Tuesday, January 15, 2013

Talk About a Fiscal Cliff

Tax (Photo credit: 401(K) 2013)
Of late, I have been trying to avoid posting things of a political nature.  Sometimes, though, I can't help myself.  I especially reserve the right to post something of a political nature when it impacts me personally, as is the case with this post.

Two weeks ago, Congress and the President reached a deal to extend the Bush era tax rates for most Americans to prevent us from going over the so called "fiscal cliff" that would have most likely sent us into another recession.  According to those powers that be and their complicit media, we are to be oh so grateful that they pulled together to avoid the fiscal cliff.  Well call me ungrateful because I am not buying into the hype.

You see, I am facing my own personal fiscal cliff.  Let's start with the expiration of the 2% payroll tax holiday that took place on January 1st.  With all of the hype from the media and politicians about how the fiscal cliff deal prevented tax increases on all but the richest Americans, lost was the fact that most would be facing smaller paychecks due to the end of the payroll tax holiday.  Sorry, elite media and pols, but that is a tax increase.  I actually saw the increase on my check on January 3rd.

Unlike a lot of folks, I was fully aware that this was going to happen.  There have been a lot of news stories out there about how people were shocked that their paychecks were smaller.  I will not be like some on the right who will blame Barack Obama for this (well not entirely) because even had Mitt Romney been elected this tax break was going to expire.  Nobody was calling for it to be extended.

I do find it funny (in an ironic way, not humorous) that when the right points out that 47% of Americans do not pay income taxes, the left is quick to point out that those people do pay payroll taxes.  Then when the left  (media and politicians) wants to say that only the rich saw a tax increase with the fiscal cliff deal that they conveniently leave out the fact that everyone would see a payroll tax increase.  Let's be consistent, people!

Regarding the 2% payroll tax holiday, I will say that it was a pretty stupid idea to begin with, though when first implemented it did benefit me.  Two years ago, my health insurance premium went up quite a bit.  That 2% tax break was just enough to offset that premium increase so it ended up being a wash for me.  It just seems like I can never get ahead.

Speaking of health insurance premiums, that brings me to the second part of my personal fiscal cliff.  Back in October, I posted about my health insurance premium increase for 2013.  My share of the health insurance premium went up 30%.  While I saw the first check with the higher payroll tax two weeks ago, I saw the first check with the higher insurance premium this week.  The Dickster is NOT a happy camper.

When you combine the expiration of the 2% payroll tax holiday with my increase share of my health insurance, I have seen my net paycheck decline by about 7% or so.  Meanwhile, gas and food prices are both on the rise.  Plus, the Maryland state government is back in session and looking to raise gasoline taxes.  Lower net pay and increased living expenses are not a good combination, hence the presonal fiscal cliff.

On a side note, I was able to download my W-2 today.  There was something new on it this year thanks to the Obamacare health care bill that was passed a few years ago.  There is now a box that shows how much the employer provided health care costs.  It shows the combined total of the employer and employee share of the health insurance premium is.

Here is some food for thought.  Currently, both of those contributions are tax exempt.  The employer gets to write the premium off as an expense, and the employee is able to pay their share before tax withholding takes place.  There are a lot of folks in government who would like to see those tax exemptions eliminated.  In other words, the employer share would end up being taxable as income for the employee and the employee's share would not get the tax break.  For me, that would increase my taxable income by 20% while not increasing my actual pay.
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