January 7, 2013

The Real Reason Your Paycheck is Lower

Last Friday, #WhyMyPaycheckIsLessThisWeek began trending on Twitter.  Tweeters were quick to blame President Obama, free birth control, immigrants, and a number of other things for the deductions they saw in their paychecks last week, following the “fiscal cliff”.

Rush Limbaugh ranted that paychecks declined in order to pay for “another Obama vacation,” and similar (outrageous) complaints have been made by other conservatives with large followings as well.

None of these are true.  In reality, the decrease in paychecks is due to the expiration of the payroll tax holiday, which went into affect on January 1st. According to Working America, the payroll tax cut expiration was, among other things, the result of “the lack of attention to job-creating policies that help workers pay their bills, and devotion of Republicans and some Democrats to ‘cutting spending’ while protecting the interests of their wealthy and corporate sponsors.”

Here’s a bit more background, based on actual facts, not accusations:

-The payroll tax cut lowered payroll taxes from 6.2% to 4.2%, and went into effect in 2010. It was set to expire in December 2011, but after a vote was extended until January 1st, 2013.

-As the new year approached, the “Fiscal Cliff” was created in order to set a deadline about how to offset the national debt.

-President Obama, in his initial offer to Boehner, wanted to extend the payroll tax holiday, however he was rejected because the offer did not extend Bush tax cuts to the wealthiest 2% of Americans. During the series of concessions and offers that took place during the fiscal cliff negotiations, the payroll tax holiday extension was dropped, as a concession by President Obama to House Republicans.

-Regardless, experts predicted the concession of the payroll tax holiday extension as early as September 2012, before the country knew who our next President would be.

source: Wonkblog