Big Issue Making Your Paycheck Smaller


(Courtesy: MGN Online)

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CLEVELAND -- You may be wondering why your first paycheck of 2013 is a bit smaller - two percent smaller to be exact.

A tax break expired, and it has nothing to do with the fiscal cliff.

For the past two years, all working Americans have been getting a two-percent tax break on their social security taxes.

We normally pay 6.2 percent.

But because of the recession, President Obama and Congress dropped the rate to 4.2 percent, but only until the end of 2012.

Now workers are once again paying social security taxes at the rate of 6.2 percent.

We got a break on that tax so we could spend more money, put it back into the economy and help with the recession. But with that tax being taken out once again, we will have less to spend.

For someone who makes $50,000 a year, they will pay an extra $1,000 a year.

"By giving us that two percent tax reduction, there is less money going into the Social Security fund, and I think that when the fiscal cliff negotiations were going on there wasn't anyone in Congress looking to shortfall Social Security because that's a big issue that they face," said Joseph Mentrek, with the accounting firm Meaden & Moore in Cleveland.

So, that smaller paycheck is here to stay.

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