What the Tax Bill Means For You?

With the clock winding down on 2010, one of the most biggest news stories about the lame duck session of Congress was whether we’d get a resolution to the issue of income taxes. With tax rates set to increase in 2011 after the sunset of the Bush era tax cuts, which the name given to the tax cuts in the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003, Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

There were two big changes that affected most Americans. First, there was a two year extension to the “Bush era tax cuts” signed into law in 2001 and 2003 that maintains the current tax brackets. They were set to revert back to higher rates but now they will remain the same for the next two years when they can become a proper election year topic.

The other major change was a payroll tax holiday, which effectively gives everyone a 2% raise. If you have a job, take a look at your most recent paycheck. You’ll see a contribution to Social Security and Medicare – sometimes it’s rolled up into one line as FICA. For 2011, there will be a 2% reduction in the amount you pay towards Social Security which can result in up to $2,136.

Some changes that affect fewer people include extending federal unemployment benefits, changing the estate tax, patching AMT, and the extension of the Child Tax Credit, Earned Income Tax Credit, and the American Opportunity Tax Credit. With the estate tax, the top rate was lowered to 35% (from the 55% it would’ve been in 2011) and the exemption was raised to $5 million (up from $1 million).

Estimated cost? $858 billion over 10 years.

Jim writes about personal finance at Bargaineering.com.

Comments

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  1. ParingKnife ("That's a kniwfe.") says:

    Stupid. Specifically the part about the payroll tax, but all around it’s not great. This will bankrupt Social Security for no damn good reason. People don’t understand that there is no such thing as a “tax holiday” in this country- they get extended indefinitely until they’re signed into law.

    Typical- underfund and undermine government services, then turn around and claim they never work.

    • Slave For Turtles says:

      I’m curious if there is really any other way to spin it, but yeah, you explained it the way I understand it, ‘Knife.

    • TasteyCat says:

      While this won’t help, Social Security is on its way to bankruptcy regardless.

      • captadam says:

        That is actually not true.

        • spamtasticus says:

          Please show your work.

          • Elcheecho says:

            SS being bankrupt per se is meaningless. there’s no pile of money or gold or anything that’s marked “do not touch.” money has been moved out of Social Security for years to make up general fund deficits. when revenues fall short of promised benefits, we’ll just take it out of the general fund.

            If nothing changes, we’ll eventually have to decrease benefits or increase taxes. “bankrupt” is meaningless.

            • TouchMyMonkey says:

              Basically, there is a pile of T-bills that represents the so-called “trust fund.” While these are indeed IOUs, technically speaking, they are backed by the full faith and credit of the U.S. Government (just like those green pieces of paper in your wallet, which would still make you quite upset if any of them came up missing, or if fewer of them suddenly appeared in your paycheck), which last I checked was still good. Suggestions to the contrary should be immediately met by inquiries of “why do you hate your country,” similar to those made by the defenders of whatever idiocy the Bush Administration was perpetrating on a given day.

              • cara says:

                I’m a 20 year old college student, and since I’ve been 16, my parents have told me to just start putting money aside now, because by the time I retire there will be no Social Security.

                I don’t care if my parents, or ANYONE are wrong or right about the status of Social Security, but I’d rather have a chunk of money set aside just incase if everything crashes and burns and I have no children to take care of me.

          • Mike says:
        • TasteyCat says:

          The Social Security Trust Fund is slated to be depleted in 2037, if not sooner. At that time, in theory, unless they a decrease benefits and/or increase taxes (at some point, we get to overly burdensome taxes for payments that are insufficient anyway), the government can merely just fund the shortfall in Social Security through the normal budget. Anybody buying that theory is living in a different America than I am. Where I live, the government can’t even afford to support its current obligations. Pretty soon, the government will barely be able to afford the interest on its debt, let alone any new debt. So how they are going to be able to support additional massive social benefits on top of what they already cannot afford is a mystery to me. As it is, rather than trying to reign in spending, the current administration has been pissing away trillions of dollars for little benefit, while wasting a year debating a social health care plan that can’t possibly help the economic situation.

        • nova3930 says:

          You can only borrow so much $(^&%#$ money before people wise up and stop lending it to you.

          Historically, we are capable of pulling in 18% of GDP on the federal level across all forms of taxation. That leaves us with a perpetual, structural deficit of 4-5% of GDP (currently $1.2 trillion).

          We can’t simultaneously run a $1.2 trillion deficit while at the same time fulfilling the $45-$90 trillion in outstanding liabilities of SS and Medicare. Something has to give.

          We’ve got to cut discretionary spending, SS/Medicare expenditures or more likely, both or the US Gov’t is going to face a severe fiscal crisis similar to what the Greeks went through, except there’s nobody big and bad enough to bail us out if our ship sinks…..

