Will Taxes Rise This Year?

November 30, 2011 — 2 Comments

Between Thanksgiving and Christmas, congress will be determining a crucial tax policy decision. According to experts, if congress does not extend the payroll tax holiday and unemployment benefits for 2012, there will be about one million fewer jobs than in 2011. Some believe it may even cause a recession.

The payroll tax is the source to fund Social Security benefits. Workers contribute 12.4% of their annual salary towards Social Security, which means employees and employers both contribute 6.2% respectively. Through a technical amendment spearheaded by Obama tax cuts in response to the worsening economy, the payroll tax rate fell to 4.2% for workers for one year. In addition, last year, the average US household saved more than $900 in taxes due to the payroll tax cut. However, because the super-committee has yet to agree on a budget plan, this tax cut could expire by Christmas, which would effectively hinder U.S. economic growth.

With 1 out of 11 people unemployed, the U.S. needs to devise a plan that promotes job growth and appropriate tax cuts. The following chart shows what would happen for each profession if congress does not extend the payroll tax holiday.

2 responses to Will Taxes Rise This Year?

  1. 

    Note regarding the comnemt on “corporate taxes”…the amount does not include sub-chapter S corporations as the income is passed through to the owner and is paid at the individual tax rate. All regular “C” corporations with the exception of large publicly held firms take all of the profit and expense it out as bonuses to the primary stock holders and employees/401K’s etc..it would be stupid to do otherwise. The result of this action is that the Corp pays very little if any tax. If this action is not taken you will be paying taxes TWICE. Regarding the fact that tax revenues went up despite the number of unemployed..a very large percentage of this group is in the -0- or small tax bracket. I have paid a total of over $500,000 in each of the last two years in federal taxes alone…final note. I sold my business…just not enough return for the risk..the U.S Government/laws are not pro business and if they are not changed quickly these negative results will continue and the standard of living for us and ourchildren will stay on the path to ruin. Just look around…government is growing and the producers/risk takers are being taxed to death.

    Like

  2. 

    Federal spending might come “under cotnorl” in about 20 to 40 years when the present generation of entitled retiring Baby Boomers finally passes on. The generation behind us already knows that they cannot collect, so they are less willing to contribute. However, the numbers are against them at the polls. For now. In the mean time, the Austrian alternative would be to tend your own garden. Leaving campus, waiting for a bus, I saw a sign at a pizza shop: MEDIUM 1 TOPPING $899. I knew they needed a decimal point; but clearly, it is only a matter of time before that pizza is $899 and the average worker makes $1400 per hour and gold is $150,000 per ounce. The history of the Turkish lira and Italian lira, and the Japanese yen, show that the zeroes do not matter as long as people accept the scrip. What does matter, of course, is long-term savings which contra Keynes, is exactly the same as long term investment. Inflation destroys that for any savings (investment) in that denomination. Therefore, the next generation will also have to adapt to more sophisticated media such as Exchange Traded Funds, rather than thinking of passbooks and certificates of deposit. And there is always gold … or we could go long on pizza futures…(:-)

    Like

Add your $0.02

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s