Don’t let your January paychecks make you too optimistic

posted at 2:01 pm on December 23, 2012 by Erika Johnsen

Whether or not we go over the fiscal cliff, we’re looking at a slew of brand-new taxes and costly regulations coming up in the next couple of years, largely courtesy of ObamaCare, that are going to put a sizable damper on our economy. Yet another aspect of all of this governmental procrastinating on a fiscal-cliff deal, however, is all of the accompanying uncertainty about which tax increases and spending cuts we’ll actually be looking at; ergo, says the AP, don’t let your first January paychecks lull you into a false sense of security.

No matter what Congress does to address the year-end fiscal cliff, it’s already too late for employers to accurately withhold income taxes from January paychecks, unless all the current tax rates remain unchanged, which is an unlikely scenario.

Social Security payroll taxes are set to increase on Jan. 1, so workers should immediately feel the squeeze of a 2 percent cut in their take-home pay. But as talks drag on over how to address other year-end tax increases, the Internal Revenue Service has delayed releasing income tax withholding tables for 2013.

As a result, employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year, said Michael O’Toole of the American Payroll Association.

If employers don’t withhold enough taxes in January, they will have to withhold even more taxes later in the year to make up the difference. Otherwise, taxpayers could get hit with big tax bills, and possibly penalties, when they file their 2013 returns.

And the worst part of this is, it’s looking increasingly likely that we are going to go over the fiscal cliff. Obama and the Democrats’ refusal to make any sort of good-faith negotiations or concessions makes it increasingly apparent that everybody’s tax rates going up across the board is something they really don’t have that many qualms with, as Sen. John Barrasso explained this morning:

Mr. Barrasso, Wyoming Republican, said on “Fox News Sunday” that the White House isn’t interested in finding a solution to avoid having the American economy go over the “cliff” — the automatic tax increases and spending cuts that kick in in 2013 if Washington lawmakers can’t reach a long-term budget deal.

“I think the president is eager to go over the cliff for political purposes,” Mr. Barrasso said. “I think he sees a political victory at the bottom of the cliff.

“He gets all this additional tax revenue for new programs; he gets to cut the military, which Democrats have been calling for for years, and he gets to blame Republicans for it,” Mr. Barrasso said.


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I’m coming around to the idea that going over the cliff is the only thing that will get the country’s attention off Jersey Shore, Kim’s a$$ and the crease in Obama’s pants and focus it on the looming national economic collapse and federal bankruptcy.

Delaying the impact until February and then jacking it up to make up for lost ground will only increase the impact.

Going over the cliff will surely cause much damage, but continuing the national neuroses of denial and procrastination will do far more.

novaculus on December 23, 2012 at 2:08 PM

Wonder how many bhopress will tell their viewers/readers about this tax mess even if or if not the cliff gets done? NOT one will, me thinks. Just keep blaming the nasty R’s for not giving bho all he wants? Sure must be nice to have bhopress covering your hind end bho, isn’t it?

BTW, thank you Erika for bringing this up, so many other sites won’t!
L

letget on December 23, 2012 at 2:11 PM

…present!
…My January paychecks haven’t looked good for 4 years now…so what optimism do I have?

KOOLAID2 on December 23, 2012 at 2:12 PM

…there are cliffs in Hawaii!

KOOLAID2 on December 23, 2012 at 2:15 PM

Pain is very necessary. Teaches people not to do things that cause harm. Put you hand on the hot stove, you won’t do it again. Jump off a second story roof, you won’t do that again. The problem of the last four years and why 0bama was reelected is that there was no pain. Well, there was some pain, declning net worth and declining take home pay but everybody ate, everybody had a roof, and nobody felt the pain of paying for 0bama’s economic illiteracy. But it was more along the line of a paper cut, an inconvenience.

If people want the big government welfare state it has to be paid for. Which right now means doubling revenues. The only place that kind of money exists in earnings is the middle class. Let us find out if the middle class thinks that doubling their taxes to let the moochers and takers live as comfortably (or more so) while not working. Let’s allow the middle class to determine if they are comfortable with the true cost of the welfare state and big government.

