Taxes on virtually all workers are going up after the late fiscal cliff deal between the White House and Senate failed to extend the payroll tax holiday, resulting in a hike of the Social Security payroll tax from 4.2 percent to 6.2 percent.
The tax hike comes despite President Barack Obama’s #My2K social media campaign, during which he mobilized his supporters in an effort to tell lawmakers what $2,000 in extra income each year would mean to them.
According to the Wall Street Journal, the payroll tax holiday had amounted to an annual income increase of $1,000 for U.S. family making $50,000 a year. For a family making $110,100, the maximum wage subjected to the payroll tax, it provided an increase of as much as $2,202 annually.
Obama, before heading to Hawaii for a vacation, praised Congress for supposedly fulfilling his campaign promise of not adding burdens to middle-class families.
“I want to thank all the leaders of the House and Senate,” he said. “Under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up.”
It would be more accurate to say that 77 percent of American households will see an increase in their federal tax burden, the Tax Policy Center noted.
Economists are concerned that the smaller pay for Americans will affect the economy as workers tighten their belts.
“It would pull money out of peoples’ wallets, and for a lot of folks, that really matters,” said Roberton Williams, a senior fellow at the Tax Policy Center, to CNN.
Starting in late November, Obama encouraged Americans to use the hashtag #My2k on Twitter to tell lawmakers what the estimated average tax raise of $2,000 would mean to them if Congress failed to reach a deal in advance of the fiscal cliff deadline.
The official White House page for the campaign also featured voters explaining what $2,000 meant to them: “#My2k is keeping this house and keeping it warm for my growing family this winter”; “My2k … means food on table, co-pays at the Drs office, gas in the car & our kids extra activities”; and “#My2k means I won’t have to choose between life-saving meds or food.”
Obama’s official account retweeted others such as, “My2K will just about cover out-of-pocket costs for my cataract surgery” and “My2K helped me to support my parents, pay for their health and pay my car loan.”
One of Obama’s most recent tweets reads, “This law is just one step in the broader effort to strengthen our economy and broaden opportunity for everybody.”