    • PunditGuy says:

      I was more upset about it until I found out the money isn’t being removed from SS per se — it’s backstopped by general taxpayer funds. The money will be paid back. That sort of thing can’t continue indefinitely, of course, but I’m looking forward to a 2% raise for the time being.

  2. RvLeshrac says:

    You mean I’ll get a whole FIVE DOLLARS on my check?! THANKS, Republicans!

    • huadpe says:

      Actually the payroll tax holiday was something the Democrats shoved into the bill.

    • kenj0418 says:

      If you are only making $250 a check, then you probably weren’t paying much in taxes besides FICA anyway – so what are you complaining about?

      • HoJu says:

        If his paycheck totals out at $250, there’s a reason he doesn’t understand whats going on here.

      • Gulliver says:

        I guess sales tax, and every other local fee does not count as paying taxes? This is one of the big right wing lies, that poor people do not pay taxes. As a $ of income they pay as much, because paying sales tax is highly regressive, as are any tax that is disguised with the word fee.

        • nova3930 says:

          Soooo Sorry that your LOCAL GOV’T fucks “low income” individuals with a sales tax. On the national level, as far as everyone else is concerned, that falls into the category of NOT OUR PROBLEM. Don’t like it, go bitch to your LOCAL gov’t.

    • hansolo247 says:

      Most people will get more back.

      If you make $50,000, you had the $400 Make Work Pay credit…that’s gone. It’s replaced with $1,000 instead.

      If it’s only $30,000, it’s $600, still more.

    • Snowblind says:

      Senator Max Baucus (no relation to the Greek God) Head of the Finance Committee is responsible for that part of the bill, (which was suggested by the White House) not the Republicans.

      Change your mind about who or what to support?

      • Bladerunner says:

        No, sorry, it’s still the Republicans’ fault for refusing to do ANYTHING until the cuts were extended…any idiocy included in the bill is superfluous, since the very idea of the bill was idiocy. A Democrat including something in it in an attempt to mitigate it isn’t all that bad; the Repubulicans probably call it a “compromise” despite the fact they haven’t done a real one of those in a decade or so. It’s barely anything (as the poster said, gee, thanks for my 5 dollars or in my case twenty bucks), but it had to be ADDED to the bill that the Republicans were shutting down government to pass. I say the sarcasm still applies.

        • Snowblind says:

          Huh?

          It was added so democrats would vote for it.

          Democrats controlled House/senate and White house, and still control 2 of them.

          Waah. We will blame the minority Republicans! Waaah!

          No wonder you can’t govern.

          • Kate says:

            Not all democrats are liberals, and the ones that aren’t are pretty much one of the republicans. But no. You can’t go around a minority on everything, even most things. You might want to review how our government works.

          • Bladerunner says:

            The Republicans shut down all bills until they got their bill passed. Being a minority didn’t prevent them from killing health care for 9/11 rescuers because the tax breaks “needed” to be extended. This was added as a sop to “the people” so that Democrats wouldn’t use what spines they do have to point out how awful Republicans are. To paraphrase you: No wonder you can’t govern; you don’t know what you’re talking about. But don’t worry; no matter how evil republicans get, they seem to get votes, so I suppose they can govern, thanks to representative democracy, they just can’t do it COMPETENTLY.

            Also, I’m not a Democrat, so…”I’m” not governing at all.

  3. RvLeshrac says:

    Oh, it should be pointed out everywhere that, the last time we had a declared War, the income tax rate was 94% on all income over $200,000

    • TheUncleBob says:

      It should also be pointed out that when the National Debt was $0, there was no income tax.

      • skylar.sutton says:

        Win.

      • nopirates says:

        yes, and black people worked “for free”

        idiotic argument

        • TheUncleBob says:

          Actually, most of the slaves that were left were already freed two years earlier. A few months after the national debt hit zero was when the remainder of the slaves were finished. Excellent way to inject race into a totally unrelated discussion though.

    • nova3930 says:

      It should also be pointed out that the last time we had a declared war was 1941 and we haven’t had one since….

      It should also be pointed out that the number and size of deductions and exemptions was MUCH MUCH higher in 1941 than it is now such that virtually nobody paid 94% of their income in taxes.

      On top of that it should be pointed out that the actual data on tax receipts shows that the amount of $$$ collected has remained virtually constant over the last 8 decades at 18% of GDP, regardless of the tax structure……

      • dolemite says:

        How do you figure? GW stated we are in a perpetual state of war, and Congress signed off on it, because as long as there are terrorists, we are at war (so…indefinately).

