Employee payroll taxes increase 2 percent
by Staff Reports
Beginning this week, U.S. employees will take home 2 percent less in pay.
Although Congress did not increase income taxes for most Americans under the "fiscal cliff" deal reached Tuesday, lawmakers did allow a two-year reduction in Social Security payroll taxes to expire.
In 2010, the federal government temporarily reduced the payroll tax from 6.2 percent to 4.2 percent as part of measures to respond to a struggling economy.
The rate now returns to 6.2 percent, an increase that equates to about $50 more per month for someone earning $30,000 per year. A person earning $113,700, the highest wage amount to which Social Security taxes are applied, will pay an extra $189.50 per month.
The legislation, known as the "American Taxpayer Relief Act of 2012," raises income taxes on households making $450,000 or more and individuals who make $400,000 or more but preserves current income tax rates for most people in the U.S.
The legislation also delays automatic spending cuts for two months, extends unemployment insurance benefits for one year and temporarily extends the Farm Bill. Provisions of the legislation apply retroactively to Dec. 31.
Republican U.S. Rep. Virginia Foxx of Foscoe voted against a motion in the U.S. House of Representatives to concur with Senate amendments to the bill, which passed the House 257-167.
"Since May, House Republicans have acted in good faith to generate ideas to avert the fiscal cliff," Foxx said in a statement Tuesday. "Our balanced proposals have been designed to protect American jobs and begin the hard work of overcoming America's debt crisis. Thus, I could not in good conscience vote for a Senate 'deal' that delays savings while expanding spending subsidies and ignoring the real drivers of debt."
Foxx blamed the Senate for foot-dragging on the bill, which senators received from the House Aug. 31, 2012.
"The proposal they finalized in the early hours of Jan. 1, though deeply flawed, does clear up uncertainty for families and small businesses trying to prepare for the future. I am glad for that, but feel for the many job creators who will face a higher tax burden in yet another year of tepid economic recovery," she said.
North Carolina Sens. Kay Hagan, a Democrat, and Richard Burr, a Republican, both voted in favor of the bill, which passed the Senate 89-8.
"While I believe it is unacceptable that Washington has once again waited until the 11th hour to find a solution, and though I would have preferred a comprehensive, balanced solution to avert the fiscal cliff and begin reducing the deficit, I voted for the plan put forth tonight so that we can stop a tax hike on middle class families in North Carolina," Hagan said in a statement Tuesday.
"We still have issues surrounding the fiscal cliff that we must resolve, including the defense cuts that will have an outsized impact in North Carolina and our skyrocketing federal debt," the senator said.
Burr also weighed in via a statement released Tuesday.
"While the deal we voted on tonight was far from perfect and not as comprehensive as I had hoped, I supported this proposal because it protects 99 percent of Americans from increased taxes, it provides permanent certainty on the estate tax and Alternative Minimum Tax, it provides one year of protection for the reimbursement of doctors, it extends unemployment insurance for one year and the net result of the deal provides over $600 billion that should be used to pay down our national debt," Burr said.