First paycheck of 2013

[Reeve]

So I got my first paycheck of 2013 today, and sure enough I'm down $46 from my usual check. So now I know exactly how much the payroll tax cut expiration is going to cost me annually going forward: $1104/year. I'm happy to pay it if it'll help us out of the debt issues we're having, but I'm going to have to alter my purchasing habits at least until I get another raise.

My question is will this end up harming consumer spending enough to retard the growth of the economy in 2013? I'm pretty solidly middle class, which is arguably the driver of economic growth in the US, and I'll have $92 less dollars per month to spend on things that help employ others. So in the end, will this be a net positive or a net negative on government incomes?

[Rukentuts]

I'd say the bigger negative is all the hype about it, and now the increased hype about the debt ceiling and a possible government shutdown. This shakes the markets, consumer confidence, and therefore drives down consumer spending and will limit the recovery.

Just a layman's 2c.

[drwelfare]

That was FICA withholding, money taken out for Social Security

People will have less to spend/save, they will have to save less or cut back somewhere.
The hit will come somewhere, what are you going to cut to save $100 a month?

[Reeve]

That was FICA withholding, money taken out for Social Security

People will have less to spend/save, they will have to save less or cut back somewhere.
The hit will come somewhere, what are you going to cut to save $100 a month?

First thing I'm gonna do is change my auto insurance. They're over-charging me by around $100/month. So that should help at least.

[Lysah]

As above post states, consumer attitude is more important than actual expendable income. Getting people optimistic about investing matters far more than giving them more money. At the same time, making their paycheck smaller does not seem to incentivize spending for the average American.

[Catta]

I would give you my two cents but... you know... the economy.

[Huntingbear_grimbatol]

That was FICA withholding, money taken out for Social Security

People will have less to spend/save, they will have to save less or cut back somewhere.
The hit will come somewhere, what are you going to cut to save $100 a month?

less food, since ya'll are American! ;D

joking obviously, but on topic what % tax do US have now? In Norway we pay 25%-35% (and higher for wealthy people) of our pay to help our country with health benefits and all the other crap we get for "free".

[Spectral]

The change didn't affect me, as I have an odd pay structure that goes through a fellowship, so I don't pay FICA. If I'd been affected, it would have cost me about $1500 a year, which wouldn't change my spending habits even a tiny bit; I'd just be saving $1500 less. That's not enough money to put me even close to a financial edge.

[Linkedblade]

You're a consumer; that $1k a year isn't going to the economy. Government paychecks get hit as well.

The problem is this "balance the budget" program doesn't even cut enough money to fix anything. It cuts $620 Billion over 10 years, or on average $62 Billion per year. That is nothing compared to what the government spends. There was plenty of wastes in the latest bill as well.

I'm with you that we might have to sacrifice a little for the better good. This bill doesn't cut enough to help the national debt at all.

[drwelfare]

less food, since ya'll are American! ;D

joking obviously, but on topic what % tax do US have now? In Norway we pay 25%-35% (and higher for wealthy people) of our pay to help our country with health benefits and all the other crap we get for "free".

It depends on income.
My last paycheck I wrote to myself was about 30% withheld after Income tax, Medicare, unemployment, FICA, and state tax. Your employer also has to match part of those withholdings which is money paid but you never see. Also add an 8% sales tax when you buy things.

Depending on your state and income bracket you can be at around 50%

[Darsithis]

Yeah I lost $120 a month due to it. It's all balancing out since I'm also seeing a $100 a month drop in my healthcare costs and $50 a month in sponsorships + $50 in my phone bill so I'm coming out a bit ahead.

[Spectral]

joking obviously, but on topic what % tax do US have now? In Norway we pay 25%-35% (and higher for wealthy people) of our pay to help our country with health benefits and all the other crap we get for "free".

