first year of it my husband was unemployed so it did not effect us at all. After he got a job yes the extra money helped to build our savings back up but we did not change our lifestyles because of it.

[disney4us2002]

Clearly I am not a math person because I don't understand at all. My dh's paystub did not change, not one penny more deducted from either state or federal taxes. However, his FICA deduction changed from $80 to $426 in ONE check. That is huge. If that keeps up twice per month, we are talking $700. Dh is very nonchalant about the whole thing so I'm sure he won't call his HR or finance dept. Someone else posted about the max FICA can collect but that meant nothing to me. His last paystub from 2012 showed the total as $6574 but his deduction had been $80 for the last 4 months of 2012. I'm confused if they start this very high and then cut it back as the year goes on?

[DisneyATlast]

Originally Posted by mikehn

We cant help it if we are high income earners. Thats just how it worked out. We have the right to enjoy the money we earn just like anyone else

As a previous poster already said, nobody has a problem with high income earners. Don't we all try to earn as much money as we can? That's not the issue at all...

The issue (for me at least) is when "high income earners" whine and moan about paying their share while the rest of us accept it as a fact of life and move on.

Like they say though....rich people don't get rich by being generous.

[ajh88]

Originally Posted by disney4us2002

Clearly I am not a math person because I don't understand at all. My dh's paystub did not change, not one penny more deducted from either state or federal taxes. However, his FICA deduction changed from $80 to $426 in ONE check. That is huge. If that keeps up twice per month, we are talking $700. Dh is very nonchalant about the whole thing so I'm sure he won't call his HR or finance dept. Someone else posted about the max FICA can collect but that meant nothing to me. His last paystub from 2012 showed the total as $6574 but his deduction had been $80 for the last 4 months of 2012. I'm confused if they start this very high and then cut it back as the year goes on?

As someone who is minimally versed in these issues, another helpful poster (sorry, I don't remember who!) pointed out to me the 113K threshold. Assuming your DH's earnings hit that sometime last year, his FICA went down (not to nothing, as someone else stated - I still had a little bit taken out each check, but not the same amount as before the threshold). Now, it has gone back up and will stay there until the threshold is reached again. Last year was the first time that had ever happened to me, so yes, it shocked me when my first paycheck of the year was about $300 less than normal ($600 a month). Maybe this is the difference you are seeing?

And just because I can't resist putting in my 2 cents...Having been on both ends of the spectrums being discussed here (but far from "rich"), I think it is about perspective. I don't miss the 2% all that much, to be honest - yes, I sort of miss $600 a month (which is NOT only 2%, more like 6-7%) and I hope that no matter how much I ever make I always will. I want to appreciate every dollar I earn, spend, and save. But, I'm tightening the budget up and I don't know many people, regardless of if they make $20,000, $50,000, or $150,000 a year who wouldn't miss $200, $400, or $600 a month from their budgets (and I totally made those numbers up - they are not calculated from anywhere!). Even if it is simply discretionary spending money, it still requires a change in some habit that was formed while the cut was in effect.

I personally think people can vent or moan all they want - everyone had a 2% increase in the tax from where it was last year. I assume that if someone makes $180K, they are living a $180K lifestyle and their 2% makes a difference to them, just like mine does to me.

[Claire&TheBoys]

Originally Posted by disney4us2002

Clearly I am not a math person because I don't understand at all. My dh's paystub did not change, not one penny more deducted from either state or federal taxes. However, his FICA deduction changed from $80 to $426 in ONE check. That is huge. If that keeps up twice per month, we are talking $700. Dh is very nonchalant about the whole thing so I'm sure he won't call his HR or finance dept. Someone else posted about the max FICA can collect but that meant nothing to me. His last paystub from 2012 showed the total as $6574 but his deduction had been $80 for the last 4 months of 2012. I'm confused if they start this very high and then cut it back as the year goes on?

FICA is Social Security tax + Medicare tax. For the last 2 years, SS was 4.2% of gross taxable (which is gross wages, less any payments for health insurance that are pre-tax, like most employer-sponsored health plans). Now, it is back to 6.2%. Medicare is 1.45% of taxable wages. But, if you make over a certain amount (for 2013, I think CF is right with the $113,700 figure), you don't pay SS tax on what is above that. So, if your husband makes more than $113,700, then yes, likely the last several paystubs of 2012, only 1.45% was being withheld for Medicare tax. Now that we're in a new year, the full amount of 6.2% + 1.45% is being withheld. When he hits the max again, his FICA deduction will drop again.


Hope this makes sense!

[Kathi OD]

Originally Posted by disney4us2002

Clearly I am not a math person because I don't understand at all. My dh's paystub did not change, not one penny more deducted from either state or federal taxes. However, his FICA deduction changed from $80 to $426 in ONE check. That is huge. If that keeps up twice per month, we are talking $700. Dh is very nonchalant about the whole thing so I'm sure he won't call his HR or finance dept. Someone else posted about the max FICA can collect but that meant nothing to me. His last paystub from 2012 showed the total as $6574 but his deduction had been $80 for the last 4 months of 2012. I'm confused if they start this very high and then cut it back as the year goes on?

