Friday, January 4, 2013

About That Paycheck of Yours...

Yeah... about that paycheck.  See, it's going to be smaller, no matter who you are.  You know how Obama sold the idea that only the "other guy", those "rich bastids", were going to pay more?  Not so much.

First off, do you remember that Social Security withholding has been artificially low for a few years, and it's going back up to it's regular rate, so you'll be putting 2% more into your FICA deductions.  No, not 2% of the 4.2% you've been putting in - you'll be paying 6.2% of your gross instead of 4.2%.  Now, personally I don't think they should have ever done this, it is phenomenally stupid to reduce the intake of money into the social security system with the program teetering on the verge of bankruptcy.  SocSec ran a $47.8 Billion deficit this year, and frankly looks like it will never not run a deficit again - unless something changes.  

Second, and bigger, Obamacare adds a bunch of new taxes and expenses this year.  You may recall that when it was being fought out in the Congress, they talked about collecting extra taxes for 4 years and then starting the "full tilt" system up: it was the only way they could make it not look like it was going to bankrupt the country within 10 years.  Here's a brief summary of the new taxes.  Some of these will be felt by everyone, and some only by certain people.  Courtesy of Americans for Tax Reform.
Higher payroll tax: $86.8 billion. The Medicare payroll tax is currently 2.9% on all wages and self-employment profits. Under this tax hike, wages and profits exceeding $200,000 ($250,000 for a couple) will face a 3.8% rate instead. This is a direct tax hike for small business owners, who are liable for self-employment taxes in most cases.
Flexible Spending Account (FSA) limits: $13 billion. Roughly 35 million Americans use FSA accounts to pay medical expenses not paid by the employer's health insurance with pre-tax dollars. These accounts are especially important to chronic patients with substantial out-of-pocket drug expenses.  While there used to be no (Federal) limit to how much may be put into these accounts, that went away January 1, and contributions are now limited to $2,500.  If you have an FSA, your benefit from it has been reduced.
Obamacare Surtax on investment income: $123 billion.  This increase has nothing to do with those fecal cliff negotiations we heard (entirely too much) about.  ObamaCare adds 3.8 percentage points to tax rates bringing the highest marginal tax rate up to 43.4% for individuals making more than $200,000 and couples earning above $250,000.  The new tax hits dividends, capital gains and other investment income.
Capital Gains Dividends Other*
2012 15% 15% 35%
2013+ (current law) 23.8% 43.4% 43.4%
The table above also incorporates the scheduled hike in the capital gains rate from 15 to 20 percent, and the scheduled hike in dividends rate from 15 to 39.6 percent.
Limits on itemized medical expense deductions: $15.2 billion. Currently, people can deduct medical expenses in excess of 7.5% of income if they itemize. Next year, that threshold will rise to 10%. This means a higher tax burden for those who have the misfortune to have large medical bills. It is literally a tax on the sickest Americans.
Medical device tax: $20 billion. This 2.3% tax on gross sales could amount to a very large percent of after tax profit thus encouraging an industry that is providing very good domestic jobs to relocate overseas. Meanwhile, the burden of the tax will be reflected in higher prices for anyone who needs an artificial knee or hip or a pacemaker.
If you're like me, you're also likely to find that either your insurance has become more expensive, or your doctor may be restricting services in some ways.  As the rules set in, we're seeing companies with one or two employees over the 50 employee ObamaCare limit getting rid of employees, and we see employers reacting to the 30 hour limit of full time employment by restricting the number of hours employees can work to 28 hours. If you're the 51st employee that gets let go, I'd say that's a smaller paycheck!  Same if your 35 hours at the Dead Lobster are reduced to 28. 
(Kaiser Family Foundation - H/T to the Bartelists)

Gonna be a lot misery in the next couple of weeks as everyone gets a look at their new, smaller paychecks.



3 comments:

RegT said...

And as the cost to those of us with coverage we personally pay for increases so the insurance provider can still make the profit their investors demand.

I wonder how many employers will be dropping their current plans and going with the "Exchange"?

I'm hoping someone tracks how many jobs are lost, along with how many hours are reduced in order to comply with this obscenity.

Reg T said...

Meant to add: I will personally take pleasure in asking anyone I meet who complains about the loss of their job (or their hours) if they voted for Obama - and then reminding them they did this to themselves. Along with the rest of us, of course.

Graybeard said...

One of the cartoonists I see regularly (so probably at Townhall.com) depicted two young women talking on a park bench.

{1} I sure am glad that ObamaCare passed, so that now that I've lost my job, I can even get birth control pills for free!.

{2} Why did you lose your job?

{1} My company had to cut back costs because of ObamaCare.

A bit over the top - in real life, "low information" people like that would never connect the two.