  4. kathygnome says:

    The social security tax cut replaced the Making Work Pay tax credit, so if you make less than 20k individual or 40k married, you actually pay more under the plan. State and municipal workers don’t pay social security in some states, we have a preexisting pension plan instead, so this was a big tax increase for us as compared to the Making Work Pay credit.

    If you’re a billionaire though. It’s smooth sailing.

    • Necoras says:

      Social Security is not paid on income above the 106K area. It doesn’t matter if you make 107K or a million dollars this year, you’re only paying SS on that amount. (I believe medicare is paid beyond that though.)

  5. mrsam says:

    We, as the nation, will remain perpetually screwed as long as the mindless sheep accept the concept that there’s a “cost” to letting taxpayers keep a bigger portion of their earnings, instead of having it confiscated by the government.

    Gee, isn’t it terrible? The government will have to do with $858 billion less. How awful. Boo-hoo. Boo-hoo-hoo.

    On the other hand, whenever the Marxist-Leninist branch of the government seeks to raise taxes, you never hear how much of that is going to “cost” the taxpayers. No, that’s not the language that gets used, in that case. Then it’s merely the patriotic duty of “spreading the wealth”, or “making the rich pay their fair share”, or any one of many other terms carefully picked, using focus groups and polling, to maximize the emotions of the sheep; and fuel the flames of class envy, class hatred, and class exploitation.

    So remember that, boys and girls. Keeping a bigger portion of you earn, “costs” the government. And we don’t want that to happen, do we? That’s going to be your lesson for the day.

    • captadam says:

      I hope that, with this attitude, you avail yourself of no services of government. You’d better not fly, use the highways, use national parks, use the courts, or rely on banking regulations. And I hope you deny the protections of a military. Otherwise, you’re a damned hypocrite.

      • mrsam says:

        If that was actually a viable option offered to me, I would gladly take it, without hesitation.

        I will gladly pay my costs of any service that the government would otherwise subsidize. Of course, in exchange for keeping every last cent I earn, you understand.

        You got yourself a deal.

        • RadarOReally has got the Post-Vacation Blues says:

          And who will pay for the bureaucracy needed to figure out each person’s share, collect it, make sure it gets to the right people? I assume you think the IRS is evil, too, so a new agency would have to be created. Who will pay for those people’s salaries?

      • George4478 says:

        Why? The government has legitimate functions and needs money to fund those. If I don’t think my Federal tax dollars should fund Polynesian Historical Centers or new hockey rinks in Wisconsin then I shouldn’t use roads?

        That makes no sense.

        • Gulliver says:

          And what if I don’t think MY funds should be used to fund illegal wars, highways that I do not drive on, or planes I will not fly? They do npt put YOU in charge of where the money goes. This is not a democracy, and anybody who took American Government 101 would know we are a republic.
          Polynesian Museums may not be important to youy, but the thing most morons don;t understand is the ONLY way to ever get the budget in order will be to cut in two areas that nobody will touch.
          1. Defense -the largest single discretionary spending item in the budget
          2. SSI- Actually the only self-sustaining program in existence. IT PAYS FOR ITSELF.

          • Skyhawk says:

            You’re joking, right? SSI pays for itself?

            #1 No, it doesn’t. It is paid for by taking money, through threat of incarceration, from the wages earned by workers. That money is then given to people currently receiving SS benefits.

            #2 Since the money taken from every worker is immediately used for SS liabilities, it doesn’t gain interest.

            #3 If people received only the money they put in, then most would run out long before they died.
            So, like every other Ponzi scheme, SS relies on more people paying into it, than receiving the benefits from it.
            With longer life expectancy and the single largest group in US history at or near retirement age, there will soon be more money paid out than taken in. End of Ponzi scheme, right?
            Nope. They then fund it from the general fund. Which makes taxes go up.
            So, instead of allowing people to invest that money, to provide for their own retirement, you force people to rely on big-daddy governemnt to provide for people when the retire.
            More control over people’s lives and more dependence on governemnt.

        • Awesome McAwesomeness says:

          Everyone thinks money should be spent of different things. What is important to one person means nothing to another. So who do you think should ultimately decided what is “important” and what isn’t? My guess is you think it should be you.

    • PunditGuy says:

      Republicans have been starving the beast for 30 years, hoping that someone will finally step forward and start cutting stuff. That “someone” would be someone other than Republicans, of course, who insist on adding new cabinet positions, creating new programs and increasing federal employment every damn time they’re in power.

      Promoting the general welfare takes hard-earned cash, unfortunately. You and the rest of the so-called conservatives can keep borrowing from future generations like you’ve continuously done for three decades, or you can cut stuff or start paying for the stuff that’s being done. This isn’t rocket science.

      • mrsam says:

        “Republicans have been starving the beast for 30 years”

        Gee, I didn’t know that the Republicans have been running the House Of Representatives, where all tax bills should originate (at least according to the Constitution, but who cares about that) for so long.

