If you’ve gotten a paycheck since the beginning of 2013, you’ve no doubt noticed one effect of the fiscal cliff deal Congress reached last week: It did not extend the payroll tax holiday. Employees had been getting a break on their Social Security taxes, but now it’s over. The tax on Social Security went back up by 2% to its former level, resulting in lower paychecks for everyone.
I’ve fielded a few questions this week from people wondering if there’s anything else in the 11th hour deal that should interest them, given that they don’t earn enough to be affected by the expiration of the Bush tax cuts on very high earners. The answer, as always, is that it depends. There were certainly extensions and changes that trickle down to the 99%, starting with the extension of the Bush tax cuts for the rest of us. Here are a few of the job-related items:
- If you are out of work, you no doubt know about this one: The federal government extended its emergency unemployment benefits program. For unemployed people who have exhausted the benefits available from their state, this program provides additional weeks of benefits. The program was set to expire at the end of 2012.
- Employees can continue to exclude from their income — and therefore, not pay tax on — certain benefits paid by their employers, including educational assistance and adoption assistance. The bill also allows employers to continue claiming tax deductions or credits for certain benefits, such as child care.
- The CLASS Act is gone. This program was part of the larger healthcare reform legislation. It created a long-term care insurance program to be paid by payroll withholding from employee paychecks, if employers opted to participate in the program. Critics claimed it was inadequate at both ends, from the funding to be paid in to the benefits to be paid out. I don’t know enough about it to weigh in, but no matter: The program got killed.
Finally, a very restricted group of employees — the ones who created this mess in the first place — got a pay freeze. So if you are a Senator or Congressperson, you will just have to continue living on your $174,000 annual salary. If you are the majority or minority leader of either house, you get $193,400. And if you are John Boehner, you will have to budget yourself to only $223,500 a year. Performance-based salaries? You be the judge.
