End of Payroll Tax Holiday Could Impact Mid-Michigan

By: Fay Li Email
By: Fay Li Email
Reaching a fiscal cliff deal didn

FILE - (AP Photo/J. Scott Applewhite)

"For the moment we have avoided the worst of the fiscal cliff which probably would've put the country into a recession within a couple of months," said MSU Economics Professor Charles Ballard.

However, something separate from fiscal cliff negotiations is the end of the payroll tax holiday. That means everyone with a paycheck will see their payroll taxes go up from 4.2% to 6.2%. For the average wage earner making $41,000 a year, that's essentially a pay cut of $16 per week.

Ashley Samson from the Center for Financial Health in Lansing helps low to moderate income families create balanced budgets. She expects many mid-Michigan families will have to rethink their spending plan as an extra 2% of their pay slips away in federal taxes.

"These budgets are stretched so thin for a lot of these families that any decrease in take home pay is going to have a very large impact on their overall financial health," said Samson.

Experts expect the economy can withstand the payroll tax cuts and say tax hikes and/or spending cuts are inevitable.

"We're running big government deficits so we know we can't continue to do that forever, we've got to either raise taxes and/or cut spending. But the problem is if you do that too fast, if you really slam on the breaks as the fiscal cliff would've done, that has real potential to push the economy back into recession," Prof. Ballard said.

It seems congress found a moderate solution for now, but many families may still feel the pain and negotiations in Washington are far from being over.

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  • by Name Location: Location on Jan 12, 2013 at 04:14 AM
    Well Steve, we can agree on the imbecile part of the discussion! Get well soon!?!?!?
  • by Steve Location: Dewitt on Jan 11, 2013 at 08:15 AM
    Yes I am an imbecile for ever supporting local business. They take money from the working man, the very individual that made this state the powerhouse it used to be. Local business does not create jobs or improve the economy, it just takes money from the working man. BOYCOTT LOCAL BUISNESS! Doesn’t your daughter have enough ponies??
  • by Heywood Location: Location on Jan 9, 2013 at 02:50 AM
    Hey Steve, did I mention that you, sir, are an imbicile?
  • by Name Location: Location on Jan 8, 2013 at 12:08 PM
    Steve, you should boycott the Kool-Aide stand at the end of the street!?!?!?
  • by Steve Location: Dewitt on Jan 8, 2013 at 05:15 AM
    Funny how no one cried when they raised the tax on pensions but now "the elite" are getting asked to pay their share and it’s a problem? Way to continue the hypocritical ways of the rich and privileged! BOYCOTT ALL MICHIGAN SMALL BUISNESS! Purchase through the internet or the Big Box Retailers only. I guarantee that Big B didn’t hire one additional employee with the tax break his buddy just gave him.Nor did QD or the like! They will just use the extra money to by their daughters a pony for their birthday!
  • by Anonymous Location: Location on Jan 7, 2013 at 06:59 AM
    If you think this is the last of increased taxes on the middle class, think again. I am sure there will be many more so we don't have to cut spending, which is what we really need to do. This has nothing to do with Snyder but some just need any reason to hate him.
  • by Name Location: Location on Jan 7, 2013 at 05:14 AM
    So the Uninformed 51% that voted for BO are now informed, Obama lied and EVERYONE is now taxed!
  • by Name Location: Location on Jan 3, 2013 at 07:46 AM
    so this bill according to the media was supposed to help out working familys but just did the opposit.. when will congress get there act together and cut military spending?..
  • by Name Location: Location on Jan 3, 2013 at 04:07 AM
    Steve, this is a federal tax. It's your Boy Barry who is responsible for this. I see Barry extended the "Bush" tax cuts for 98% of the "rich" as well?!?!?!?
  • by free Location: Mason on Jan 3, 2013 at 03:59 AM
    Your right Steve, actually they'd like to tax all our money away till we're homeless, then put us in prison letting business pay prison wages.
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