How the Payroll Tax is hurting small business

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Last week most Americans were surprised to learn that their paychecks were a little lighter than usual. That’s because this administration has allowed the payroll tax to go up 2% for the new year. As the owner of a small company, Glenn explains exactly how impactful this and other measures this administration has enacted have been on the engine that drives jobs in America: small business.

In an e-mail to Mercury and TheBlaze staffers, Agnes, Glenn’s head of Human Resources, wrote:

The not so great news is that the payroll tax that was rolled back in 2011 from 6.2% to 4.2% has been restored to 6.2% effective January 1, 2013. Thus you may notice a dip in your take home pay.

Finally, fulltime, benefit eligible employees will note a Group Term Life deduction. While the company pays 100% of your Life Insurance Benefit premiums, the government requires that you, the employee, pay an imputed tax for life insurance coverage in excess of $50,000.00 per year. The amount of the tax is governed by the amount of the coverage & the employee’s age. The older a person is, the higher the tax is. What can I say? That’s Life!

Best,
Agnes

“So you’re taxed on buying a life insurance policy for yourself? That the company is actually paying for. And then we have to be taxed on that. That’s just astounding,” Pat said after Glenn read the e-mail.

“I’m buying your life insurance. So your family, in case something happens to you, your family is covered. That should be something the federal government says “Thank you. Thank you, Mercury.” Because if you die, now your kids are not going to be living off of welfare,” Glenn said.

“Because I took care of the insurance for you, but I can guarantee that I’m being penalized for it and you’re being penalized for it. And so now what’s going to happen? Most companies are going to say, ‘No life insurance. No, I can’t afford the life insurance. Something’s got to give. We’re going to give the life insurance. So if you guys want life insurance, you’re going to have to pay for it.’ Is that incredible?”

“Thank you, universal healthcare. So now these people who all supported that guy for president are now being they’re losing pay because they’re getting cut hours and they’re losing their healthcare,” Stu added.

CNBC had more on the increase in the payroll tax:

As of Jan. 1, the payroll tax that funds Social Security was raised two percentage points to its 2010 level of 6.2 percent. It is also by far the biggest component—$125 billion of the $190 billion—in tax increases approved by Congress to fend off a bigger wave of tax hikes from the “fiscal cliff.”

Economists expect it to pare as much as 1 percent or even more from first quarter growth on an annualized basis.

“In Q1, annualized it will shave about 1.4 percent off GDP,” estimated Mark Zandi, chief economist at Moody’s Economy.com. He said the payroll tax increase is by far the biggest hit, and he expects that the other new taxes amount to a dent to growth in the first quarter of about 0.3 percent.

The payroll tax increase is widely expected to shave about 0.6 percentage point off of GDP this year, but the hit will be hardest in the first quarter as consumers initially feel the pinch.

 

  • landofaahs

    Anyone with a brain knew that.  Frankly if you are a dumb liberal, you won’t even know it.  Sorry but it is what it is.

  • landofaahs

    We’ve had the tax’n; Time for the axe’n.

  • http://www.artinphoenix.com/gallery/grimm snowleopard (cat folk gallery)

    I have first-hand testimony to this effect of the new taxes as twelve small businesses around my area of the nation have cut back hours of their workers, and three owners have stated they will be forced to shut their doors, leaving almost 100 people out of work, due to the health care fiasco induced by Obama-care.

  • http://www.artinphoenix.com/gallery/grimm snowleopard (cat folk gallery)

    Obama has demonstrated that Liberalism is truly a form of madness to the core of a humans personality and their soul.

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    The liberals can care less about the poor trying to find work they don’t care that they are throwing the working class under the bus. No all they care about is making their rich boss pay their fair share at 63% but yet they still blame the economy on Bush. He might have started the roll off the cliff but you idiots lit the bus on fire cuts it breaks and held the gas down. Now we are stuck with a Marxist system that just as usual made the poor even more poor and taking whatever money we have left to pay for more idiot spending for programs that help no one or even improve anything.

  • Anonymous

    The uninformed are always surprised.

  • Anonymous

    I am disappointed with you Glen. The payroll tax never should have been temporarily cut to begin with, and you of all people should know that. Please examine the Statement of Social Insurance and then educate yourself on “unfunded liabilities”. If we want these programs (SS/Medicare), then we must be willing to pay for them. The current increased rate does not even pay for them, so technically the rate should be higher or program benefits need to be cut.

    The life insurance argument is a little naive too. Most here will agree that the current tax system is filled with inequities and should be abandoned. Except when it is a loophole that benefits us – then it is a good loophole right? Employer provider benefits is one of those loopholes. Where an employer provides the benefits and deducts the cost from their profits, the employee typically gets the benefit tax free. In the case of life insurance, there is a limit of $50K and the worker gets taxed above that. Those workers that do not get such benefit, do not get a deduction for the cost of their first $50K of insurance, do they? How is that fair?

  • Anonymous

    WOW!  One of our “low information” fellow employees went ballistic last week when she got her paycheck and blamed the employers wife for the decrease in her take home pay.  She accused the employers wife of taking the money and spending it at Whole Foods! 