Personally, I don’t think the middle class will think that they are getting a fair value for their work and contributions. However, I could be wrong. The only one way to find this out is to implement it, run the live experiment and record the results.

jukin3 on December 23, 2012 at 2:16 PM

Since the math/economics says we’re going to eventually go over not only this fiscal cliff but many subsequent ones as well, let’s get started! The sooner we start to try and repair the economy and political system the better off we’ll be. It all starts with changing the national focus and ending the denial. Extra bonus- it takes the focus off gun legislation issues.

Scotsman on December 23, 2012 at 2:17 PM

“He gets all this additional tax revenue for new programs; he gets to cut the military, which Democrats have been calling for for years, and he gets to blame Republicans for it,” Mr. Barrasso said.

And the Stupid Party voted for this. No doubt thinking, “Hey, we’ll take the senate and WH, and never have to worry about it ever really coming to pass.”

*sigh*

Wethal on December 23, 2012 at 2:19 PM

Obama and the Democrats’ refusal to make any sort of good-faith negotiations or concessions makes it increasingly apparent that everybody’s tax rates going up across the board is something they really don’t have that many qualms with

…well yeah!…you go on vacation when a plan comes together!

KOOLAID2 on December 23, 2012 at 2:20 PM

My January paychecks will not be a distraction; once we go “over the cliff” my checks stop.

M240H on December 23, 2012 at 2:22 PM

Get the heck rid of BOEHNER BOY

and let’s take the plunge.

Own it, DemocRATS.

Own it, Preezy of the United Steezy Barack Hussein Obama.

OWN IT ALL!

SD Tom on December 23, 2012 at 2:23 PM

As an aside, automatic withholding was one of the greatest victories the government has ever won. If people actually had to write a check each month, each quarter, whatever to pay their taxes, instead of the money never feeling “real” to them because it’s taken out before it hits their check, I guarantee you attitudes about taxes would be different.

Shump on December 23, 2012 at 2:24 PM

My January paychecks haven’t looked good for 4 years now…so what optimism do I have?

KOOLAID2 on December 23, 2012 at 2:12 PM

They keep the siphon on you earnings..suck suck suck
I am a 1099..I purposely dropped income
for a lower bracket this year. Then file an extension.
Done with the more I make- the Govt take.
I’m not giving it to the moochers anymore and a govt that squanders my $ due to hard work and long hours.

bazil9 on December 23, 2012 at 2:30 PM

SD Tom on December 23, 2012 at 2:23 PM

They won`t own it. The MSM will happily re-gift it to the republicans. We`re not going to win either way so let`s stop pretending there`s a good outcome possible.

ThePrez on December 23, 2012 at 2:30 PM

People are so dumb they think Obama inherited the ‘fiscal cliff’.

Wigglesworth on December 23, 2012 at 2:30 PM

…there are cliffs in Hawaii!

KOOLAID2 on December 23, 2012 at 2:15 PM

And volcano’s…..
;)

bazil9 on December 23, 2012 at 2:31 PM

I’m not at all happy about having to pay even more taxes but I think it’s time that We the People are forced to pay for the government we elect. Especially Democrat voters and those too damn lazy to get out and vote against the Dems.

Until ALL voters feel the pain of our bloated government there won’t be enough interest in shrinking it.

If we go over the cliff, rates go up, and the Dems call for a middle class tax cut next year I would oppose it. One reason our government has gotten so large is that so few of us actually pay for it. That has to stop.

As a taxPAYER, $30k this year, I’m sick of other Americans voting to increase my taxes for their goodies.

Charlemagne on December 23, 2012 at 2:34 PM

As the current tax laws stand, if they don’t put an AMT fix in place, everyone making over about $40K loses just about ALL of their deductions including mortgage interest. If they don’t fix the AMT by sometime in January and you are claiming extra withholding deductions for mortgage interest, you better file a new W4 and bring that down.

crosspatch on December 23, 2012 at 2:36 PM

The only one way to find this out is to implement it, run the live experiment and record the results.

jukin3 on December 23, 2012 at 2:16 PM

I agree.

Earlier this week I learned that yet another small business in my area sold out. It’s a chain of family owned, successful convenience stores employing several hundred people.

After the election several people I know who worked there were doing their “happy dance”. Now they are angry. They do not understand why the owners, like many around the country, have decided to sell prior to the end of the year. I gave up trying to explain the situation to them prior to the election and now with the predicable result. They will never understand – not because they can’t with a little effort – but because they choose to believe what they want to believe, i.e. fairy tales.

