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I have already cut back on my spending, and will do so ruthlessly throughout the year.
That extra 1k a yr I am loosing, has caused me to even more look into buying things on discounts and cut back on discretionary spending for myself and the kids.

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Red me if you like, but in my circumstances, it will affect my spending. Husband lost his business early in 2012 because... (more)

ferns48 (Jan. 21, 2013 @ 2:49p) |

My sympathies. At least you are honest to acknowledge it as a "tax rate reset" instead of calling it an increase compare... (more)

PrincipalMember (Jan. 23, 2013 @ 11:33p) |

You make 50,000 a year. I make 25,000 a year. When you and me go to Six Flag, my ticket cost 25 bucks, and yours is 100 ... (more)

scrock (Mar. 07, 2013 @ 3:46p) |

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2013 will probably catch the economy in a vicious cycle.

Taxes go up.

People spend less.

People now have less income as sales drop and income drops as a direct result.

Taxes go up as a result of a lack of sales tax income resulting in the government finding other "revenue streams".

People spend even less.

I'm all for paying a fair share but when the government takes over 50% of your income after everything is said and done it doesn't promote the economy, it stifles consumer spending, and leads to less tax income for said government.

Personally the payroll tax won't affect much spending, the penalties for not having health care and the penalties for having too many employees means we won't grow as a company, but the payroll tax won't directly affect my spending.

That said I understand why me cutting back spending won't make things better and it will only affect the people I normally spend money with.

For me it will be fairly transparent. Were' having another kid, so -1k payroll tax, +1k child tax credit. The bigger impact to me this year will be the extra $3k spent for better health insurance.

I spend a lot more money on ice cream now.

It won't impact my behavior at all.

atohmc said:   I spend a lot more money on ice cream now.

Look at this rich guy, I bet you'll wash it down with MILK when it skyrockets in price just to show how awesome you are compared to the rest of us.

I loved the recent showdown about milk subsidies.

Don't subsidize milk = Milk prices go up, taxes go down.

Subsidize Milk = Milk prices are still pretty jacked up, taxes stay the same.

It would be pretty amazing to see the government drop all subsidies of businesses and let the market work itself out.

Ice Cream would get a lot more expensive but it's okay because half of the products on the shelf are just frozen desserts anyways...

I'll probably just save $1000 less this year.

I plan on upgrading from part time unemployment benefits to full time SS disability benefits . I don't expect it'll effect me at all.

technolich said:   atohmc said:   I spend a lot more money on ice cream now.

Look at this rich guy, I bet you'll wash it down with MILK when it skyrockets in price just to show how awesome you are compared to the rest of us.

I loved the recent showdown about milk subsidies.

Don't subsidize milk = Milk prices go up, taxes go down.

Subsidize Milk = Milk prices are still pretty jacked up, taxes stay the same.

It would be pretty amazing to see the government drop all subsidies of businesses and let the market work itself out.

Ice Cream would get a lot more expensive but it's okay because half of the products on the shelf are just frozen desserts anyways...



You know, I really can't tell if you didn't get the joke, or if it was I that didn't get the joke in your reply.

atohmc said:   I spend a lot more money on ice cream now.

I'm planning on spending 7-10x my salary on ice cream this year. Nothing to do with the tax situation though...

It will probably feel similar to a few years ago when the rate was the same as it is today.

People at work are already complaining as some just received their paychecks.
You guys are correct it will be a vicious cycle this year, i already see people at work putting off purchases and buckling down.
It really came as a shock for alot of folks.
My company has also suspended the 401k match this year and that caused alot of talk.
Seems like no raises either at work, so time to tighten the belt buckle and hang on for a rough ride.

When the payroll tax holiday was implemented I just increased my 401k contribution by 2%. Now that the holiday expired I just decreased my contribution by 2%. So my spending won't be affected.

SpeedingLunatic said:   atohmc said:   I spend a lot more money on ice cream now.

I'm planning on spending 7-10x my salary on ice cream this year. Nothing to do with the tax situation though...


What flavor?

When the payroll tax was cut 2 years ago I upped my 401K contribution by 2% so it had no effect on my the last two years except to build up my retirement. I may end up reducing my contribution later, but as OP said, I am really trying to cut back to save up a better emergency fund and pay off the house this year. Last year I put 50% of my income into paying off my HEL from 39K to 13K, 20% of my income into my 401K and several grand more to build up a 6 month emergency fund and buy some more stocks and bonds. I try to keep living expenses at under 25% of my income. My worry is they will penalize savers by means testing social security even more in the future -- so you are damned if you prepare and rewarded if you are irresponsible.

