Increase in Payroll Taxes Worries Taxpayers

Last updated on January 15, 2013

Those who received a lighter paycheck this year and those who expected a decrease in pay because of an increase in payroll taxes are sharing their concerns on and offline. Families earning $50,000 a year will see around $40 less in their monthly paychecks. Though the amount may not seem significant, it can affect the way taxpayers spend money. Taxpayers are now reevaluting their spending, thinking about whether or not to spend on certain luxuries, in order to save more.

On Twitter, #WhyIsMyPaycheckLessThisWeek is a trending topic. Everyone is talking about what less money will mean to them. Cutting back on spending seems to be common in most conversations.

The payroll tax increased occurred because of the expiration of the tax cut brought by the Bush administration. It was extended by the Obama administration in 2010 for two years. Now that it has expired, taxpayers will now pay more in Social Security taxes. In a recovering economy, taxpayers are already careful about their spending. Increased payroll taxes seem to reinforce re-consideration of consumer spending habits.

The talk of the fiscal cliff that followed the New Year has also contributed to taxpayers thinking more about taxes and their spending. Only time will tell how the increase in taxes will affect American taxpayers, the economy, and politics.