January 6, 2013. Retrieved online January 7, 2013 from Brook Stockberger, Las Cruces Sun-News
LAS CRUCES — Starting immediately, your work paycheck will be lighter.
Two years ago, the amount of money the government took out of your paycheck to fund Social Security was reduced by 2 percent in an effort to give the American consumer a little more money in his or her take-home pay in hopes that consumer would then spend more and help stimulate the economy.
That two-year tax holiday came to an end with the start of 2013 and the amount of payroll tax deduced from your paycheck has risen back up by 2 percent, from 4.2 percent to 6.2 percent.
CNNMoney reports that, workers earning the national average salary of $41,000 will receive $32 less on every biweekly paycheck. Business owners say their lower wage employees will feel it most.
Jim Peach, who teaches economics and international business at New Mexico State University thinks the effect of the payroll tax readjustment will be minimal.
“It’s going to have a modest downward effect on consumption, but not anything really severe,” Peach said. “It’s not like it’s a huge kind of tax increase. (The effect) will show up mainly in discretionary spending.”
The amount of Social Security payroll tax taken out of paychecks has risen from 4.2% to 6.2%. Here is an idea of what that might mean for Americans’ take-home pay. Numbers are approximate:
Salary — Increase per year
- $25,000 — $500
- $50,000 — $1,000
- $75,000 — $1,500
- $100,000 — $2,000
Read the Las Cruces Sun-News article