When a payroll-tax break expired Dec. 31, Americans began paying 2 percentage points more in Social Security taxes on their first $113,700 in wages. For a person making $40,000 a year, that is about $15 a week.
The extra tax bite is about equal to a year of car insurance for a family making $30,000 or a basket of groceries per month for a family making $50,000, according to Wal-Mart’s analysis.
Other retailers who court low-income Americans also are bracing for the rising taxes.
Higher payroll taxes “go against our customers’ wallet,” Family Dollar Chief Executive Officer Howard Levine said on a Jan. 3 conference call. “Clearly, they do not have as much for discretionary purchases than they did.”
Even Obama’s core constituency, if they are working, pay Social Security taxes.
Social Security tax rates
Employees pay 6.2% of their wage earnings, up to the maximum wage base.
Employers pay 6.2% of their employee’s wage earnings, up to the maximum wage base.
However, in reality, as an employee you actually pay the full 12.4% Social Security tax. I’ll let the brilliant Milton Friedman explain.
Friedman should be required viewing for every High School student.