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Mon Jan 14, 2013, 03:05 PM

Some clarification for those who post about their paycheck going down.

Ok so Jan. 1 has come and gone, and now you are looking at a paycheck that is lower. Before you get upset and jump up and down how Obama has screwed you, do me a favor and take a long hard look at that paycheck, not just the bottom line of what you take home.

If you look at your last paycheck from last year and your first paycheck from this year, what are the differences in the federal withholdings? There is only 1 change: Social Security (assuming you make under 400K, this post does not apply to you).

If you live in one of the 9 states that does not have income tax, that change in Social Security change should be the only change to your paycheck, and will equal 2% of your pay before taxes.

That said, now look at the rest of your paycheck. Does your state withhold taxes? I pay two state taxes, as I live in one, and work in another. So I have to pay my home-state and local income taxes and my work-state family leave, disability, unemployment, and workforce development taxes. All of these, with the exception of my home-state and local income taxes have an annual maximum. So come mid-year when I have contributed the annual maximum, they no longer withhold these taxes. But come Jan 1, I am responsible for paying them again. So, do you have any state taxes that you were not paying in Dec, that you are now paying in Jan? Perhaps so.

Also, look at your retirement (401K), medical, or life insurance withholdings. Some of these may have annual maximums as well, so come Jan 1, you will have to start contributing to them again.

For me, my take home dropped about $65 a week. However less than a third of that was Social Security, the rest of the deductions are the state taxes that I must contribute to every year, a good chunk of which have annual maximums.

Remember, this is exactly what you were having withheld 2 years ago. If you just entered the workforce within the last two years, I'm sorry, but those are the breaks. You were not having the proper amount of your pay withheld for your Social Security benefits in the first place.

Here is a breakdown of contributions by annual salary for only the Social Security increase.

Annual Salary and additional 2% Social Security withholdings per week.
15,000 = $5.77
20,000 = $7.69
25,000 = $9.61
30,000 = $11.54
35,000 = $13.46
40,000 = $15.38
45,000 = $17.31
50,000 = $19.23
55,000 = $21.15
60,000 = $23.07
65,000 = $25.00
70,000 = $26.92
75,000 = $28.85
80,000 = $30.77
85,000 = $32.69

So if you make $35,000 a year and your paycheck went down more than $13.46 when compared to your paycheck in the last week of December, than you should look to your state taxes or personal withholdings.

If you are still upset, I'm sorry, but I hope this helps direct your anger in the right direction. But remember, it was a holiday, and holidays do not last forever. Otherwise we would call them "everydays".

36 replies, 3781 views

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Arrow 36 replies Author Time Post
Reply Some clarification for those who post about their paycheck going down. (Original post)
Glassunion Jan 2013 OP
Journeyman Jan 2013 #1
Glassunion Jan 2013 #2
freshwest Jan 2013 #3
sinkingfeeling Jan 2013 #4
freshwest Jan 2013 #6
yardwork Jan 2013 #22
freshwest Jan 2013 #23
yardwork Jan 2013 #24
freshwest Jan 2013 #25
sinkingfeeling Jan 2013 #34
Fantastic Anarchist Jan 2013 #36
dems_rightnow Jan 2013 #20
sinkingfeeling Jan 2013 #33
Glassunion Jan 2013 #5
freshwest Jan 2013 #7
whopis01 Jan 2013 #29
cthulu2016 Jan 2013 #8
Glassunion Jan 2013 #11
jtuck004 Jan 2013 #9
Glassunion Jan 2013 #10
ErikJ Jan 2013 #13
Glassunion Jan 2013 #14
ErikJ Jan 2013 #15
Glassunion Jan 2013 #16
ErikJ Jan 2013 #17
Glassunion Jan 2013 #21
ErikJ Jan 2013 #12
johnp3907 Jan 2013 #18
Historic NY Jan 2013 #26
WCGreen Jan 2013 #19
Still Sensible Jan 2013 #27
Glassunion Jan 2013 #31
Romulox Jan 2013 #35
dkf Jan 2013 #28
Glassunion Jan 2013 #32
Scurrilous Jan 2013 #30

Response to Glassunion (Original post)

Mon Jan 14, 2013, 03:14 PM

1. Very good job summarizing the effect January 1 has on so many paychecks. . .

and one of the better examples I've seen of the impact the end of the Social Security "holiday" will have on individual paychecks.

Love the summation, as well: Holidays don't last forever. Otherwise we'd call them "everydays."