I don't know, I just don't see how this 2% is going to affect the behavior of the general population. Most people I know have no clue about finance, budgeting, or general investing. I suspect they will maintain a similar lifestyle which may meant they rack up a little more debt than they usually do. I personally just do little things to off-set this - dump more pre-tax money into my FSA, max out my HSA, etc. I think this will have have a very limited impact and by June we won't even notice this slight decrease in net pay.

my company went from 26 paychecks to 24 paychecks this year. I guess the psychological impact of a lower paycheck is minimized right there

2% 401K matching contribution terminated in 2001.
No pay increases of any kind since 2003
5% pay cut in 2011
High deductible health insurance coverage increased to approx. $10,000 annually for family coverage 2012
Illinois state income tax increased 66% 2011
Illinois tolls increase 87% 2011
Food price rose 2.5% to 3.5% 2012
Interest on modest savings average <1%

Payroll tax increase?
Didn't feel a thing, I was numb already.

If you're self employed you pay estimated taxes based on the previous year, so you won't actually feel the effects of 2013 increasing until 2014 when suddenly you'll owe more when filing your taxes in 2014 if your income stayed the same from 2012 to 2013. That means during the course of 2013 you probably won't think much about it at all.

My level of spending isn't closely correlated to my income, so it will make no difference at all.

Won't impact me at all. I knew the payroll tax holiday wasn't going to last forever, so it went into my 401k. I started my fiscal year back in October and cut back eating out by a lot, started cooking a lot more and that alone saved me a few hundred per month.

If you're sweating bullets about 2%, you have bigger issues. I know it's money, but we knew it wasn't going to last forever. Plan accordingly.

None at all

I've increased my Vanilla Reload churn to more than compensate, so my spending is staying the same but my saving is going up.

Well, considering I received a 1.7% increase in my salary in 2013, the 2% payroll tax increase will be fairly transparent.

technolich said:   2013 will probably catch the economy in a vicious cycle.

Taxes go up.

People spend less.

People now have less income as sales drop and income drops as a direct result.

Taxes go up as a result of a lack of sales tax income resulting in the government finding other "revenue streams".

People spend even less.

I'm all for paying a fair share but when the government takes over 50% of your income after everything is said and done it doesn't promote the economy, it stifles consumer spending, and leads to less tax income for said government.

Personally the payroll tax won't affect much spending, the penalties for not having health care and the penalties for having too many employees means we won't grow as a company, but the payroll tax won't directly affect my spending.

That said I understand why me cutting back spending won't make things better and it will only affect the people I normally spend money with.


- 39.6% top tax rate,
- certain deductions get phased out after $250K. the rate of phaseout is 3%. thus, your effective federal tax rate is 1.03 * 39.6 = 40.8,
- medicare 1.5 ( * 2 for employer's side) = 3.00 %,
- obamacare extra 0.9%,
- states like NY or Cali, 8% marginal state tax,
- states like NY or Cali, 7-8% sales tax,
- if you have municipal tax, add that too.

although not at the margin, you pay 12.4% of the first $113K in social security tax. if you are making $250K, that's roughly 6.2%.

i think at the margin, tax is pushing close to 70% at the high end.

Loafofbreadhead said:   I don't know, I just don't see how this 2% is going to affect the behavior of the general population. Most people I know have no clue about finance, budgeting, or general investing. I suspect they will maintain a similar lifestyle which may meant they rack up a little more debt than they usually do. I personally just do little things to off-set this - dump more pre-tax money into my FSA, max out my HSA, etc. I think this will have have a very limited impact and by June we won't even notice this slight decrease in net pay.

I strongly disagree with that statement. By that token, if you add a 1% tax every year, most people won't notice it. In 50 years, you would have added 50% in taxes.

When you remove 2% of income on 100Million people, there bound to be macro effects.

begunn said:   2% 401K matching contribution terminated in 2001.
No pay increases of any kind since 2003
5% pay cut in 2011
High deductible health insurance coverage increased to approx. $10,000 annually for family coverage 2012
Illinois state income tax increased 66% 2011
Illinois tolls increase 87% 2011
Food price rose 2.5% to 3.5% 2012
Interest on modest savings average <1%

Payroll tax increase?
Didn't feel a thing, I was numb already.


Time to pick up pitch and fork and head east.

abracadabra1 said:   Well, considering I received a 1.7% increase in my salary in 2013, the 2% payroll tax increase will be fairly transparent.

The way to go - I like your attitude! Personally, 1K on a 50K salary should not mean the end of the world. The other thing is that there is no increase in payroll tax - we are back to normal. What really happened was that there was a bonus given to people for the last 2 years and hopefully people enjoyed the bonus, thanked god for a good time and now we are back to normal instead of feeling that there is an increase in tax.

PrincipalMember said:    What really happened was that there was a bonus given to people for the last 2 years and hopefully people enjoyed the bonus, thanked god for a good time.

I don't want to be insensitive to the people who are losing homes because they happened to buy at the wrong time but for others, the interest rates are really low - i.e. the biggest expense in one's budget is really low. I also presume that this has kept a lid on the rents. Now you can say that there is no money to be made in the CD's. True - but hopefully, your mortgage is much higher than your CD balance - i.e. still on the positive side. And for those who took some risks in the stock market, at least the year is starting out very nicely - so at least for now, there should be no reasons to be feeling gloomy.

begunn said:   2% 401K matching contribution terminated in 2001.
Illinois state income tax increased 66% 2011
Illinois tolls increase 87% 2011
Food price rose 2.5% to 3.5% 2012
Interest on modest savings average <1%

Payroll tax increase?
Didn't feel a thing, I was numb already.