        • PunditGuy says:

          Federal budgets are interesting things, and there are resources you can use to figure out very interesting things about them. Things such as, for 7 of the 8 Reagan budgets, the Democratic congress spent less money than Reagan proposed.

          You may want to look into the duties of the OMB before you go spouting your facile talking points.

          • mrsam says:

            And that also, under Reagan, the revenue to the government skyrocketed. But your amnesia made you forget that part, didn’t it?

            But, you’re changing the subject, because you are incapable of defending the notion that tax cuts “cost” the government something. Or, perhaps, you would like to explain what yammering something about Reagan has to do with the notion that everything anyone ever earns belongs to the government automatically, that the government has the first claim on everyone’s wages, so that if people end up keeping a bigger chunk of their paycheck, when all is said and done, that’s somehow “costly”.

            If I buy a cup of coffee, for a buck, that cup costed me that buck. Therefore, if reduced tax rates are considered a “cost” for the government, it must mean that the government had that money first, but no longer has it and that’s where that “cost” came from.

            I mean, why make things so complicated. Let’s just make it so that the government receives 100% of what everyone makes, up front, and then turns around and doles out a stipend, according to some notiong of what “fair” means, for everyone. That’s definitely going to minimize are “costs”, right?

            • PunditGuy says:

              Reagan raised payroll taxes. How does that fit your narrative?

              Yammering? Look, as I’ve explained, promoting the general welfare costs something. We all pay in to the system in order to reap the benefits. There’s a rule of law because of the government, which means that contracts can be enforced. This allows commerce to happen. So at the very minimum, we’ve got to pay to keep the engine of capitalism moving, along with any supplemental spending to protect and enhance that engine. This isn’t free, so this utopian notion of yours that you own 100% of what you’ve “earned” is just as preposterous as saying the government owns 100% of it.

              You wouldn’t be able to earn anything without government intervention. You can pay for that intervention now, or force your kids to pay for it, or cut the protection and enhancements to match how much you’re willing to pay. Republicans have consistently done the second while simultaneously yelling that we need to do the third. Oh, and while blocking Democrats from doing the first.

              • mrsam says:

                “Rgn rsd pyrll txs. Hw ds tht ft yr nrrtv?” H rsd FC bcs Scl Scrt ws gng bnkrpt. tk t y wld nt’v hd prblm hd th Gppr dcdd t lt Scl Scrt g bnkrpt, rght? “W ll p n t th systm n rdr t rp th bnfts.” Nt qt. W r frcd t p nt th systm, wtht n prms tht w wld gt bck nythng f vl. “Thr’s rl f lw bcs f th gvrnmnt, whch mns tht cntrcts cn b nfrcd. Ths llws cmmrc t hppn.” S hw xctl ds tht ddrss m rgnl pnt tht th ntn tht tx cts “cst” th gvrnmnt mpls tht ll th mn vryn rns s th gvrnmnt’s t strt wth, s lttng th wg rnrs kp mr f wht th rn smhw cms t f th gvrnmnt’s pckt? Y cnnt dfnd tht rgmnt, s y’r jst tryng t rg smthng ls. “Ths sn’t fr, s ths tpn ntn f yrs tht y wn % f wht y’v “rnd” s jst s prpstrs s syng th gvrnmnt wns % f t.” Bt hw xctl wld tx ct “cst” th gvrnmnt, f th mn wsn’t th gvrnmnt’s t strt wth? “Y wldn’t b bl t rn nythng wtht gvrnmnt ntrvntn.” Shcks, ‘m tryng t fgr t wht th gvrnmnt hs dn n rdr t mk t pssbl fr m t rn lvng, nd ‘m hvng sm dffclt fgrng t t. Th gvrnmnt hs bn mr f hndrnc, thn n hlp. “Y cn p fr tht ntrvntn nw, r frc yr kds t p fr t,” T lt. r kds wll lrd b pyng fr th mn tht Brck Hssn bm, Nnc Pls, nd Hrr Rd r spndng td.

                • incident_man says:

                  And what about the money Emperor Bush and Darth Chaney charged to the country’s credit card, borrowed straight from Communist China, and that went straight into Halliburton’s, Blackwater’s and every other sweetheart government contractor’s pockets that ultimately cost poor folks’ kids lives while you rich ChickenHawk bastards were crying for MORE TROOPS?!?

                  • Skyhawk says:

                    You mean the expenditures that were approved by a Democratic Congress? Blaming one party, while defending the other misses the point entirely. It isn’t EITHER party. It’s both of them that have long since had the best interests of the country in mind.
                    BOTH parties have the single focus of expanding and retaining their power.

