Gauging the effects of a payroll tax holiday expiration
Pending further legislative changes, the current payroll tax holiday is set to expire at the end of the year. This will result in paychecks being 2 percent lower in 2012 - the equivalent of approximately $83 per month for the average American family, according to financial planner Wes Moss, writing for the Atlanta Journal-Constitution.
Put in the context of daily living expenses, "that's a week's worth of groceries, or nearly two tanks of gas for the car," Moss notes.
On a larger scale, he estimates that the return of the 12.4 percent payroll tax will cost the economy more than $140 billion over the next two years as consumers tighten their purse strings. This could result in an annual gross domestic product decrease of nearly 0.75 percent.
Democrats recently introduced legislation into the Senate that would extend and expand the payroll tax cut ahead of its expiration date. According to Senate majority leader Harry Reid, the measure would put nearly $1,500 into workers' pockets.
"The most important thing we can do is to make sure they have money to keep their bills paid," Reid said during a conference call, as quoted by The New York Times.
Put in the context of daily living expenses, "that's a week's worth of groceries, or nearly two tanks of gas for the car," Moss notes.
On a larger scale, he estimates that the return of the 12.4 percent payroll tax will cost the economy more than $140 billion over the next two years as consumers tighten their purse strings. This could result in an annual gross domestic product decrease of nearly 0.75 percent.
Democrats recently introduced legislation into the Senate that would extend and expand the payroll tax cut ahead of its expiration date. According to Senate majority leader Harry Reid, the measure would put nearly $1,500 into workers' pockets.
"The most important thing we can do is to make sure they have money to keep their bills paid," Reid said during a conference call, as quoted by The New York Times.
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