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Response to Journeyman (Reply #1)

Mon Jan 14, 2013, 03:33 PM

2. Thanks.

There has been a lot of confusion and mis-information floating around that I felt needed clearing up.

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 03:56 PM

3. Are these the same rates as during the Reagan years? It seemed more, plus IRS was higher, too.

I finally threw out my old paystubs and IRS records from those years, and was in the middle of the list there. Otherwise I'd have the exact figures for you.

I turned down overtime to keep out of a higher tax rate - 30% (?). These figures seem lower than what I paid, even considering that the list is only FICA.

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Response to freshwest (Reply #3)

Mon Jan 14, 2013, 04:06 PM

4. I recently found my 1977 tax booklet and return. I paid a 34% tax federal rate

on the amount I made that year in excess of $18,200. I paid taxes on something like $19,067. That was filed as a single person and the exemption was like $35.

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Response to sinkingfeeling (Reply #4)

Mon Jan 14, 2013, 04:18 PM

6. Thanks, that sounds similiar. At any rate, I managed to live on it.

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Response to freshwest (Reply #6)

Mon Jan 14, 2013, 09:47 PM

22. The problem is that prices are so much higher now.

Taxes are lower, but people's real income is much lower compared to the cost of everything. That's why people feel so squeezed. That's why it's so easy for right-wing radio to convince people that this must be the fault of the Democrats.

We need a radical socialist labor movement to restore balance. We need to reduce the obscene incomes of the top 1% and let the salaries of the bottom 80% rise.

We need to take a good hard look at Wall Street and ask ourselves if this is really the way that we want to run the country and the world.

/end rant

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Response to yardwork (Reply #22)

Mon Jan 14, 2013, 09:51 PM

23. We need to convince the 60 million and their families who voted for Romney.

Or simply show up and vote them out of their minds. Wait, they're already out of their minds. Work with me here.

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Response to freshwest (Reply #23)

Mon Jan 14, 2013, 09:54 PM

24. What I don't understand is why so many people go along with being brainwashed.

This seems so obvious to me. I understand why many people don't march in the streets and visibly protest. They're afraid of losing their jobs. But to actually AGREE with our oppressors? I don't get it.

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Response to yardwork (Reply #24)

Mon Jan 14, 2013, 10:12 PM

25. A substantial number of baggers have jobs from privatization.

As that sector continues to build, there will be no calls for socialism or unions from those workers or their employers. The ones I've argued with see liberals and the public sector as their oppressors and denying them a chance to improve their lot in life. And they have a point, when you look from their angle.

Often they are less educated and skilled than those in union and public sector employment. If their boss can get the job carved up so it fits their skill level, while he takes the bulk of the profit, they are loyal to that employer above any other considerations.

They see themselves as victims in the competition with the public sector and organized labor. The innate socialism of the commons is an evil to them. You can't undo an entire generation with a lack of education on the labor movement and their philosophy of self-interest, their libertarian beliefs.

They consider public functions as costing them money by taxing them, giving that money to those who they see as elitist, with benefits, steady work and retirement as public workers and unions often have. It is a matter of envy and resentment.

They are not brainwashed, they are the survivors of Reaganomics. And they see people like you and me, Democrats, as frivolous, entitled snobs. That's not my view of the world, but that is where they are coming from as far as I can see.

So we must find common ground, and it's hard since they feel desperate and won't give an inch. IDK how to persuade them when they get a direct reward from what they are doing.

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Response to yardwork (Reply #22)

Tue Jan 15, 2013, 09:36 AM

34. Not compared to income. Here's the 1st. paragraph from the 1977 Census on

Household Incomes Report.


"The median money income of households in the United States rose to $13,550 in 1977, a 7-percent increase from the 1976 median income of $12,690. However, almost all of this increase was eroded by rising prices. After adjusting for the 6.5 percent rise in prices between 1976 and 1977, the 1977 median in terms of constant dollars did not show a significant change from the 1976 median."

http://www2.census.gov/prod2/popscan/p60-117.pdf

Mortgage rates averaged 8.9% on a 30 year. Per capita income was a whole $5,730. The per capita income in 2011 was $26,708 or 4.66 times more. Based on that and prices of things in 1977, a gallon of milk should now cost $7.83! (Was $1.68 in '77) and a dozen eggs should be $3.82 and a gallon of gas should be $3.02, exactly what it's selling for here!

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Response to yardwork (Reply #22)

Tue Jan 15, 2013, 02:06 PM

36. We do need a radical socialist movement.

Quoted for truth!

