Amidst all the asinine fighting over top tax rates, a working class tax increase was included with virtually no debate. The payroll tax holiday, scheduled to expire, was not renewed, which raises taxes on 77% of Americans. This will increase taxes on all working people by 2%, bringing your payroll tax rate back to 6.2%. There are no deductions or loopholes on the payroll tax. It is completely regressive as it is capped at $110k instead of increasing as income increases, like income taxes.
The dirty secret in all of this was, almost no one wanted the payroll tax holiday to be extended. It was not a matter of debate. The payroll tax funds nearly 40% of the federal government, and the tax holiday was a major driver of debt.
I’m not suggesting that ending the payroll tax holiday was a bad idea. I’m just astounded that the way Americans are taxes is so complicated that something like this can go essentially unnoticed. Working class Americans pay a really low tax rate as it is, but when we spend so much energy arguing top tier rates, these small tax increases can slip by.