For a portion of this calendar week, President Donald Trump considered cutting payroll taxes. “I’ve been thinking about payroll taxes for a long time,” he told reporters on Tuesday, and then he turned around on Wednesday and told the same reporters “I’m not looking at a tax cut now,” he said. “We don’t need it. We have a strong economy.”
But look, this guy changes his mind more than a picky eater trying to decide what to eat for lunch, so let’s just review what he could have tried to do to your payroll taxes. I am sure we will need to review this again soon enough.
A payroll tax cut decreases the amount of tax collected from one of two places: Social Security or Medicare. When you get your paycheck, 6.2% has been deducted for Social Security tax. Your employer also pays 6.2%. Any income you make above $132,900 isn’t subject to Social Security tax.
For the Medicare tax, employees and employers each pay 1.45%, with a 0.9% surtax for individual wages above $200,000. If you’re self employed, you pay the combined 12.4% Social Security tax and 2.9% Medicare tax all on your own.
Advertisement
When the Obama administration cut the payroll tax in 2011 and 2012 to boost the post-recession economy, the employee side of Social Security tax was reduced to 4.2%, and the employer side stayed the same.
How much you’d save with a payroll tax cut
If President Trump pushed for a payroll tax cut this year, most full-time employees would save somewhere around $908, according to Kelly Phillips Erb at Forbes. Top wage earners, she says, could save up to $2,658 via such a payroll tax cut.
Advertisement
But while you may welcome a little extra cushion in your paycheck, a payroll tax cut could cost the government up to $300 billion during a time when the deficit is already rising and projected to continue into further in to the red.
Congress would have to sign off on any payroll tax change, and Eamon Javers at CNBC said the chances of Congress supporting a payroll tax cut are “south of zero.”
Advertisement
https://twocents.lifehacker.com/how-a-totally-hypothetical-payroll-tax-cut-would-impact-1837452596
2019-08-22 15:00:00Z
52780361041299
Tidak ada komentar:
Posting Komentar