                    The ‘divide and conquer’ strategy has worked wonders in this country. People are so invested in their political affiliation that they miss the big picture.

            • Skyhawk says:

              MrSam is absolutely correct.
              ‘The general welfare’ can be provided with 25% of the money that is taken out of the economy presently.
              There are so many unnecessary, redundant, useless governemnt programs and agencies that have nothing to do with the ‘general welfare’.
              Though I am glad you used that term, as it is derived from the preamble to the US Constitution.
              The very document that limits the size and scope of the Federal governemnt.
              However, these limits have long been ignored, and look where that has gotten us.
              Do we really need 4 different levels of ‘education’ departments, that all serve the same basic function? Fed. Dept. of Ed, State Dept. of Ed., County Dept of Ed., Town Dept of Ed. of Ed.Has it improved education? No, it hasn’t.
              That’s just the tip of the iceberg. There are 300 more.

              Most of the government agencies are unneeded, unnecessary, not authorized by the Constitution and are a waste of money that hurts EVERY American.

              I guess when you become conditioned to having ‘daddy-governemnt’ providing for your ‘general welfare’, you start to believe that it’s not YOUR responsibility to care for yourself, and not everyone else.

              • PunditGuy says:

                By all means, cut stuff. Stop talking about it. Stop electing people who do nothing but talk about it. The talk is getting boring.

                Great, you want to get rid of the federal department of education. Maybe the feds shouldn’t spend any money on educating U.S. citizens. It’s not like countries that are eating our lunch when it comes to producing scientists and engineers are doing so with some central planning. We’ll just rely on the Bill Gateses in our midst, because of bootstraps and we don’t need no fancy book learnin’. Fine. You make that argument and get it done. When you’re done with that, we can take on the other 300 things you failed to mention with any specificity.

                And we’ll probably end up with only 90% of our current deficit.

                • 99 1/2 Days says:

                  Why should the Feds educate US citizens? Local governments handle it.

                  • PunditGuy says:

                    Ask any of the Little Rock 9 why federal involvement in local education issues might be necessary.

                    • Skyhawk says:

                      Yes, but that was the SJC, NOT the Dept. of Ed.
                      The Dept. of Ed. isn’t a law enforcement agency and had nothing to do with the events you used as a justification for it.

                    • PunditGuy says:

                      He didn’t ask why the Dept. of Ed needed the be involved. To answer your question, though, “Mississippi.” (Although, in fairness, I think the last time I looked at state rankings they were 45th or something.)

                  • ghostfire says:

                    How are the kids from a county with a 43.6% poverty rate (Buffalo County, SD) or a 39.9% poverty rate (Quitman County, MS) going to fare against the kids from places like Waukesha County, WI (4.9%) or Morris County, NJ (3.8%)? Say anything you will about why those rates are the way they are, but no child chooses where or to whom they are born, and children from those poor areas do not deserve to be treated like serfs.

                • Skyhawk says:

                  I’d run out of room listing every unnecessary program.

                  Here are a few more, that I take it you fully support-
                  http://www.heritage.org/Research/Reports/2005/09/Examples-of-Government-Waste

                  By your logic, we should add more levels then, right? 5,6, even 7 levels of bureaucracy will help, right?

                  Tell me how 4 redundant levels of bureaucracy have improved education in this country.

                  They haven’t.

                  You make the mistake, again, of equating massive governemnt spending and bureaucracy with success. You are wrong.

                  If you think kids won’t get ‘no book learnin’ by cutting needless, wasteful programs, you are part of the problem.

                  The state of California recently spent $578 million on ONE school. ONE SCHOOL!
                  http://education.change.org/blog/view/california_spends_578_million_on_the_taj_mahal_of_schools

                  This is the obscene waste you support?!

                  So, again using your logic, (more money and gov’t = better education) every student in that school should be an A+ student.
                  When they don’t, will you take the blame?

                  • PunditGuy says:

                    There you go mouthing off again. Are you planning on doing anything about what you perceive the problem to be, or are you going to do something about it?

                    I brought up Reagan earlier because he started the modern conservative decline. You know one of the things he ran on? Shutting down the federal department of education. So after 30 years of inaction, I’m supposed to believe that you’re somehow serious about wanting that department cut? Please. Put up or shut up.

            • Wawa says:

              Reaganomics (aka supply side economics) was based on the theory that lower tax rates would enlarge the tax base to where net revenues more than offset lost taxes due to the rate cuts.

              It didn’t work. Deficits soared in the 80s. Bush Sr in the 1980 republican presidential primary called it “Voodoo Economics”.

              • mrsam says:

                “Reaganomics (aka supply side economics) was based on the theory that lower tax rates would enlarge the tax base to where net revenues more than offset lost taxes due to the rate cuts.

                It didn’t work.”

