Changes in the payroll tax, a tax to pay for Social Security, weren’t included in the final negotiations over the fiscal cliff deal so they got little attention until the bill passed. It means payroll taxes are going up by 2%, and, technically, it’s not a tax increase. It’s the end of a tax holiday that’s been in place since 2010.
Just two House members from Indiana were among the 257 who voted for the fiscal cliff deal. Democrat André Carson is one of them. His spokesman says the payroll tax holiday was meant to be a temporary fix during high unemployment and that steps have to be taken now to reduce the deficit. Democrat Joe Donnelly voted yes but calls the deal “far from perfect.”
So, while the President talks about protecting the middle class, the middle class will still have less take home pay, $50 a month less for someone who earns $30,000. “They were saved from an increase in their tax rates but still everybody’s gonna pay more taxes,” says University of Indianapolis economist Matt Will.
John Ketzenberger of the Indiana Fiscal Policy Institute says Congress did no favors for taxpayers. “They just kicked the can down the road, added to the deficit,” he said, “and we still get a middle class tax increase.”
Indiana Senator Dick Lugar voted for the fiscal cliff deal and so did fellow Republican Dan Coats, who called it the lesser of two evils. A spokeswoman for Coats says there was bi-partisan opposition to the idea of continuing the tax holiday.
So while the President focused on higher taxes for individuals who make more than $400,000 and couples who make more than $450,000 saying “Everyone pays their fair share, everyone does their part,” fairness may be in the eye of the beholder.
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