John Baer: How's your paycheck, right about now?

Posted: January 08, 2013

HERE'S A QUESTION: Have you seen your first 2013 paycheck (if you're lucky enough to have one)?

Notice anything? Like, less money in your take-home pay?

And - be honest - did you know that was coming? Or did you think that since you don't make $400,000, you were held harmless when we didn't dive off the "fiscal cliff"?

"I think people will be surprised," says veteran economist David Kautter, managing director of American University's Kogod Tax Center. "It's one thing to listen to debates about taxes and spending, but it's not real until it impacts you."

You now may know that what happened to your paycheck is part of the deal between Congress and the White House.

Understandable if you missed all the details.

After all, while President Obama touted saving the "middle class" from higher taxes by raising taxes on the rich, he failed to mention that almost everybody else also takes a hit that is, no matter how you couch it, an increase in taxes.

He said your tax rate won't go up. What he didn't say is that your taxes will.

Oh, for a straight-talking pol at any level of government!

You're feeling this new hit because a two-year reprieve from paying 6.2 percent of your salary in Social Security taxes ended as part of the deal.

In 2011 and 2012, you (we) paid 4.2 percent; so, reverting to the prior number means paying 2 percent more this year than last.

If your gross biweekly pay is $1,500 ($39,000 a year), your check is $30 lighter. If your weekly gross is $1,154 ($60,000 a year) your check is $23 lighter.

And so on.

But the annual impact, when factoring other tax changes and deductions, plus all sources of income other than earnings - capital gains, dividends, pensions, etc. - varies, according to Roberton Williams, a senior fellow at the nonpartisan, Washington-based Tax Policy Center.

Most taxpayers making between $40,000 and $50,000 will pay $579 more in 2013, and most making between $75,000 and $100,000 will pay $1,206 more, according to center calculations.

These numbers aren't starvation-makers, I'll grant you. But they'll strip many families of a few niceties and force cutbacks on many others.

And they got little attention because of bad reporting by national media focused more on the politics of the deal than its impact on real people, and because of a president and a group of leaders who just refuse to level with us.

About the sole solace is that members of Congress get hit, too.

Since 1984, they, the president, the vice president and federal judges have paid into Social Security just like the rest of us.

And the fiscal deal kiboshed Congress' annual automatic pay raise.

But don't feel bad for your public servants; they each still make $174,000 - more than three times the nation's median household income of $52,762.

And Pennsylvania state lawmakers got their automatic raise, hiking base salaries to $83,802 - more than twice Philly's median household income of $36,957.

There are a few ways to look at all this.

View your pay cut as your part of a national sacrifice to help the economy, and hope the fiscal deal leads to better days ahead.

See it as the tax center's Williams does: You got gifts from the government in 2011 and 2012; you're not getting a gift in 2013.

Or look at what you pay your elected servants and just how worth it they all are.

Then look at giveaways in the fiscal deal such as hundreds of millions in tax breaks to Hollywood, rum producers, NASCAR and asparagus growers (I am not making this up), all of whom clearly have great lobbyists.

So here's a question: Whaddaya gonna do? Whine, run for office or hire a lobbyist?


Email: baerj@phillynews.com

Blog: philly.com/BaerGrowls

Columns: philly.com/JohnBaer

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