  • Steve

    GTLI: The employer pays for the premium which benefits the employee – its the same as the employer giving the empoyee a bonus in the amount of the full payment, which the employee should pay tax on. However, the tax law gives employees a break and exmpts them on the cost of the 1st $50,000 of GTLI.

    The payroll tax reduction from 6.2% down to 4.2% was a polittical give-away. SS is underfunded 
    and the reduction made it worse. Having said that, SS is still a lousy deal for higher income taxpayers. 

  • Anonymous

    Now one knows why I never did think that cutting the fica tax would be a good idea.Once cut sure it’s nice to have little more pay but at what cost?It has reduced s.s.money so the funding has to pull more from other areas.Now it’s back up to where it was and you are unhappy about it.Never should have  been cut in the first place.

  • Anonymous

    can you explain how we became a marxist system and when it happened?

  • Anonymous

    Can you explain why?

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    Can you explain why the rich are paying 63% of their income though taxes and how that is not Marxist ideal? Come on let’s hear it independent lie. Let hear the lies and back flips you have to do to explain that you are going to do to defend your god Obama. Maybe you should actually look up the word Marxism instead of listing to media matters.

  • Anonymous

    never listen to media matters… Why do you keep calling Obama God.

    You just answered a question with a question.

    please explain your statement that america has turned into marxist country.

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    So in other words you ignore my response to your question. Gee why is that not shocking that you want to be dishonest and say I did not answer your question when I did but that is ok keep living in denial the Obama lie.

  • Anonymous

    You never anwered my question. You just asked me a question and said that i was going to lie. Where in your statement is explain how the country has become Marxist?

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    You are on blind fool you know that. You can’t even see 63% taxes on the rich as Marxism. I am sorry I tried to get you to think for yourself what in the hell was I thinking Obamabots don’t think on their own only programed.

  • Anonymous

    You still have not anwsered the question because haveing the rich pay 63% taxes is not marxist. You do know that in the 50s the rich paid 77% taxes. So please explain me how the country has become a marxist country?

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    By the way moron the reason they were that high is because back then progressives controlled the white house since the 1900s and guess where they lean to Marxism you are not helping your own argument. You are a tool to the Marxist left and this conversation is over.

  • Anonymous

    So your telling me that are country best economic period was because of Marxism? So if that’s the case what wrong with going back to that?

    Progressives have controlled the white house since the 1900′s?

    so that means the following presidents where progressive

    William Taft
    Richard Nixon
    Gerald Ford
    Ronald Reagan
    George Bush
    George W. Bush

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    Again not what I am saying dumb ass but you have problem with the truth so I am not going to do this with a moron.

  • Anonymous

     ”the reason they were that high is because back then progressives controlled the white house since the 1900s and guess where they lean to Marxism”

    I have copied and pasted the qoute above from what you said. Please tell me where in that staement don’t i understand. You say that the reason that Taxes back then was high was because they where leaning towards Marxism. That was also the country best economic period. So bascilly your saying that happened because of Marxism. Then you say that progressive controlled the white house since the 1900′s so  i listed some of the presidents from that time frame.

    So where am i mistaking and what is with the name calling  i haven’t callled you a name.

  • Guest

    Which lead to what happen under the Carter’s White House or was loses jobs faster than the speed of light is a good thing in your book of I hate Beck.

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    Which lead to what happen under the Carter’s White House or was losing jobs faster than the speed of light is a good thing in your book of I hate Beck.

  • Anonymous

    Nixon and Ford two conservative where white house before cater so your statement is blaming the job loses on them.

  • Anonymous

    Nixon and Ford two conservative where in white house before cater so your statement is blaming the job loses on them.

    Yea and what about your book i hate Obama?

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    But it happen under Carter and Nixon is about as conservative as Obama is white.

  • Anonymous

    So now Nixon is a progressive when did that happen?And like your statment said what Ford and Nixion did Lead to the Job losses under Cater.

  • Jaamoose

    Said the cuckoo…

  • Anonymous

    I am done with the two system. Liberals say they need to pulverized the GOP….they did a good job of that on their own.

    Someone here mentioned, ” How can we split the party vote and insure a liberal win?” Did they or did they not get their way while the GOP sat back and watched?
    The move to Change parties is Simple,…… if you are sick and tired of being used; Tired of high taxes; Government intruding in your business, Then you are a candidate for not voting either party.

    Keep your party affiliations so they don’t have a clue in 2016. They, are the pundits.

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    More like half and half. You are not worth it your head is so far up Obama’s rear that you just have to blame the Republican for a liberals mess. Why is it that you liberals never ever take reasonability for your own actions? Sure it might have started under them but Carter made it fifty times worse like Obama today but that is ok keep blaming the other guy when your liberal plans fall flat on their ass.

  • Anonymous

    I never blame the republican those are your words. you are the one that said the presidents before Cater lead to the job loss. I just informed you of who where the presidents before him. I don’t see why you so hostile about that.

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    Because you are twisting my words no shit I am going to be very pissed off at you.

  • Anonymous

    How did i twist them is that not what you said.

  • http://youtu.be/XEjnyMyJYTI Sam Fisher

    that was not what I was getting at.

  • Anonymous

    Oh, ok so please clarify.