People seeing less in 2013 paychecks - KCTV5

People seeing less in 2013 paychecks despite avoiding fiscal cliff

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Many people opening their first paychecks of 2013 are surprised to see less, despite the U.S. avoiding the fiscal cliff.

For many working class Americans, the cutbacks have begun in earnest. All the talk about avoiding the fiscal cliff and not having 98 percent of the population not paying higher taxes turned out to be just talk.

For weeks Congress and the White House were at each others' throats over the debt ceiling, taxes and going over the fearsome fiscal cliff. Like most Americans, Myra Broils followed the developments closely.

"It was going to affect us as well as the rich people, so I knew it was going to be an issue," she said.

But Broils' relief over her tax rates staying the same was short lived when she got her first paycheck of 2013 and saw a significant deduction.

"I got two boys in college and my daughter here in dance school. It kind of takes a big chunk out of your plans, your budgets," she said.

While much of the focus was on income tax rates, very little attention was given to the payroll tax, which funds Social Security. In order to stimulate the economy after the near-financial collapse in 2008, Congress temporarily cut the payroll tax rate to 4.2 percent, but as part of the new fiscal cliff deal, the rate was allowed to expire and went back to the initial 6.2 rate.

That equates to about $40 to $50 a paycheck or about $500 a year, which most working people can't afford.

"This is just the first steps of seeing some of the effects, cutback effects, that are going to be hitting us," said Michael Tansey, PHD, an economics professor with Rockhurst University.

Tansey said the payroll tax hike is yet another example of everyone having to give up something when it comes to political deals.

"In a sense, there has to be some give and take and I think that's what you're seeing here," he said.

Broils said she'll just have to get use to getting by with less.

"It's hard, but we'll make it somehow," she said. "It'll be a struggle, but we can do it."

There is also concern that the payroll tax could hurt the economy. A recent poll of store managers found that shoppers plan to cut back on their spending. Some retail analysts are expecting shoppers to use more coupons or buy more generic household items.

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