For many of the nation's working poor, the
payroll tax reduction that became law on January 1 has shown no effect. In fact, it's made things worse in some cases, according to The Detroit News. The source is reporting that for many working poor - those who have negligible savings rates despite employment - the tax reduction will lead to greater costs.
Changes to the payroll tax initiated a 2 percent cut in Social Security taxes, and while that cut will lead to more income for many, taxpayers making $20,000 per year or less will actually be paying more come tax season.
The News reports that those earning below the $20,000 threshold will pay $100 more in taxes in 2011 than the previous year. Couples filing jointly will pay $500 more. It's not quite the incentive low-income workers hoped for.
"If you had a high income, you got nothing under Making Work Pay," Roberton Williams, a senior fellow with the Tax Policy Center, told the news source. "Now, if you're a low-income worker, you lose out. If you're a high-income worker, you make out like a bandit."
The tax cut also comes as the Making Work Pay Tax Credit expires. That $400 credit could cancel out any benefit the payroll tax reduction would offer, the Somerset Daily-American reports.
All data and information provided on this news blog is for informational purposes only. Infinisource makes no representations as to accuracy, completeness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis. Information regarding employment suits and other legal action is not updated after publication, and may not be current.
Related Headlines