                I hate to confuse you with facts, but federal revenues were 517 billion in 1980, and 991 billion in 1988, after the Reagan tax cuts took effect. The Reagan tax cuts nearly doubled the revenue to the government.

                “Deficits soared in the 80s.”

                Again, I must apologize for confusing you with facts, but the deficit went up, then went down, as the revenues came in. The deficit reached the peak of 208 billion in 1983, and dropped to 152 billion in 1989.

                • hegemonyhog says:

                  Actually, Reagan oversaw some of the largest tax hikes in American history. Ah, the untold story of supply-side economics.

                • Kate says:

                  Sure because when you are a business you start hiring people when someone gives you a discount on your costs and totally ignore the fact that demand is way down.

                  If you are an idiot, maybe. Most corporations aren’t run by idiots. They put that extra money right in their pocket and go their merry way.

        • EverCynicalTHX says:

          Cue the hipsters, nice Che t-shirt btw,..

    • spamtasticus says:

      This is not about Republicans and Democrats. This is about the Government and The People. Don’t you all realize that the unwashed masses squabbling over the differences between the two “teams” detract from the real debate. Not only is it a waste of time, it plays into their status quo. Heck, it was the Roman Empire’s favorite tactic. Instead of bitching about how my politician is better than your politician we have to come to a realization that none of them are worth a damn once they taste power. What we need to do is keep them on a tight leash and remind them in what direction that leash goes.

      • PunditGuy says:

        Empty rhetoric was popular back then, too. Or did you have a plan to keep politicians on a short leash? Last I checked, voting them out was a pretty good option. Oh, but then you’d have to decide which among the candidates was the best. Damn democratic system.

    • TheUncleBob says:

      I don’t know about you, but back when I ran my own business, I put the (larger) number that I thought customers should have to pay me in my “Profits” column and spent accordingly. Then, at the end of the year, I put the difference between what I thought they should have paid me and what they actually paid me into my “Losses” column. Isn’t that how everyone runs their business?

      • Gulliver says:

        Except the government is NOT A BUSINESS. Should not be run like one either.

        • TheUncleBob says:

          You are correct – it is not a business. I know of no business that can force customers to pay by threat of a gun.

          Well, there are a few business like that…

          • Kate says:

            The government is us. You don’t like being one of us? there are ways to handle that – most involve leaving.

            • TheUncleBob says:

              So, when someone complains about our health care system, our insane military spending or laws discriminating against homosexual couples, your answer is “Don’t like it, leave!” as well?

    • RadarOReally has got the Post-Vacation Blues says:

      I suppose you go out and pave your own roads, police your own streets, drive your own kids to school, make their lunches there, fight all the wars single-handed, deliver your own mail…

      Taxes are the price you pay for living in a civilization. If you don’t want a government, you should probably find some cave to live in.

    • RadarOReally has got the Post-Vacation Blues says:

      P.S. When you start throwing around words like Marxist, your Beck/Hannity brainwashing shows. Taxing citizens is not “spreading the wealth” or “making the rich pay more”. It’s how a civilization works. We may all disagree on how much or where it goes, but taxes are necessary.

    • Mecharine says:

      Ah yes, the age old adage of “Let me pay less but keep fighting wars and supressing civil liberties”.

      Beck must be your favorite economist.

  6. captadam says:

    You’re missing one important thing–the Making Work Pay tax credit, which lowered our taxes by $400 a year, is disappearing. For most, that will be more than offset by the drop in the payroll tax.

  7. veg-o-matic says:

    “Most biggest” news story, indeed.

  8. heart.shaped.rock says:

    Yes, the person who earns the max wages subject to social security will receive an additional 2136 this year. (me, i’ll get an extra $16 a week). And the people who earn more than that will see the additional 2136 and have the added benefit of paying NO social security tax on any income above 106,800.

    The real answer is to increase the wage cap on the employee wages, or get rid of it altogether. I’d be for keeping a cap on the employer’s portion, since it’s the employee who gets the benefit.

    • hansolo247 says:

      If you raise the wage cap for the tax, you un-cap the benefit.

      Simple as that.

      It’s only a quasi-welfare scheme right now, uncapping the wage base makes it full-on welfare, except for middle class people.

      SS has been a primary cause of the problem of poor seniors who didn’t save.

      • PunditGuy says:

        http://www.nber.org/aginghealth/summer04/w10466.html

        People who actually studied your theory — with real numbers and a method and stuff — and reached a different conclusion.

        • hansolo247 says:

          well, of course…you spend money on them and they have money. Easy enough to understand.

          Now, back to the original point, increased SS spending has resulted in LOWER personal savings for the population, and thus seniors.

          Got a study to refute that??

          • hegemonyhog says:

            Got anything to prove that?