This depends on income, locale, income type, how many kids you have, and numerous other factors. As I mentioned in a post above, I have an odd pay structure where I don't pay some payroll taxes. I do pay ~15% of my income in federal taxes and another ~6% as state income tax. An additional 6% of expenditures goes in sales tax when I'm buying things in Maryland (most of the time), 10% in Washington, DC, and 8.75% when I'm visiting back in New York.

A typical person pays an additional 6.2% in payroll tax out of their paycheck and a "hidden" 6.2% tax on the employer end as payroll tax.

[Faroth]

less food, since ya'll are American! ;D

joking obviously, but on topic what % tax do US have now? In Norway we pay 25%-35% (and higher for wealthy people) of our pay to help our country with health benefits and all the other crap we get for "free".

I ballpark mine to be about 16% for my tax bracket. I don't pay state taxes since I'm in Texas. We have a higher sales tax instead, which I personally prefer.

To the OP, yep, mine is down about $35 a paycheck, but that's just the social security increase. I expect federal income tax withholding to increase the next paycheck or the one after in response to all the changes for this year. Personally the change has already kicked my take home pay back to 2011 and if I'm right and I see an increase in federal income tax withholding in the next check or two, I wouldn't be surprised if I'm back to 2010 net pay again.

This is a travesty, man, a f'ing travesty! I have so much more frivolous spending to do!

[Reeve]

I ballpark mine to be about 16% for my tax bracket. I don't pay state taxes since I'm in Texas. We have a higher sales tax instead, which I personally prefer.

To the OP, yep, mine is down about $35 a paycheck, but that's just the social security increase. I expect federal income tax withholding to increase the next paycheck or the one after in response to all the changes for this year. Personally the change has already kicked my take home pay back to 2011 and if I'm right and I see an increase in federal income tax withholding in the next check or two, I wouldn't be surprised if I'm back to 2010 net pay again.

This is a travesty, man, a f'ing travesty! I have so much more frivolous spending to do!

Our sales tax is pretty typical for the country, actually. Property taxes are high relative to some of the surrounding states, but equivalent to California.

[drwelfare]

I ballpark mine to be about 16% for my tax bracket. I don't pay state taxes since I'm in Texas. We have a higher sales tax instead, which I personally prefer.

To the OP, yep, mine is down about $35 a paycheck, but that's just the social security increase. I expect federal income tax withholding to increase the next paycheck or the one after in response to all the changes for this year. Personally the change has already kicked my take home pay back to 2011 and if I'm right and I see an increase in federal income tax withholding in the next check or two, I wouldn't be surprised if I'm back to 2010 net pay again.

This is a travesty, man, a f'ing travesty! I have so much more frivolous spending to do!

When talking to a lot of people I know we count ourselves lucky to be making the same as we did in 2001-2003 even though the purchasing power is much less.

[Reeve]

When talking to a lot of people I know we count ourselves lucky to be making the same as we did in 2001-2003 even though the purchasing power is much less.

My company hasn't given raises in 2 years, which makes sense given how badly the company has been doing, but in those same 2 years my apartment rent has gone up $200/month. I'd really love to just make as much in equivalent purchasing power as I was making 2 years ago.

[Spectral]

When talking to a lot of people I know we count ourselves lucky to be making the same as we did in 2001-2003 even though the purchasing power is much less.

Purchasing power is less? What? That's only true if you pretend technology advancement doesn't count.

[Reeve]

Purchasing power is less? What? That's only true if you pretend technology advancement doesn't count.

I can rent a lot less apartment for the same money today than I could in 2010.

[Spectral]

I can rent a lot less apartment for the same money today than I could in 2010.

He was referring to 2002. I think there's a good argument to be had for purchasing power dropping over the last three years, but not over the last ten.

[drwelfare]

He was referring to 2002. I think there's a good argument to be had for purchasing power dropping over the last three years, but not over the last ten.

Are you saying you can live better on $30,000 a year now then you could then?
Technology may have improved and gotten cheaper, but basics like food, shelter, utilities, fuel have not.