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Social Security taxes to hit workers in the pocketbook

By Sally Voth

While the New Year's Day passage of a tax package averted the so-called fiscal cliff and large income tax increases for workers, those same workers still will be paying more to Uncle Sam in 2013 than they did in 2012.

And one person displeased by this is Strasburg tax preparer Richard Kleese.

"I find it absolutely criminal as a matter of fact that Congress can have held up the American people till beyond the 11th hour to figure out no more than they figured out," said Kleese, a certified public accountant who admits to being "highly opinionated."

While most of the George W. Bush-era tax cuts were extended to all but individuals earning $400,000 and above and couples making upward of $450,000, a cut in the Social Security payroll tax was allowed to expire.

That tax rate will go from 4.2 percent to 6.2 percent, the level it was before 2011. The reduction was put in place in a bid to stimulate the economy.

"That's a 2-percent tax increase on everyone that works up to the first $110,00 or so of your base earnings," Kleese said Wednesday afternoon. "That's an immediate 2-percent increase. I had thought they were going to extend it, but no, they did not extend it.

"I don't think Congress has very well represented the wishes of the people, quite frankly," he said.

Still, income tax rates could have gone up 3 or 4 percent for those not in the higher-earning brackets, Kleese said, and parents still will get tax credits for their children, a big deal for many taxpayers.

And, before the passage of the bill, most people really were concerned about whether their income taxes would be raised, said Jim Guiliano, a professor of business management and administration and financial services at Lord Fairfax Community College.

"I don't think that was particularly palatable to anybody," he said. "I think most people's focus really was on what were the income taxes going to be. Those are set. At least at this point."

Guiliano, too, cited the decision to let the reduction in what employees pay toward Social Security expire as what most workers will notice.

"That was supposed to be temporary to begin with," he said. "It doesn't seem significant, but for some folks, it will be. I think that's what people will see. I'm not sure they see anything else, or they will feel anything else."

The Associated Press contributed to this report.

Contact staff writer Sally Voth at 540-465-5137 ext. 164, or svoth@nvdaily.com


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