I hate to tell you, but if he had $426 taken out of one pay and he gets paid twice a month, that's $852 per month...not $700.

[ilovemk76]

OP, you are not missing anything.

[DisneyATlast]

Originally Posted by ajh88

As someone who is minimally versed in these issues, another helpful poster (sorry, I don't remember who!) pointed out to me the 113K threshold. Assuming your DH's earnings hit that sometime last year, his FICA went down (not to nothing, as someone else stated - I still had a little bit taken out each check, but not the same amount as before the threshold). Now, it has gone back up and will stay there until the threshold is reached again. Last year was the first time that had ever happened to me, so yes, it shocked me when my first paycheck of the year was about $300 less than normal ($600 a month). Maybe this is the difference you are seeing?

And just because I can't resist putting in my 2 cents...Having been on both ends of the spectrums being discussed here (but far from "rich"), I think it is about perspective. I don't miss the 2% all that much, to be honest - yes, I sort of miss $600 a month (which is NOT only 2%, more like 6-7%) and I hope that no matter how much I ever make I always will. I want to appreciate every dollar I earn, spend, and save. But, I'm tightening the budget up and I don't know many people, regardless of if they make $20,000, $50,000, or $150,000 a year who wouldn't miss $200, $400, or $600 a month from their budgets (and I totally made those numbers up - they are not calculated from anywhere!). Even if it is simply discretionary spending money, it still requires a change in some habit that was formed while the cut was in effect.

I personally think people can vent or moan all they want - everyone had a 2% increase in the tax from where it was last year. I assume that if someone makes $180K, they are living a $180K lifestyle and their 2% makes a difference to them, just like mine does to me.

Of course people can moan all they want. Just don't be surprised when someone is wondering why. It'd be like someone complaining to a homeless person that their house is too small.

People probably shouldn't live so that a 2% difference in income is going to change their lifestyle anyway.

[ajh88]

Originally Posted by DisneyATlast

Of course people can moan all they want. Just don't be surprised when someone is wondering why. It'd be like someone complaining to a homeless person that their house is too small.

People probably shouldn't live so that a 2% difference in income is going to change their lifestyle anyway.

People do a lot of things they probably shouldn't do. Somehow I don't believe that the ONLY people commenting on the impact of the increase are ones who earn a "high income" (which I don't) - but again, maybe that links to the other thread. I guess when my income was around $50K, it was easy for me to look at someone making $150K and think, man, I'd have it so easy if I made that much money and they must never worry about money. In reality, I now know that I don't worry about money in the same way that I used to (like, can I pay my bills?), but I do still worry about it (like, am I saving enough for my DD's education, for my retirement, etc?).

But I will fundamentally agree with you and the OP - I wouldn't assume that a 2% "increase" in taxes would really make a catastrophic difference in the day to day lifestyle of a family earning between $150K and $200K a year.

[preschoolmom]

Originally Posted by DisneyATlast

Like they say though....rich people don't get rich by being generous.

Who says that?

[rsschneck]

Originally Posted by DisneyATlast

Like they say though....rich people don't get rich by being generous.

Wow! Very offensive statement.

[snarlingcoyote]

I wish the government had never given us a tax break, to be honest. I keep hearing people grumble about it as though they had never paid payroll taxes at this rate in their entire lives. It was supposed to be a short-term thing to stimulate the economy. What part of that did people miss?

[DisneyATlast]

Originally Posted by preschoolmom

Who says that?

I've heard it several times throughout my life, but I remember specifically the first time I heard it was several years ago when I was working as a waitress and there were certain "rich" customers who were notorious lousy tippers.

We'd all complain about this one rich man in particular who would come in regularly, get great service, and leave $1. I mentioned this on another thread awhile back. It's definitely not always true, but in general we would all agree that it was the average Joe's and the dirty construction workers who were the best tippers. There was another man who would break out his "tip calculator" every time. Yes, tips are based on the amount of the bill, but most people don't take that so literally that they break out a calculator if they order a soda instead of a water. Maybe people who are living in a way that 2% makes a big difference do though.

[DisneyATlast]

Originally Posted by rsschneck

Wow! Very offensive statement.

If it doesn't apply to you then I don't know how it would be offensive. Obviously not all or even most rich people are greedy, but if you are rich and greedy then I think it's a pretty fitting and funny saying.

[DisneyATlast]

Originally Posted by preschoolmom

Who says that?

After doing a quick Google search, I think it may have originated here. Not sure.

"Homer complains to Marge that everyone except the Simpson family are getting rich off the Internet, and he wants a piece of the action, despite knowing nothing about it. He launches his own dot-com company, Compu-Global-Hyper-Mega-Net, which is later bought out by Bill Gates and his goons. Unfortunately, Bill Gates' "buying out" procedure is having his goons destroy Homer's office and break all of his possessions, stating he "didn't get rich by writing a lot of cheques".