Friday, December 23, 2011

The $40 Per Pay Check Deception and Chicanery

For weeks now, Obama and the Democrats have told us that 160 million workers will lose, on average, $1000 a year in their paychecks if the payroll tax cut is not extended. If you do the math, that's about $19.23 a week; or $2.75 a day. But, you see, that $1000 is actually taxable income subject to an average tax rate of approximately 25%. Therefore, at best, the average worker will see about $750 in additional annual take-home pay; resulting in a $14/week or $2/day benefit. Of course, this is hardly enough to buy a single $2.14 non-frapp, standard-brewed and standard-sized coffee at Starbucks (sales tax not included).

Now, all of the sudden, Obama and the Democrats have decided to claim that the average worker's pay check will see a loss of $40 if the tax cut isn't extended. Conveniently, the Dems have attempted to make the amount of this benefit seem larger than it actually is by assuming the average worker is being paid on a bi-weekly basis. But in America, the most common pay period is weekly; especially for the trades and service workers. Management is typically paid monthly or bi-weekly. But, still, the reality is that the true, after-tax benefit will only be about $2/day.

Effectively, this amount is literally "peanuts" when compared to the inflation that the average worker and his family has seen in gasoline, food, energy, and clothing prices over the last three years. And, that's why this payroll tax cut has done very little to stimulate the economy. It is simply a political tool for the Democrats and Obama to run on against the Republicans and get reelected.

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