What am I missing with the payroll tax increase?

[Suz D]

Sorry, I posted this on another thread, when I really meant to start a new thread.

Everyone has been talking about the payroll tax increase and how it will impact their budgets in the hundreds of $$ a month. Isn't the increase 2%? So if your payroll taxes increase by $300/month doesn't that mean that you are making $15,000/month or $180,000/yr? Is my "getting older brain" having a problem with the math or is $180,000/yr income a hardship?

I'm not trying to be snarky, I honestly think my math is off because most people who are complaining about the increase are talking about several hundred $$ a month and I personally would find it easy to cut several hundred $$ a month if I was making $180,000/year.

Or are people talking about something else?

[comicguy]

I think often people are talking about dual income famlies

2% from each person's check

[Cheshire Figment]

Yes. I agree. I used the same example, but for $200/month or $120,000/year.

And to expand on your point, the SS maximum is currently based on the first $113,700 of income per year, so people with incomes higher than that will not be affected over the loing term.

[allyphoe]

Two percent for two people is still two percent. And yes, to get a $300 / month increase, whatever combination of paychecks that extra $300 is coming out of would work out to $180,000 a year.

High cost of living area, maybe.

[Suz D]

Originally Posted by comicguy

I think often people are talking about dual income famlies

2% from each person's check

But isn't 2% of the household income the same thing as 2% of each check? If one person works and makes $100,000 the witholding would increase by $2000/year (2% of 100,000). If two people work and both make $50,000 then the witholding would increase by $1000.00/person (2% of 50,000) or $2000/year. Again, please correct me if I'm wrong.

Our income is reduced by $130.00/month. We're a one income family. We live frugally enough that although that's a chunk of change, we'll reduce the amount we save (which is unfortunate), but we don't have to change our lifestyle.

[Marionnette]

Originally Posted by comicguy

I think often people are talking about dual income famlies

2% from each person's check

That would still be a combined income of $180K.

[Marionnette]

I'm just guessing here, but I think that many of the people who are saying that they are down $300 or more are looking at more than just changes due to the SS tax holiday coming to an end. I have a feeling that many of them have higher health insurance costs coming out of the pay in addition to the SS tax.

[DisneyATlast]

Are you surprised that people who make the most are the ones complaining?

[jmac323]

So my check was around $60 less than it normally is this time. Times that by 2 because I get paid twice a month and that's $120.

My husband's check vary depending on what jobs he's doing, however we typically gross around the same amount every year so I figured his amount would be similar to mine making us minus $240 a month. That's a large chunk to be quite honest, even though we are dual income making around $150k a year.

[comicguy]

Originally Posted by Marionnette

That would still be a combined income of $180K.

Yes you are right it is still a combined 180,000 butif it was one person check then only the first 115,00 or so is taxed w/ the 2%

So if each spouse made what ever amount combined to 180,000 but neither one exceeded the 115,00 threshold then that amount of $ could be correct, I also did not take into consideration of higher cost of health care as well as slight tax bracket changes.

So basicaaly I am saying is with all of the combonation of the above it is quite possible to attain the orginal figure.

Hope I explaine that a bit clearer than mu original response, reading back over it now it seems as clear as mud lol

[Judyat]

So all those individuals who make over 113,000 have nothing taken out once they reach that level. Another big plus for them.

[Suz D]

Originally Posted by Marionnette

I'm just guessing here, but I think that many of the people who are saying that they are down $300 or more are looking at more than just changes due to the SS tax holiday coming to an end. I have a feeling that many of them have higher health insurance costs coming out of the pay in addition to the SS tax.

This could very well be the case.

[Suz D]

Originally Posted by DisneyATlast

Are you surprised that people who make the most are the ones complaining?

I am, and I guess that's why I thought I must be missing something.

[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

[cmwade77]

We lucked out and are making 20% more before taxes this year, so this still means an 18% increase for us.

But 2% os not the end of the world. DW and I line on so cal and have been living off of about $44,000 a year before taxes.

While it would have been annoying, we could have lived with the 2% decrease. So, I have a really hard time understanding how 2% of 180,000 would be a hardship, unless you had a family with something like 10 kids. Yes, if you are already living paycheck to paycheck, you might need to make a few cuts. But if you make $180k a year and are living paycheck to paycheck, you might need some budgeting help.

My parents have three kids at home and live off of about $10,000 a year and still are able to put money into savings. We do of course help them where we can, but they do well without our help.

Now, their house is modest, but paid in full, as are their cars. The house is well insulated, which keeps utilities down. Instead of cable, we share our Hulu plus with them and they have Netflix, etc. that they are able to watch.

They have no landline, but are on our family plan as it is only about $5 extra per line.

They do live in a Highly agricultural area and several of the farmers will bring excess
Crops to the neighbors, including them. So, this helps a little. But overall, there is so little competition where they live that prices are high for everything and drives up the cost of living. So, my point is if they can do it, anyone can. We just might need to reexamine what is really a necessity vs. a want and which of our wants should have the highest priority.

This is of course oversimplified as to how they do it, I am just using it as an example of why I don't understand how 2% of $180,000 can have that much of an impact.

And yes those who make more money certainly have a right to enjoy it. I simply question budgets if 2% will make that much of a difference. Ideally, you should be saving at least 10%. So, if the 2% will hurt that much, cut back to saving 8%. This negates the 2% decrease.