Robert Reich today
Just before the new year I asked a friend who's in the administration why no one in Washington seemed terribly concerned about the payroll tax hike going into effect in January. Why wasn't it part of the fiscal cliff deal? He said no one thought it was "that big a thing." Not even the media made much of it at the time. Payroll taxes went from 4.2% of workers' paychecks to 6.2%. To most professionals in government and the media that seemed like chump change. After all, most of them have incomes that exceed the ceiling on income subject to payroll taxes (this year, $113,600), most benefited from the permanent extension of the Bush tax cuts on their incomes, and most have seen their stock portfolios rise.
But for most working Americans the payroll tax hike is a big deal. It has reduced their paychecks by at least $100 a month, a week's grocery bill. Which explains why the Conference Board said Tuesday that its consumer confidence index dropped to in January to the lowest reading since November 2011.
The payroll tax is regressive -- it disproportionately falls on lower-income Americans -- as are sales taxes, which are also rising.
President Obama said in his second inaugural last week that we're in an economic recovery. Most Americans don't feel it.
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