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Response to sinkingfeeling (Reply #4)

Mon Jan 14, 2013, 08:39 PM

20. The personal exemption was $750 in 1977

Not like $35.

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Response to dems_rightnow (Reply #20)

Tue Jan 15, 2013, 09:09 AM

33. You're correct. The $35 times number of dependents was a temporary general tax

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Response to freshwest (Reply #3)

Mon Jan 14, 2013, 04:07 PM

5. During Reagan the FICA withholdings were lower.

Now these are combined rates, where the employee and employer split the contribution.

1980 10.16%
1981 10.7%
1982 10.8%
1983 10.8%
1984 11.4%
1985 11.4%
1986 11.4%
1987 11.4%
1988 12.12%
1989 12.12%
1990 12.4%
1991 12.4%
1992 12.4%
1993 12.4%
1994 12.4%
1995 12.4%
1996 12.4%
1997 12.4%
1998 12.4%
1999 12.4%
2000 12.4%
2001 12.4%
2002 12.4%
2003 12.4%
2004 12.4%
2005 12.4%
2006 12.4%
2007 12.4%
2008 12.4%
2009 12.4%
2010 12.4%
2011 10.4% (holiday started)
2012 10.4%
2013 12.4% (holiday ended)

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Response to Glassunion (Reply #5)

Mon Jan 14, 2013, 04:19 PM

7. Thanks.

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Response to freshwest (Reply #3)

Mon Jan 14, 2013, 11:08 PM

29. They are higher than during the Reagan years.

OASDI was in the mid 5% range during the Reagan years. Technically it has been 6.2% since 1990 - but it was temporarily reduced by 2% from 2010 until now.


http://www.ssa.gov/oact/progdata/taxRates.html

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 04:53 PM

8. See also: The cost of your next prescription

I have cut back on a medication in January/February when the price to me increased tenfold when the new year's annual deductible kicked in.

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Response to cthulu2016 (Reply #8)

Mon Jan 14, 2013, 05:23 PM

11. I'm sorry to hear that.

I'm lucky where I work, we do not have deductables on our prescritions. I did not even think of that.

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 05:10 PM

9. It sure seems like it was easier for them to let the holiday expire than it was to hold the banks


accountable for stealing much of the rest of the missing money. I say that because the people who make the laws and those who have the most money seem to be doing better than at least 100 million Americans. Many of whom will live and die in poverty never knowing any other opportunity because 1% of the country is taking it for profit.

If they would keep the tyrants from taking more than their share and enabling them to steal from the rest of us and not pay their bills this whole SS conflict over who gets the money would just disappear.

ymmv...

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Response to jtuck004 (Reply #9)

Mon Jan 14, 2013, 05:22 PM

10. I hear you.

I was just getting frustrated at the whole "OH NOES THE PRESIDENTS IS TAKING MY MONEEEZ!" posts.

We were paying that rate for 20 years (my entire working life) and when it goes back to normal people freak out. It should have never been lowered in the first place.

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Response to Glassunion (Reply #10)

Mon Jan 14, 2013, 05:57 PM

13. Actually St. Raygun doubled it in 1983

The Greenspan commission? doubled SS tax to compensate for the baby boomer retirement. I believe it was supposed to go back to normal after they started retiring. But the GOP has quite enjoyed borrowing from the SS trustfund to compensate for their tax cuts on the rich.

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Response to ErikJ (Reply #13)

Mon Jan 14, 2013, 05:59 PM

14. SS tax did not double under his presidency.

It went from 10.8% to 11.4% total.

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Response to Glassunion (Reply #14)

Mon Jan 14, 2013, 07:12 PM

15. 1980/8% to 1990/15.3%

Reagan did it gradually. In 1980 they were 8.1% to 15.3% by 1990. They were intended to last for 30 years for the baby boom generation.

http://bradfordtaxinstitute.com/Free_Resources/Self-Employment-Tax-Rate.aspx

How the Wealthy Took Tax Cuts and Why They Now Want to Clip Social Security.
Saturday, December 1st, 2012
Kevin Drum, a political columnist for Mother Jones, writes a brief explanation why Republicans are demanding Social Security be ‘on the table’ for spending cuts. Essentially, Drum explains, Social Security payroll taxes, which are paid primarily by labor and the middle class, went into surplus under Clinton and that allowed for lower income taxes on the wealthy. Going forward income taxes will need to be raised to continue making Social Security solvent because Social Security surpluses were drained by the Bush Tax cuts. So the wealthy now want to renege on replenishing the Social Security trust funds.