          • PunditGuy says:

            You: “SS has been a primary cause of the problem of poor seniors who didn’t save.”

            The article: “As the authors note, assessing the causal effect of Social Security on poverty is difficult. For example, individuals may work and save more when benefits are less generous, so a simple calculation of the increase in poverty that would result from eliminating Social Security income would likely overstate the true effect by ignoring these behavioral responses….

            Applying this estimate to the change in Social Security benefits between 1967 and 2000 suggests that the increase in benefits can explain all of the 17 percentage point decline in poverty that occurred during this period.”

            Ergo, your statement, quoted above, turns out to be false. In the absence of SS payments, the poverty rate would be higher. Seniors, left to their own devices, would not have saved enough to not be poor. The study does refute your statement.

            Do you have an actual analysis of real numbers that backs your theory?

            • wimom says:

              But they would have been able to save more if they did not have to pay into SS every month. Sure, maybe not all people have saved a lot–they might have preferred to travel or buy a vacation home, but they would have had the free choice to do what they wanted with the money they earned. That is what is great about our county: opportunity. SS took away the opportunity to do what they wanted with their money.

      • Kibit says:

        Unfortunately it isn’t just about seniors “not saving”, but seniors that have not been able to save because they make a low wage or have had unforeseen circumstances that made it difficult if not impossible to save.

      • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

        When I started working, companies provided a retirement package. Very few even thought of saving for retirement. Companies stopped funding retirements in favor of higher profits and mismanaged what few funds were left. And nobody taught graduating high school students a damn thing about personal finance.

        Now, you wonder why large segments of the population have nothing but SS in their retirement?

  9. dakeypoo says:

    Yay. I get an additional $2,136 on top of my CBA raise with the federal government.

  10. Master Medic: Now with more Haldol says:

    Here’s a thought; don’t have the govt take your money from the check before you see it, make us write a check every week/month/quarter for taxes. See how fast “reform” occurs then.

    • TopcatF14B says:

      Woo Hoo, I support everybody being 1099′d!

    • wimom says:

      I have always thought this, too! People don’t realized how much is withheld. The first year after I had my daughter, I caluclated how much my husband and I paid in FICA, federal and state income taxes. I realized I made just enough to cover those taxes. I was literally working just to pay taxes. I would have much preferred to stay home with my daughter, which I did.

      • Necoras says:

        And thus the government succeeded in its goal of removing a productive member of society from the economy (I know you still consumed, and I don’t contend that being a mother/houswife isn’t a full time job, but it doesn’t add to the economy at large). Our government penalizes productivity and savings through taxes and rewards not working through welfare and the EIC.

  11. sarahphine says:

    Too bad I don’t pay into social security (state employee).

  12. ogsoleysol says:

    “The other major change was a payroll tax holiday, which effectively gives everyone a 2% raise. If you have a job, take a look at your most recent paycheck. You’ll see a contribution to Social Security and Medicare – sometimes it’s rolled up into one line as FICA. For 2011, there will be a 2% reduction in the amount you pay towards Social Security which can result in up to $2,136.”

    This paragraph evidences a fundamental mathematical illiteracy. The last sentence infers that some people pay $106,800 in Social Security taxes. To clarify what both this article and the article at bargaineering manage to mangle: payroll tax, which has been at 12.4% of the first $106,800 of your income, has been cut to 10.4%. As a result, you will be keeping 2% of your salary that you would normally be handing over to the Federal government.

    Technically, this is slightly more than a 16% reduction in the amount of your payroll tax.

    • ogsoleysol says:

      The payroll taxes I cited above are for the self-employed. For others it’s:

      7.65% down to 5.65% — a ~26% reduction in the amount of your payroll taxes.

      • ogsoleysol says:

        Geez, I wish I could edit this. The self-employment tax numbers only accounted for social security tax and not the entire FICA tax… but you get the point. It’s not a 2% reduction in the amount you pay in taxes.

      • dakeypoo says:

        Mine goes from 6.2% to 4.2%, which will result in the full $2,136.

      • dakeypoo says:

        Mine goes from 6.2 to 4.2 percent

  13. Press1forDialTone says:

    Just wait till all the government paychecks are fronzen (he laughs as
    he twirls the ends of his mustache), we’re not done with you yet you,
    you, you MIDDLE class.

  14. Press1forDialTone says:

    and “fronzen” is much much much worse than frozen.

  15. hegemonyhog says:

    Just so everyone’s clear: Ronald Reagan signed a veritable crapton of tax increases.

    http://www.ritholtz.com/blog/2010/07/reagans-tax-increases/

  16. Consumeristing says:

    Ugh. California is broke by funftyeleventy billion dollars. Again. They already raised income taxes and sales taxes for he past 2 years, and their itching for more to cover the gap. I pay the same income tax rate as my doctor because the top rate of 9.6% in CA starts at $46K. So anytime you move into an income tax free state, you’re already better off by almost 10% in salary.

