Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Why The Newly Reinstated Payroll Taxes Won't Drag Down The Economy
TBI ^ | 1-11-2013 | Lisa Mahapatra

Posted on 01/11/2013 9:08:10 AM PST by blam

Why The Newly Reinstated Payroll Taxes Won't Drag Down The Economy

Lisa Mahapatra
January 11, 2013

If you've already received your first paycheck of the year, then you've probably noticed that it was a teeny bit smaller than expected.

That's because when the temporary cut in payroll taxes expired at the end of last year, policymakers decided to let them stay that way as a part of the fiscal cliff tax deal, also known as "American Taxpayer Relief Act of 2012."

Now that these payroll taxes are back, the US government can expect to collect revenue equivalent to about 0.66% of GDP, according to a report by UBS' global macro team. That's a reduction of around $115 billion in the disposable incomes of American households.

So Americans are going to end up spending a little less than they would have, right?

Not really says UBS. Turns out, the payroll tax cut didn't really do much to increase spending in the first place.

"The negative consumption impact from the Social Security payroll tax rise should be far less than the estimated $115 billion hike in such taxes this year. That is because the temporary two percentage point Social Security tax rate cut in 2011-2012 was not a big consumption booster."

This keeps in line what's happened in the past—like in the 1960's, when the US government enacted a temporary income tax surcharge, spending only reduced by 35 cents on the dollar of the extra revenue.

The tax deal also enacts heavier taxes on higher income households, most significantly effecting those making $500,000 a year or more. But this will probably result in a drop in savings, not so much a reduction in spending, said the report.

(snip)

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: economy; recession; recovery; taxes

1 posted on 01/11/2013 9:08:18 AM PST by blam
[ Post Reply | Private Reply | View Replies]

To: blam

The first sentence gives away it is a propaganda piece.


2 posted on 01/11/2013 9:11:36 AM PST by Yogafist
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam
With this contribution it's clear that Lisa Mahapatra is a huge Obama lover. She so passionately tells us how the government taking more of OUR money from us is really harmless, just like when unemployment shot up and the corrupt MSM told us how it was good for us to spend more time with our family or to pursue that new hobby.

This is why people hate the propaganda machine known as the corrupt MSM.

3 posted on 01/11/2013 9:23:43 AM PST by Obadiah (It is when a people forget God, that tyrants forge their chains.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam
a teeny bit smaller

My ass. $200 a month.

4 posted on 01/11/2013 9:24:54 AM PST by numberonepal (First they came for Sarah, then they came for Herman.....)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

“...a teeny bit smaller...”

Spoken like a true limo-liberal who has never had to budget their own funds.

Would she turn down a 2% raise, because its ‘teeny’.

Can we call 2011’s 1.7% GDP growth ‘teeny’ now?


5 posted on 01/11/2013 9:36:38 AM PST by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

Why Removal of Your Right Pinkie Won’t Affect Your Manual Dexterity
Lisa Mahapatra
January 11, 2013

You’ve already noticed that your right pinkie was amputated this past week. So you’re going to have a little less functionality of your right hand than previous, right? Not really, says Dr. Herbert Gross of Harvard University. Turns out, according to Dr. Gross, your right pinkie really has no defined purpose and is expendable. In fact, you’ll soon realize how you never needed it and all activities of your daily life will proceed forward without hindrance. In fact, Dr. Gross’s recent research shows that people having only 4 fingers on their right hand demonstrate increased manual dexterity and higher levels of income.


6 posted on 01/11/2013 9:40:24 AM PST by BlueStateRightist (Think of how stupid the average person is, and realize half of them are stupider than that.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

It’s interesting how this was touted as being the savior to the economy when it was proposed and “no big deal” when rescinded.


7 posted on 01/11/2013 9:42:23 AM PST by Mygirlsmom (If bad plastic surgeons were banned, then Bob Costas' normal face would still be alive.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam
RE :”The tax deal also enacts heavier taxes on higher income households, most significantly effecting those making $500,000 a year or more. But this will probably result in a drop in savings, not so much a reduction in spending, said the report. “

It really doesnt matter what the cause but now Republicans need the economy to appear to tank, because their #1 talking point for years has been that the rich’=’job creators’ and ‘increasing taxes on the rich’= ‘unemployment’.