All I can say (with much regret and trepidation) is let it begin. Some people will figure it out although many will not.

Cody1991 on December 23, 2012 at 2:37 PM

And the Stupid Party voted for this. No doubt thinking, “Hey, we’ll take the senate and WH, and never have to worry about it ever really coming to pass.”

*sigh*

Wethal on December 23, 2012 at 2:19 PM

Just mind-boggling, isn’t it? I remember thinking at the time that all Obam and the Democrats had to do was obstruct and they would get exactly what they wanted in the end. Brilliant!

novaculus on December 23, 2012 at 2:40 PM

We Americans need to have the guts to go on a tax strike. We suffer more and more as the hogs at the trough in DC live like kings and queens. We keep feeding this corrupt, anti-America regime. They keep wasting our money and we, like sheep, keep paying for it. We’re cowards and I guess we deserve whatever we get.

Lizzy on December 23, 2012 at 2:43 PM

Cody1991 on December 23, 2012 at 2:37 PM

Agreed, lit it begin.

Dem/Liberal voters have lived too long under the protection of the GOP when it comes to taxes. In doing the job they were elected to do by their Republican constituents they also benefitted Leftist voters who believed spending could increase and regulations could increase all without harm to the economy.

It’s worth the personal pain for some Dems to learn their lesson. Some are beyond redemption.

Charlemagne on December 23, 2012 at 2:43 PM

And volcano’s…..
;)

bazil9 on December 23, 2012 at 2:31 PM

…maybe JugEars could be alone…by an active one!

KOOLAID2 on December 23, 2012 at 2:44 PM

Cody1991 on December 23, 2012 at 2:37 PM

I predict many more by 2014 when death
care kicks in.
Our family friend just sold his seafood market a month after the election.
Writing is on the wall.

bazil9 on December 23, 2012 at 2:45 PM

And the Stupid Party voted for this. No doubt thinking, “Hey, we’ll take the senate and WH, and never have to worry about it ever really coming to pass.”

*sigh*

Wethal on December 23, 2012 at 2:19 PM

Stunning, isn’t it? This is my favorite clip of the year. Maria B. has a Dem in her sights, but she reflects my frustration with all of these a$$holes:

http://www.realclearpolitics.com/video/2012/12/22/cnbcs_maria_bartiromo_vs_sen_ben_cardin_are_you_guys_incompetent.html

Cody1991 on December 23, 2012 at 2:47 PM

And the Stupid Party voted for this. No doubt thinking, “Hey, we’ll take the senate and WH, and never have to worry about it ever really coming to pass.”

*sigh*

Wethal on December 23, 2012 at 2:19 PM

With 20/20 hindsight I now see the debt ceiling screwing we took in Auugust 2011 was when we lost the 2012 election. The Tea Party was shunned and that killed the 2010 enthusiasm. The deal disillusioned so much of the base and that never recovered. The whole theory of getting blamed for a government shutdown and not sticking to principles spelled our doom. The one thing good I can say for democrat party members in good standing is they NEVER give up on their principles and they never give up, our team does every single damn time.

Bottom line is you can’t win if in your heart you don’t really want to. Particularly against a determined and disciplined foe that is willing to do anything to win.

jukin3 on December 23, 2012 at 2:48 PM

Actually, the House passed a budget that would have solved several of these problems but it still sits collecting dust in the Senate.

crosspatch on December 23, 2012 at 2:50 PM

Our family friend just sold his seafood market a month after the election.
Writing is on the wall.

bazil9 on December 23, 2012 at 2:45 PM

Yep. I tried so hard to explain the situation to people in a non partisan way leading up to the election – to get people whose lives and livelihoods were already tenuous to THINK and make the right choice.

I’m worn out. And I’m depressed being surrounded by abject stupidity.

They get what they deserve. When I have enough energy to be angry I’m pissed off that the rest of us have to deal with their idiocy and try to figure out ways to survive.

Cody1991 on December 23, 2012 at 2:52 PM

We fell off the fiscal cliff sometime during W’s spending spree.

As evidenced by their votes, the majority of Americans don’t care.

Let it burn.

