Americans’ 2 percent raise expires

WASHINGTON – The fiscal cliff may have been avoided, for now, but most Americans have a bit less take-home pay to spend this year as Uncle Sam is taking a bigger bite.

Two years ago, Congress and the president lowered workers’ social security withholdings to stimulate the economy. The result, most Americans saw what amounted to a 2 percent raise. But that tax break expired at the end of 2012.

“As a result of the ending of the payroll tax holiday, everyone’s paycheck will be reduced by 2 percent,” says Joel Heiserman, with Heiserman and Young Accountants in Bethesda, Md.

Around Washington, many people hadn’t noticed the drop in take-home pay which is estimated to average about $700 a year. Others, like Martin Austermuhle, editor- in-chief of DCist.com, were well aware.

“My employer started covering my health insurance plan 100 percent. So, I assumed I’d be getting more on a monthly basis. I looked at my paycheck last week and I was getting less than I was last year,” Austermuhle says.

The payroll tax does not distinguish between middle and upper class.

“Everyone check is affected as a result of the social security tax,” says Heiserman.

But, that’s no consolation for Austermuhle, who was banking on having more take-home pay this year.

“I’d assumed I had a little extra cash on hand, but certainly not,” Austermuhle says.

WTOP’s Mark Segraves contributed to this report.

Follow @SegravesWTOP and @WTOP on Twitter.

(Copyright 2013 by WTOP. All Rights Reserved.)

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