So the worst part of the taxes going up could be a side effect, if the economy appears to strengthen (for whatever reason) and Dems are believed more than Rs for another half decade.

8 posted on 01/11/2013 9:48:24 AM PST by sickoflibs (Losing to O is NO principle!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

apparently these bitter clingers didn’t get her memo:

Obama voters whining about their paychecks on Twitter:

https://twitter.com/search/realtime?q=paycheck+&src=typd

8 posted on Friday, January 11, 2013 10:42:35 AM by jimbo123
http://www.freerepublic.com/focus/f-news/2977090/posts


9 posted on 01/11/2013 10:08:16 AM PST by TurboZamboni (Looting the future to bribe the present)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

It is NOT 2%. It IS 32%.


10 posted on 01/11/2013 10:16:58 AM PST by csmusaret (I will give Obama credit for one thing- he is living proof that familiarity breeds contempt.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: numberonepal
a teeny bit smaller

My ass. $200 a month.

That's awesome. Your wages must be $10,000 a month. Congratulations. That must be really cool toward the end of November or first of December when you hit the annual ceiling for SS withholding and it looks like you got about a 4% to 5% raise for those last few paychecks of the year.

11 posted on 01/11/2013 10:41:44 AM PST by VRWCmember
[ Post Reply | Private Reply | To 4 | View Replies]

To: csmusaret
It is NOT 2%. It IS 32%

No, the social security payroll tax is not 32%. But the prior reduction of the social security payroll tax rate was 2%, and that 2% reduction has expired reverting the social security tax rate back up to its prior level - roughly 6%.

12 posted on 01/11/2013 10:45:30 AM PST by VRWCmember
[ Post Reply | Private Reply | To 10 | View Replies]

To: blam
Lisa failed. Allow me to assist, with a rewrite:

If you've already received your first paycheck of the year, then you've probably noticed that it was a teeny, tiny, miniscule itsy-bitsy insignificantly bit smaller than expected. in fact, you probably didn't notice. In fact, if you did notice, you are probably one of those evil Republicans, you know the sort -- the ones that like to deny women health care and swap Tic-Tacs for our birth control pills! You know, the ones who want nuclear-tippped supersonic guided-missile bullets in 1000000 round magazines in spraying machine guns that are strapped to infants foreheads!!!! God Republicans are evil!!!1!1!1 We should start killing conservatives!!!1!!!!1!1!!1!!!!1

13 posted on 01/11/2013 10:50:52 AM PST by Lazamataz (LAZ'S LAW: As an argument with liberals goes on, the probability of being called racist approaches 1)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

I want to say any money not in the feds’ hands is money better spent. But they would’ve spent it anyway. Then again, this hike will let them spend even more, so it still works out to be worse.


14 posted on 01/11/2013 10:58:30 AM PST by Tublecane
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

I’ll still go to restaurants but my tips will be less


15 posted on 01/11/2013 11:13:08 AM PST by hecht (america 9/11, Israel 24/7)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

2% of my salary is supposed to be a teeny bit? Respectfully, is Lisa retarded or just incapble of operating a calculator?

In my case the sum is a chunk of cash almost equal to my monthly mortgage. Said differently, Barry is making me pay 12 months of mortgage on 11 months of pay.

The 2% I will not be spending this year is allegedly more valuable for the Marxist Regime to put to better use? I think not.


16 posted on 01/11/2013 11:22:26 AM PST by Made In The USA (I'm not yelling, just... just talking enthusiastically..)
[ Post Reply | Private Reply | To 1 | View Replies]

To: VRWCmember

Raising a tax from 4.2% of pay to 6.2% of pay is an increase of 32%. Two percentage points is not nearly the same thing as a percentage. With math skills like this it is no wonder we can’t balance a budget.


17 posted on 01/11/2013 11:23:11 AM PST by csmusaret (I will give Obama credit for one thing- he is living proof that familiarity breeds contempt.)
[ Post Reply | Private Reply | To 12 | View Replies]

To: blam

This is the Obama regime’s “business” propaganda rag. (((YAWN)))


18 posted on 01/11/2013 11:24:15 AM PST by FlingWingFlyer (Impeach Obama Now.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: FlingWingFlyer

I don’t get a paycheck. So haven’t seen it yet.