Valiant on December 23, 2012 at 2:52 PM

The only one way to find this out is to implement it, run the live experiment and record the results.

jukin3 on December 23, 2012 at 2:16 PM

Agreed. I think the problem is that there simply isn’t the ‘slack’ in the system that Euro socialist countries had after WW2. Remember they started slow – national health systems when healthcare was pretty cheap and rudimentary. Lavish benefits when the vast majority didn’t claim them.

Barky’s trying to do it all in 5 minutes without that slack. You’ve got upside down demographics, an economy that is technically shrinking, and people who are already getting squeezed very hard.

In other words there are some serious structural problems for Utopia. We can’t afford all the rent seekers now, adding more isn’t going to change the math.

Economic collapse of some sort is increasingly inevitable. Fiscal cliffs, socialists, the GOP, low information voters – pick your vilain(s). The numbers don’t stack up and people clearly don’t get it. They will get it when the well runs dry and they’ll say “How on earth could this have happened”?

You know what? We’d best ensure no-one is armed with guns because this situation could turn ugly.

CorporatePiggy on December 23, 2012 at 3:00 PM

“He gets all this additional tax revenue for new programs; he gets to cut the military, which Democrats have been calling for for years, and he gets to blame Republicans for it,” Mr. Barrasso said.

All foreseeable.

However the STUPID RINO’s stupidly did not believe Obama would allow us to go over the cliff. They stupidly believed he would negotiate even though he never had eve once in good faith.

The conservatives were yelling Obama is not to be trusted. But RINOs trusted him anyway.

GOP the STUPID PARTY.

Steveangell on December 23, 2012 at 3:01 PM

Cody1991 on December 23, 2012 at 2:52 PM

I tried hard too Cody, to deaf ears. If I heard..”Where is my free coverage” one more time..my head was going to spin off.
I work in the insurance field..guess where my explanations went?
I am the “evil” insurance lady. Don’t listen to her…
I also used facts..not partisan rhetoric.

Now the tide is changing..some see it for what it is now.
They got what they deserved and will. I feel much like you.
Worn the hell out,depressed (as a patient myself) and angry.
I won’t sell or advise to screeching libs that voted for this.
I tell them to go to healthcare.gov and reach them. I am not 411 for obamacare. Cold of me but out of sympathy.

My small business clients are calculating and cutting back..(our sm fam business as well)including no new hiring and layoffs. Stream lining. Also, once contributing to the employees dependent medical premiums-no more. Employees will not only absorb the medical increase but the full cost of dependent coverage.

Some owners are older and saying eff it-sell and shut down-take the $ and retire.

People hear but they don’t listen.
Soon, they will get a 2×4 to head and maybe wake up.
I am also figuring out the best way to maneuver and survive.

Merry Christmas to you Cody.

bazil9 on December 23, 2012 at 3:14 PM

Merry Christmas to you Cody.

bazil9 on December 23, 2012 at 3:14 PM

Best wishes to you, bazil. Hope you and yours have a very, merry Christmas. All the best in the New Year!

(If you have any brilliant ideas, do pass them along. I find that my interest in politics has turned to revulsion. It’s only worth paying attention in order to figure out how to circumvent their calamities.)

Cody1991 on December 23, 2012 at 3:19 PM

I find that my interest in politics has turned to revulsion. It’s only worth paying attention in order to figure out how to circumvent their calamities.)

Cody1991 on December 23, 2012 at 3:19 PM

Where I am at.
I keep an eye on the enemy -so I am prepared to react.
All the best to you and yours too!

bazil9 on December 23, 2012 at 3:27 PM

Punish success get less of it.

Reward failure get more of it.

The democrat party is about nothing but that….and looting the treasury.

jukin3 on December 23, 2012 at 3:40 PM

As an aside, automatic withholding was one of the greatest victories the government has ever won. If people actually had to write a check each month, each quarter, whatever to pay their taxes, instead of the money never feeling “real” to them because it’s taken out before it hits their check, I guarantee you attitudes about taxes would be different.

Shump on December 23, 2012

I have been saying this for years. If you want true tax reform (i.e. lower taxes) have no deductions on paychecks and make people pay Soc. Security, Medicare, Medicaid , etc. quarterly. Attitudes on taxes and tax rates would change real quick.