  17. vicissitude says:

    The ‘Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010′ is first, a lie cooked up by all parties involved. In reality taxes will be going up for about 100 million US tax payers. Just like before, using the Church’s ‘Faith Based Initiative’ as a template, the Texas ‘Think Tanks’ have a plan to eliminate taxes entirely. Privately employed folks and home owners identify with tax issues and they use that. There are some major differences in the issues however. Big business wants education, law enforcement and the medical field to be completely based upon the business model. Your parents may depend on Social Security, or your child may depend on going to a good public school and we already know corruption has ruined law enforcement all across America. So much of the agenda put forth by big business has little to do with maintaining your American way of life and has little in common with the things we take for granted as Americans. If ALL businesses and corporations in America paid their fare share of taxes, then things would not only be better now, but the deterioration of America’s infrastructure would be far less. However, this does not play to their advantage when their agenda is to pay NO taxes at all. When you’re main navigational guide is short term greed, then the sky is the limit with possibilities. Paying no taxes may sound great personally, but that also means you loose as well. Goldman Sachs has a great advantage by always having a supposed economic consultant on the President’s team since before Ronald Regan. Goldman Sachs gets out of $2.5 Billion dollars each year in taxes. It’s not just the Federal tax issues either. States and Counties use supposed tax incentives to lock in deals with businesses. In many States, those tax deals include a business abilities to actually be appealed, or contested and in many cases delinquent, when later their tax reductions are negotiated behind closed doors with some Governor’s hand picked tax commission. If each company would pay their fare share, many budget shortfalls would be eliminated and this could result in lower taxes for the average American. Of course if you convince Americans that taxes and regulations are not needed, then you wouldn’t have anyone watching in the first place. Before the big bank entitlements, this could have solved many of our States budget issues. The truth is if all business paid their fair share of taxes they would all be playing on the same level field and have the exact same opportunities. Play poker in a casino, a portion of the pot goes to the house. The point is that America is the house in which all business plays. Finding loopholes and playing musical seats with America’s taxes not only goes against America, it could eventually even destroy America completely. While China might think this a good thing with this scenario, but eventually nobody wins. Some folks chant “Personal responsibility!” a lot. The truth is that we all have the personal responsibility to take care of America and most importantly taking care of Americans with in it. Please remember when the political sell outs in congress talk about lowering taxes, they mean eliminating taxes for the largest companies, America’s well-being means absolutely nothing to them. It also does not make you a communist Marxist to want to keep America beautiful, or that you take the responsibility of taking care of Americans and the American infrastructure we depend on. It just means you are taking care of America in a responsible way. It is no longer ‘We the people’, now it’s we the big business who runs the government, who in turn sets the agenda using the media and the politicians they own. Remember those people you see on the tv news are reading a script written with an agenda and intent on keeping Americans consumers, or better put, keeping Americans Indentured servants. Just like religion should be separate from our government, so should business. America should be always about the people and *not* the greed. Otherwise we will continue to lose the freedoms we enjoy and the things that made America great in the first place.

    • Excuse My Ambition Deficit Disorder says:

      That could possibly be the largest paragraph I have ever seen on Consumerist.

  18. Jalbert says:

    Wow I had no idea that there were so many economists commenting on consumerist

  19. Awesome McAwesomeness says:

    “Most biggest”–really??

  20. Chooi says:

    I love the payroll tax part EXCEPT for the fact that I don’t pay into Social Security at work so I get no credit. Thanks goverment!

  21. iggy21 says:

    “The other major change was a payroll tax holiday, which effectively gives everyone a 2% raise. “

    Math fail. The 2% only applies to Social Security/Medicare taxes, not your entire paycheck. Comparatively, it’s about a raise a .015% raise.

  22. Jessie Ventura says:

    flat tax….Flat tax…Flat Tax…FLAT Tax…FLAT TAX…FLAT TAX…whooo whoooo.

  23. Mecharine says:

    Paying less into social security? Won’t that make problems even worse?

  24. HogwartsProfessor says:

    Phhhbbbbttthh. I’m going to need help on my taxes anyway. I’m now an independent contractor with the writing thing and have a W-9 with them, and they don’t withhold anything. I have to do all that. I’ll just get my bf to help me; he knows all that stuff.

  25. jp7570-1 says:

    “most biggest”?

  26. Annoyed says:

    Why are people saying that the Making Work Pay tax credit has vanished? I am a tax preparer and I was told that it is still effective for this tax year and I haven’t read anything about the tax credit going away except on here. Check your sources!