This post may appear a bit disjointed. I was cruising in the Civic the other day and the radio stations are so easy to change... landed on an AM station and whoopie a bit of nostalgia; enjoyed a full rendition of "How much is that Dogie in the Window?"
For those who haven't been blessed with all the wonderful changes to their paycheck in the new year let me clue you in... you've been pushed! Most are already expecting their health insurance to jump (again) this year - no shocker there. The real kick in pants is the restoration of 2% to Social Security deduction (aka OASDI - Old Age, Survivor and Disability Insurance), but let's get real; it's a tax, pure and simple. Granted I realize that this was intended to be "temporary" as a tax holiday to stimulate the economy; however, with all the talk of ensuring that the wealthy pay their share, this is the one tax that kicks the working middle class the hardest.
Why do I say this?
Simple, this tax is capped on taxable income of about $114,000.So what does that mean in regards to a 2% increase?
This table provides an illustration of the gaping disparity of Social Security as a tax:| Taxable Income | Effective Tax Increase | Effective Percentage Increase |
| $114,000 | $2,280 | 2% |
| $228,000 | $2,280 | 1% |
| $456,000 | $2,280 | 1/2% |
So who is making under $114,000 and will pay the "full boat" rate of 2%?
Why, that would be the working middle class.Meanwhile, the middle class is lead to believe with satisfaction that the "wealthy" are now going to start to pay their way... with some meager increases to income derived from passive activities (interest, dividend, capital gain income...). No, I don't feel too bad for folks who are making several hundred thousand from interest and dividend income. If they have this type of "income," it reflects the tip of a huge wealth iceberg as interest and dividends are derived from assets and it takes big assets to generate big passive income. It is regrettable that "income" has gotten tagged as the vehicle for taxation. Moreover, that the system is rigged so that a wealthy class are able to hold onto accumulated wealth through favorable estate taxation and gentle treatment of passive income while the earned income of the working middle class is placed at the center of the tax collector's bull's eye...well...
..."I do hope that doggie's for sale..."
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