Businesses' fiscal cliff fear: The payroll tax cut
December 7th, 2012
11:19 AM ET
2 years ago

Businesses' fiscal cliff fear: The payroll tax cut

New York (CNNMoney) – Of all the fiscal cliff issues, there's one that scares small businesses most of all: The end of the payroll tax holiday.

The tax comes from worker paychecks and funds Social Security. For the past two years, workers have been paying a rate of 4.2%. In 2013, the rate is set to rise back to 6.2% on the first $113,700 in wages.

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Filed under: Fiscal Cliff • Jobs
soundoff (14 Responses)
  1. Dutch/Bad Newz, VA

    The President's budget proposal included stimulus. The payroll tax holiday will fall under that category. I thought republicans were the party of business. Why would they want to see this go away?

    December 7, 2012 11:26 am at 11:26 am |
  2. Maze

    They ought to just go ahead and raise rates for those over $250K and lets move on. Its not even raise 8% of the $1.1T deficit Obama ran in 2012 so unfortunately its not going to help much. I estimate I would owe about $5500 more a year more and if they do nothing to deductions I would most likely itemize most of that money away.

    December 7, 2012 11:40 am at 11:40 am |
  3. Darryl

    They should let the Payroll tax cuts comtinue for 1 more year while the economy picks up and we show a bigger movement in the work force then go back to where it was. The more people working the more that goes into the Social Sceurity fund. The minimum pay rate has to change in this country. Wages have to rise to a level where people can make a decent wage to Make house payments, insurance, utilities, food, childrens needs school clothes ect, and money to put away for a rainey day fund. People can not keep living on the edge of poverty and continually be in fear of loseing everything when someone gets sick. The disparity and inequality is way out of touch. This is all due to the Corporations and free markets to some degree. Costco is the perfact example of a corporation who is completely fair to their employees with fair pay, benifits ect. If the other corporations followed their model of operation people would be supportive and the country would creat a strong back-bone and it would lessen the hard ships on a whole lot of people.

    December 7, 2012 12:11 pm at 12:11 pm |
  4. Sniffit

    "Sniffit, I give you credit, at least you’ve remained consistent as others like fourandthedoor have either changed their name or returned to their home planet."

    Thank you. Yeah, I can't go home because my home planet was destroyed by an asteroid and I'm the only one left fo my kind. Your yellow sun gives me some fun powers tho.

    December 7, 2012 12:11 pm at 12:11 pm |
  5. Rick McDaniel

    Actually, I would disagree with that premise. I don't think the payroll tax cut, expiring, is what small business fears.

    What they fear, is the probability, that Obama will add new taxes to businesses, to pay for his social excesses, and those costs will add a burden, that for small business, will be difficult to meet.

    Let's be realistic....there are NO free rides. Someone has to pay........and it will always be, the consumer, one way or the other. Either through taxes, or through higher prices for goods and services.........the citizen has to pay for everything, in some way.

    The more that is given away, in welfare, the more the taxes and / or the cost of goods and services will rise.

    Take your pick.......it is going to be one o the other, and the middle class will be the primary payer for the poor, no matter which option you choose.

    As Obama raises the welfare level, to a family of 4 with an income of $75K.........you can expect those with higher household incomes, to pay a LOT more, through one of those options.

    In truth, the probability is that both will occur.......higher taxes on everyone earning above $75K per household, and higher cost of goods and services, as well. The spending is so great, that both will be required, to pay the bill.

    December 7, 2012 12:15 pm at 12:15 pm |
  6. just sayin

    the payroll tax cut was just another obama gimmick that didn't work. the government misusing my payroll taxes that is supposed to go to fund social security and my retirement. it is a glaring reason why social security money needs to be taken out of the hands of politicians. money had to be borrowed to make up for this and now the kids get to pay for obamas failed gimmickry. and the idiots vote for him like he's doing them a favor.

    December 7, 2012 12:16 pm at 12:16 pm |
  7. John

    USA...lol.
    So everybody is screaming "MAKE CUTS!" yet every potential cut is met with "please don't cut xxx; it benefits us". So what's the solution?

    December 7, 2012 12:29 pm at 12:29 pm |
  8. Rudy NYC

    just sayin wrote:

    the payroll tax cut was just another obama gimmick that didn't work. the government misusing my payroll taxes that is supposed to go to fund social security and my retirement. .....
    -------------–
    Are you saying that a tax cut didn't help the economy? Just saying.

    December 7, 2012 12:30 pm at 12:30 pm |
  9. Data Driven

    Yah, get rid of it. Middle-class folks buying more goods and services don't help the economy; rich people buying yachts helps the economy.

    December 7, 2012 12:39 pm at 12:39 pm |
  10. Rudy NYC

    Rick McDaniel wrote:

    ... Let's be realistic....there are NO free rides. Someone has to pay........and it will always be, the consumer, one way or the other. Either through taxes, or through higher prices for goods and services.........the citizen has to pay for everything, in some way. ...
    ----------------
    For once, I am forced to whole heartedly agree with that out of context statement, but not the derivation that you used to come up with it. The consumer always pays, never the job creators. You're correct about that part.

    December 7, 2012 12:42 pm at 12:42 pm |
  11. Gregory M. Newbold

    A fundamental
    concept that Columbia Business School or Havard Business School teaches MBA`ers when performing a cost/ benefit analysis is "SUNK COST"

    The President`s progressive critic alwaYs fear his neogiation skills. Mr. President, if you want your adversaries to RESPECT YOU, you can`t let them off the hook when you don`t have to. Translation: the top 2 Marginal Tax rates are going to 39.6% and 36% if there is no deal by Dec 31. Capital Gains ans therefore, carried interest rates are going up. You`ve won. Don`t give it back for nothing. Consider it with the same principle as "SUNK COST".

    Now, you may scale down a bit from 39.6% but you`d better get something for it or your adversaries will ridicule you. I might suggest you focus on a bill that provides tax reform benefits to COMPANIES that move manufacturing capacity to the US for at least a 12 year period. This will shift jobs from overseas and strengthen our economy. The GOP will want to fight this to keep Dems from getting the credit. Do this and the public will label the DEMs as the party that has mastery over the economy instead of the GOP. The Dems would reap the benefits of this in 2016 & 2020.

    December 7, 2012 12:42 pm at 12:42 pm |
  12. Sniffit

    "As Obama raises the welfare level, to a family of 4 with an income of $75K........."

    How many times do I have to tell you? Lead paint is NOT a healthy part of a balanced breakfast.

    December 7, 2012 12:54 pm at 12:54 pm |
  13. Ray E. (Georgia)

    The only thing that will fix this huge mess, all provided to us by the Libs since FDR wil be another Depression. And at this point I see nothing to stop it. When FDR was President there was no 16.3 Trillion dollar federal debt. The Libs want to keep spending rather than do any Fiscal Responsibility. Following the Liberal method is like feeding those One Armed Bandits in Las Vegas. Before long your money is gone and there is nothing to show for it.

    December 7, 2012 01:32 pm at 1:32 pm |
  14. WhereIsPalin

    I'll gladly pay my 6.2% if EVERYONE pays 6.2% on ALL their income.

    December 7, 2012 02:15 pm at 2:15 pm |