Who is John Galt?


19 posted on 01/11/2013 11:59:33 AM PST by bicyclerepair ( >-> Zombies eat brains. >-> 50% of FL is safe.)
[ Post Reply | Private Reply | To 18 | View Replies]

To: BlueStateRightist

That’s a keeper BlueState!


20 posted on 01/11/2013 12:12:54 PM PST by DaxtonBrown (http://www.futurnamics.com/reid.php)
[ Post Reply | Private Reply | To 6 | View Replies]

To: blam

Baloney! They are dragging me down. I issued paychecks today for our tiny company and immediately had an employee in my face complaining that her check was $30 less than she expected. “That’s ObamaCare,” I replied. If you’d been watching the news you’d know that this was happeneing. Of course I got NO pay check, and neither did my husband. That is how we’ve kept the doors open this past year — taking NO PAY and just paying ourselves out of money that we’ve loaned the company in the past.

But the real shock was what Obama’s 99 weeks of unemployment has done to us. My payroll expenses are up $1000 every 2 weeks. This is because I still have people collecting unemployment who left months ago and are just collecting their bi-weekly check from the state, and it has unbalanced my ratio of workers:unemployed.


21 posted on 01/11/2013 12:23:24 PM PST by afraidfortherepublic
[ Post Reply | Private Reply | To 1 | View Replies]

To: csmusaret

I think you need to check your math,
2% raise on a 4.2% base is 47.6% increase.


22 posted on 01/11/2013 12:57:01 PM PST by edhawk
[ Post Reply | Private Reply | To 17 | View Replies]

To: afraidfortherepublic
Here is an email that my sister's husband (the president of the company) just sent his employees:

To all employees and affiliates of *** ****** ******, Inc.

I have had several people come to me and question why 'my paycheck is short'!

I was a little surprised at the question because I thought everyone knew that this was coming!
I am sorry to report that each one of you will notice today that you pay check is LESS!
The current administration has increased your personal taxes and it begins with this first paycheck of 2013 and will continue throughout the year!
If you didn’t think it was really coming, …..NOW YOU WILL……. because the “Tax the Rich” policies includes YOU!
The last 4 years of the white house “sidestepping politics” has reached your door step!
Up to now they have told you to “pay no attention to the man behind the curtain” everything will be SO MUCH BETTER. Well, here it is, are you feeling better?
To make matters worse, you can expect this to continue year after year with the outrageous spending of our government.
Many of us up to now were not directly affected.
We are fortunate to live in a prosperous city and state.
We have been self-sufficient and paid our own way.
But it is getting so out of control and you need to recognize that it is now affecting each one of you financially…..and you can expect it to continue!
Like being responsible for your own personal health, it is YOUR responsibility to demand accountability of our politicians and for you to make prudent political decisions in the future.
Choose Wisely as the future is here!

23 posted on 01/11/2013 12:58:42 PM PST by blam
[ Post Reply | Private Reply | To 21 | View Replies]

To: afraidfortherepublic
BTW....my reply to her email was:

Who Is John Galt?

24 posted on 01/11/2013 1:02:05 PM PST by blam
[ Post Reply | Private Reply | To 21 | View Replies]

To: edhawk

4.2 plus 2% = 4.2857142

4.2 plus 32% = 6.1764705

I think you need to check YOUR math.


25 posted on 01/11/2013 1:05:21 PM PST by csmusaret (I will give Obama credit for one thing- he is living proof that familiarity breeds contempt.)
[ Post Reply | Private Reply | To 22 | View Replies]

To: blam
"The negative consumption impact from the Social Security payroll tax rise should be far less than the estimated $115 billion hike in such taxes this year. That is because the temporary two percentage point Social Security tax rate cut in 2011-2012 was not a big consumption booster."

So I guess then the American people just wasted the tax cut on frivolous things like savings and paying down debt. You were supposed to spend it on Brawndo because it's got electrolytes.

26 posted on 01/11/2013 1:59:17 PM PST by KarlInOhio (Choose one: the yellow and black flag of the Tea Party or the white flag of the Republican Party.)
[ Post Reply | Private Reply | To 1 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson