Tax Changes

Possibly you are the only one gullible enough to think that people pay attention to notices you send them.

Before I was a University Professor, I had a 24 year career as a self-employed Information Systems Consultant. It didn't matter what you were willing to pay me, I would not work on a payroll system. Payroll is not worth the aggravation when withholding changes up or down by even a penny.

Dick

I'm not a knee-jerk "blame the media" type, but in this case they deserve a lot of blame. They got so caught up in the Cliff that they got sloppy and most of the time lumped all tax increases together. Rarely did I hear anyone peel off the end of the payroll tax holiday and point out that extending it wasn't being proposed by either side.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Maybe I get my news from different media (mostly NPR), but I thought they were quite careful to mention that the fiscal cliff negotiation DID include an increase in the payroll tax. Financial programs have mentioned it frequently.

I'm a NPR fan myself, but I have to say, I'd not heard anyone talk about how the average household (the $50K family) would see their payroll tax rise 47.6%. 4.2 > 6.2 is an increase of 47.6%.

No one wanted to use that spin.

True. I heard them talking about take-home pay dropping by 2%. And unless you're trying to be alarmist about it, this is a more useful statistic -- how much you get to keep is what matters.

I heard NPR say, on more than one occasion, that repeal of the payroll tax holiday would increase a family's tax by, on the average, $1,000 each year. I remember thinking that they should have said (or at least added) that comes out to $20 each week, which is a lot easier to assimilate, it seems to me.

___ Stu

So from worst hyperbole to minimal alarmism;

Payroll tax rises 47.6% Ave family tax rises $1000/yr Ave family tax rises $20/wk Payroll tax goes up 2%

Same math, different spins....

maybe so, Paul. BGTW, good to see you again.

My stance on this is that I will NOT respond to clients' employees queries. I simply refer any such caller to his employer. It is not my job to apologize for the actions of those rascals in Washington.

ChEAr$, Harlan Lunsford, EA in LA

My stance on this first of all is that I do NOT respond to calls from clients' employees. This is not my job. Plus I would never backdate any document or payroll.

This is a common problem when people talk about percentage changes in something that's already a percentage. When they say something that was X% increased by Y%, do they mean that it changed from X% to (X+Y)%, or it changed from X% to (X*(1+Y/100))%?

Usually, the context and magnitude of Y make it clear which they mean. And rhetorical objectives govern your choice of which to use in an argument.

"Harlan Lunsford, EA in LA" wrote

Generally we only talk to the person we're supposed to be dealing with, most often the owner.

We never do that.

It's tough enough to keep the truths straight, let alone the lies.

The payroll tax *rate* increased at a rate of 47.6%. It's like the difference between speed and acceleration.

Here in CA we have a new tax on retail sales of certain lumber products, where there was none before. So, using this particular type of calculation, you could say the tax went up by infinity percent. How is that meaningful or helpful?

To further put this in context, consider two things:

1) the "real" payroll tax has been 10.4% for the past two years, since the employer share is really the employee's money being paid totally on their behalf by the employer. Comparing 10.4% to 12.4% provides a number that is not so misleading as comparing 4.2% to 6.2%. 2) This is the first payroll tax increase in 22 years, and it is only an "increase" because there was a temporary 2-year reduction. Previously, from the 1950's through the 1980's, the payroll tax rate used to increase monotonically every 3-5 years.

Complaining about this (which is what the OP was about) is like going to a store, getting a new customer discount, and then upon returning, complaining that the prices have gone up. Somewhat childish, IMO.

When the previous administration sent everyone a one-time rebate check some years back, why wasn't there a hue and cry about how taxes were being raised the following year with no rebate check? The rebate check, the stimulus credit+reduced withholding, and the payroll tax holiday were all just different ways of doing the same thing. I'd say of the three, the payroll holiday was probably the simplest to understand, cheapest to implement, and most effective (i.e. the smartest).