WINSTON-SALEM, N.C.– Despite the fiscal cliff deal, most every person in the Piedmont and the entire nation will see smaller paychecks thanks to the end of temporary cuts in the Social Security payroll tax.
Enacted in 2011, the temporary 2% cut in Social Security payroll tax was meant to boost the economy and promote spending.
During the fiscal cliff negotiations no political party seemed to champion extending the cuts, so today as the cut ended, employers across the Piedmont worked to figure out ways to notify employees about the upcoming payroll changes.
Dr. Tony Burton, CEO of Northwest Child Development Centers in Forsyth, Stokes and Davie Counties, says he’s sending an email to his 70+ employees to warn them before they get paid.
Burton says the email and changing the payroll formula is the easy part, “it’s the human side of it talking to employees trying to counsel them give them some sound advice and let them know its going to happen.”
For the average household bringing in $35,000 a year, the 2% hike in Social Security payroll tax will leave their annual income about $700 short of what they’ve become used to. That’s roughly $58 less a month.
Northwest Child Development teacher and employee Kiva Goad says, “I think that any amount is substantial. I will start thinking do I need to cut back on dinners, do I need to cut back on places I’m going because of gas prices.”
Because people are expected to cut spending thanks to the payroll tax increase, CNN Money reports the National Association for Business Economics says most economists favored another extension.
Still that extension was not included or talked about in the most recent tax break negotiations.
Most Americans can expect to see the changes in their next paycheck.