Payroll tax increase will hurt everyone's paycheck
POSTED: Thursday, January 10, 2013 - 10:29pm
UPDATED: Thursday, January 10, 2013 - 10:33pm
El Paso, TX — If you haven't noticed it yet,you soon will. Your paycheck is about to get a lot smaller.
Most El Pasoans will see a deduction of anywhere from $40 to a $100 from their next paycheck. Congress reached an agreement to avoid the fiscal cliff, but social security tax cuts still expired, and that means payroll taxes are going up 2%.
A 2% increase is reverting back to the payroll tax as it was in 2009. Congress passed a social security payroll tax holiday back then, but it's expired. More money will now be de deducted from our paychecks, called FICA, federal insurance contributions act found on your paycheck.
Newly sworn in Congressman Beto O'Rourke just got back from D.C. where he jumped right into fiscal negotiations.
"It's a tough time to take a 2% hit on your paycheck at the same time we were paying for this out of the U.S. Treasury so it was costing the U.S. treasury about 93 million dollars a year to do this social security tax out."
To understand the tax increase take a family that makes $50,000 a year, an amount very close to the National median, they can now expect to pay another $1000 a year in taxes.
Financial advisor Henry Gallardo says day to day, people will have to change their spending habits to make up for the smaller paychecks.
"For some people it might simply be as easy as going out to eat less and that could be one time a week, that could be a couple times a week, it just depends on where we eat and how much we eat. For others it might be shifting your spending habits as it pertains to that morning drive to Starbucks.
Congressman O'Rourke says he can't do anything to change the tax, rather he says getting more El Pasoans to work and in higher paying jobs is his focus, to offset the rise in taxes.
“Cutting the long weight times at the bridges produces more economic activity and growth in El Paso. It's making sure more small businesses here have better opportunities at Fort Bliss and its making sure that on a national scale we really get this country's economy going again," said O'Rourke.
Congressman O'Rourke says that in March when fiscal talks continue, some kind of comprehensive tax code reform could be on the table and that would bring more tax relief to working class El Pasoans and those that need it the most.