Charles Krauthammer is upset that Dick Durbin says Social Security is off the table in the fiscal cliff negotiations because it doesn’t add to the deficit:

This is absurd. In 2012, Social Security adds $165 billion to the deficit. Democrats pretend that Social Security is covered through 2033 by its trust fund. Except that the trust fund is a fiction, a mere “bookkeeping” device, as the Office of Management and Budget itself has written. The trust fund’s IOUs “do not consist of real economic assets that can be drawn down in the future to fund benefits.” Future benefits “will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

What Krauthammer means is that as Social Security draws down its trust fund, it sells bonds back to the Treasury. The money it gets for those bonds comes from the general fund, which means that it does indeed have an effect on the deficit.

That much is true. But the idea that the trust fund is a “fiction” is absolutely wrong. And since this zombie notion is bound to come up repeatedly over the next few weeks, it’s worth explaining why it’s wrong. So here it is.

Starting in 1983, the payroll tax was deliberately set higher than it needed to be to cover payments to retirees. For the next 30 years, this extra money was sent to the Treasury, and this windfall allowed income tax rates to be lower than they otherwise would have been. During this period, people who paid payroll taxes suffered from this arrangement, while people who paid income taxes benefited.

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Response to ErikJ (Reply #15)

Mon Jan 14, 2013, 08:01 PM

16. A few things...

For one it would appear I had some bad information.

I was using this as reference: http://www.taxpolicycenter.org/taxfacts/content/pdf/ssrate_historical.pdf which apparently is incorrect.

My bad. But, I was only looking at SS, not SS and Medicare combined. I thought we were just discussing SS as per your post in 13.

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Response to Glassunion (Reply #16)

Mon Jan 14, 2013, 08:10 PM

17. Your table is bad

I know my Self-employment tax was about 8% in 1980 and it skyrocketed to 15% by 1990.

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Response to ErikJ (Reply #17)

Mon Jan 14, 2013, 09:01 PM

21. I realize that now. My bad. It was the first result in google.

Thanks!

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 05:42 PM

12. Social Security Benefits calculator.

This is kind of interesting. I never knew the maximum benefit is $2,700 a month if retire at 65. Or $3,700/mo at retirement of 70.

For someone making approx $35,000 a year would make $1,200/month at 65 retirement. Or $1700/mo at 70.

http://www.cpasitesolutions.com/content/calcs/SocialSecurity.html

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 08:30 PM

18. Good information.

Now can you boil it down to sound-bite length so I'll know what to say to my coworkers next payday when they cuss out Obama?

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Response to johnp3907 (Reply #18)

Mon Jan 14, 2013, 10:21 PM

26. When you pay less into SS you get less......

paying what your were paying means you will get more.

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 08:33 PM

19. Well stated...

I tried to explain it from an accounting/tax perspective and it didn't translate.

They way you spelled it out is really well thought out.

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 10:24 PM

27. If you make more than the cap, you would have had no

SS taken out in some number of checks to close the year and your new check in 2013 would once again have an SS contribution deducted.

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Response to Still Sensible (Reply #27)

Tue Jan 15, 2013, 06:36 AM

31. If you make more than the cap would you be pissing and moaning

About the additional 2% withholdings?

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Response to Glassunion (Reply #31)

Tue Jan 15, 2013, 10:29 AM

35. You haven't seen any number of DUers complain against removing/lifting the contribution cap?

It's almost like an article of faith here that if the rich are asked to pay the same proportion of their income in FICA as the rest of us, that the program will be transmogrified into "ZOMG WELFARE!".

No explanation how any other portion of our progressive tax structure doesn't also amount to "ZOMG WELFARE!", however. It's just Social Security which must be sheltered from the horrors of "progressive taxation" (shudder!).

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Response to Glassunion (Original post)

Mon Jan 14, 2013, 10:44 PM

28. Only George Bush tax holidays last forever.

 

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Response to dkf (Reply #28)

Tue Jan 15, 2013, 09:03 AM

32. So says you.

It'll change. Not quickly, but I feel that it will.

My my repub congress critter can see it. I did not vote for the dude, but he has had some good votes and he listens. He held a town hall, and there were quite a few folks who stated to him that they were not afraid of a tax increase. He listened.

That's the only nice thing I'll say about him.

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Response to Glassunion (Original post)

Tue Jan 15, 2013, 01:00 AM

30. K & R

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