I'm in this boat. Not to mention Metra train pass went up almost $40/month last year in addition to everything already mentioned for Illinois.

ChumChurum said:   technolich said:   2013 will probably catch the economy in a vicious cycle.

Taxes go up.

People spend less.

People now have less income as sales drop and income drops as a direct result.

Taxes go up as a result of a lack of sales tax income resulting in the government finding other "revenue streams".

People spend even less.

I'm all for paying a fair share but when the government takes over 50% of your income after everything is said and done it doesn't promote the economy, it stifles consumer spending, and leads to less tax income for said government.

Personally the payroll tax won't affect much spending, the penalties for not having health care and the penalties for having too many employees means we won't grow as a company, but the payroll tax won't directly affect my spending.

That said I understand why me cutting back spending won't make things better and it will only affect the people I normally spend money with.


- 39.6% top tax rate,
- certain deductions get phased out after $250K. the rate of phaseout is 3%. thus, your effective federal tax rate is 1.03 * 39.6 = 40.8,
- medicare 1.5 ( * 2 for employer's side) = 3.00 %,
- obamacare extra 0.9%,
- states like NY or Cali, 8% marginal state tax,
- states like NY or Cali, 7-8% sales tax,
- if you have municipal tax, add that too.

although not at the margin, you pay 12.4% of the first $113K in social security tax. if you are making $250K, that's roughly 6.2%.

i think at the margin, tax is pushing close to 70% at the high end.
may want to check your math. 70% happens at very low income when subsidies are phased out, not at high end. Social security doesn't affect the high end.

The average person will feel the $1k pinch. Those who voted for the wealthy to pay their fair share, got a piece of the action, too. And they don't like it one bit!

yep dats it, F*ck it im movin to Canada


begunn said:   2% 401K matching contribution terminated in 2001.
No pay increases of any kind since 2003
5% pay cut in 2011
High deductible health insurance coverage increased to approx. $10,000 annually for family coverage 2012
Illinois state income tax increased 66% 2011
Illinois tolls increase 87% 2011
Food price rose 2.5% to 3.5% 2012
Interest on modest savings average <1%

Payroll tax increase?
Didn't feel a thing, I was numb already.

At least for me I will start using both sides of the toilet paper to conserve.

Keep in mind though that 2013 is the first year since 2008 that Americans aren't receiving some sort of inflated paycheck. In 2011 and 2012 we saw the 2% payroll tax holiday and in 2009 and 2010 there was the Making Work Pay Tax Credit.

The Making Work Pay Credit was $400 for single filers and $800 for joint filers. Although this was a credit when the income tax return was filed, Americans effectively received this credit throughout the year with their paychecks as the withholding tables were adjusted.

Now there is no credit and there is no holiday so Americans are receiving their lowest paychecks since 2008.

Thanks to fwf, most changes impacting my w-2 related activity is trivial.

Venturion said:   Thanks to fwf, most changes impacting my w-2 related activity is trivial.

From what I've heard, your W-2 is so big they are thinking of renaming it a W-3.

harruin said:   I'll probably just save $1000 less this year.

Or churn $1000 more

technolich said:   atohmc said:   I spend a lot more money on ice cream now.

Look at this rich guy, I bet you'll wash it down with MILK when it skyrockets in price just to show how awesome you are compared to the rest of us.

I loved the recent showdown about milk subsidies.

Don't subsidize milk = Milk prices go up, taxes go down.

Subsidize Milk = Milk prices are still pretty jacked up, taxes stay the same.

It would be pretty amazing to see the government drop all subsidies of businesses and let the market work itself out.

Ice Cream would get a lot more expensive but it's okay because half of the products on the shelf are just frozen desserts anyways...



Beer is much better for you. Less calories and more healthy.
Milk is not good for you unless you are a calf

Skipping 91 Messages...
harruin said:   BostonOne said:   miqie said:   I don't mind paying my fare share of taxes, but the gov't already has enough income coming in. They just don't know how to spend it efficiently. They will just waste this tax increase, also. I think this will ahve a negative effect on the economy because people will ahve less to spend.
Unless you're in the top 1%, you're not paying your fair share.

Could you give me a breakdown how much more the common man benefits over the rich from the government?


You make 50,000 a year. I make 25,000 a year. When you and me go to Six Flag, my ticket cost 25 bucks, and yours is 100 bucks. Fair?
By paying nil to federal income tax, common man benfits about 20 to 30 percents more over the rich from the goverment.
By paying nil to fereral income tax, common man benfits about 500,000 dollar per year over the rich from the goverment.

By common, I mean the 50% that does not pay federal income tax. By rich, I mean top 1% that everyone wants to xxx on.

I am all for RICH SHOULD PAY MORE. As long as it is fair. Meaning, if someone pay more than I do for the federal goverment, they should get better service from the fed. There should be an express line at all federal facility for the poeple that pay top tier price.



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