New payroll tax reduction helps employees
Part of the extended tax cuts currently up for debate in Washington is a one-year payroll tax reduction that will put more money in the hands of employees. Overall, projections indicate that payrolls will see approximately $120 billion in gains for 2011, Bloomberg News reports.
While the maximum benefit will be an increase of $2,100 for anyone making over $106,800 or more, the payroll tax cut is tantamount to a 2 percent raise for employees and will provide businesses with more flexibility that can spur growth, AT&T chief financial offer Rick Linder told Bloomberg.
"You need to incent businesses to grow," Linder added.
Small businesses may not be significantly impacted by the cut, as only 3 percent of entrepreneurs earn more than $250,000 per year, according to the Congressional Joint Committee on Taxation. However, that 3 percent accounts for approximately $500 billion in net business income annually.
Currently, the first $106,800 of an individual's salary is subject to a 6.2 percent taxation. That will drop to 4.2 percent should new regulations pass. However, the tax rate for employers will remain the same, according to Bloomberg.
While the maximum benefit will be an increase of $2,100 for anyone making over $106,800 or more, the payroll tax cut is tantamount to a 2 percent raise for employees and will provide businesses with more flexibility that can spur growth, AT&T chief financial offer Rick Linder told Bloomberg.
"You need to incent businesses to grow," Linder added.
Small businesses may not be significantly impacted by the cut, as only 3 percent of entrepreneurs earn more than $250,000 per year, according to the Congressional Joint Committee on Taxation. However, that 3 percent accounts for approximately $500 billion in net business income annually.
Currently, the first $106,800 of an individual's salary is subject to a 6.2 percent taxation. That will drop to 4.2 percent should new regulations pass. However, the tax rate for employers will remain the same, according to Bloomberg.
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