HGFinley on December 23, 2012 at 3:52 PM

VPN still working

DarkCurrent on December 23, 2012 at 4:33 PM

Too bad we don’t get the ‘fair tax’ and EVERYONE pays if they buy something? But dc won’t do this, the thugs at the irs would not have their hold on us and the dc bunch will say, the ‘poor’ will have to actually pay for something?

Alas, not gonna happen?
L

letget on December 23, 2012 at 4:35 PM

No optimism here. Just spent an hour last week trying to figure out where the $120/mo ObamaTax is going to come from in my family’s budget.

txhsmom on December 23, 2012 at 4:42 PM

I’m coming around to the idea that going over the cliff is the only thing that will get the country’s attention off Jersey Shore, Kim’s a$$ and the crease in Obama’s pants and focus it on the looming national economic collapse and federal bankruptcy.

Delaying the impact until February and then jacking it up to make up for lost ground will only increase the impact.

Going over the cliff will surely cause much damage, but continuing the national neuroses of denial and procrastination will do far more.

novaculus on December 23, 2012 at 2:08 PM

.
Now that’s eloquence, and right-on to boot. Kudos.
.

“Alcoholics never seek help, until they are at their lowest LOW.”

listens2glenn on December 23, 2012 at 5:43 PM

Obama Claus is coming!

You better not work,
You better not try
You better not earn
I’m telling you why
Obama Claus is coming to town

He sees you when you’re building
He wants what you all make
He’ll tell the 47 percent
That being rich is a mistake

Oh you better not work
You better not try
You better not earn
I’m telling you why
Obama Claus is coming to town

He’ll tell you to be thankful
To bow down and give thanks
Or he’ll send you to a FEMA camp
To get your thinking “straight”

Oh you better not work
You better not try
You better not earn
I’m telling you why
Obama Claus is coming to town

He’ll give you a free cellphone
Say Obama Care is great
He’ll tell you being a success
Is something you should hate

Oh you better not work
You better not try
You better not earn
I’m telling you why
Obama Claus is coooming tooo tooown!

Naturally Curly on December 23, 2012 at 5:59 PM

If we go over the cliff, a lot of Americans will be getting unemployment checks instead of paychecks. Thanks, Barky. When you’re done with your Hawaiian luxury holiday, why don’t you go on the campaign trail again instead of working with Congress to fix this mess? Oh, I know – you are the Blamer-In-Chief, that’s why. The dog ate your homework.

Philly on December 23, 2012 at 6:22 PM

Naturally Curly on December 23, 2012 at 5:59 PM

That is fantastic!

txhsmom on December 23, 2012 at 6:55 PM

Oh, I know – you are the Blamer-In-Chief, that’s why. The dog ate your homework.

Philly on December 23, 2012 at 6:22 PM

He ate dogs as a kid. The least he could do now is offer homework to them.

Myron Falwell on December 23, 2012 at 8:45 PM

As an aside, automatic withholding was one of the greatest victories the government has ever won. If people actually had to write a check each month, each quarter, whatever to pay their taxes, instead of the money never feeling “real” to them because it’s taken out before it hits their check, I guarantee you attitudes about taxes would be different.

Shump on December 23, 2012 at 2:24 PM

Oh, I can guarantee, those happy days are coming soon. With all the new regulations, companies are going to stop direct hiring employees and instead go with independent contractors. My second job teaching did just that – they closed their USA corporation, moved that part to a tax shelter, and now hire independent contractors – and don’t even send a 1099 at the end of the year. We have to deal with every aspect of taxes. Let me tell you, running in circles to try and file all my Social Security, state and local taxes on what amounts to a minimum-wage job has been a real bear. When Miss Obamaphone has to file all the paperwork on her job flipping hamburgers at McDonald’s, it’s going to be a real eye opener for her.

Well, it just guarantees that even more people are going to say, forget it. I’m not getting a job. And even more resources will be wasted chasing “tax evaders” who frankly just don’t know what to do.

JoseQuinones on December 24, 2012 at 8:15 AM

When Miss Obamaphone has to file all the paperwork on her job flipping hamburgers at McDonald’s, it’s going to be a real eye opener for her.

Wait…the Obamaphone lady has a job??

JimLennon on December 24, 2012 at 8:40 AM

Stupid should be painful.

Let it burn.

glockomatic on December 24, 2012 at 11:12 AM

Merry Christmas Seasons Greetings from Barack Obama!

evilned on December 24, 2012 at 11:31 AM