The Washington Post

The coming tax hike on the middle-class, in two charts

The payroll tax affects 159 million Americans, who've been benefiting from a temporary payroll tax cut that reduced the tax on their wages from 6.2 percent to 4.2 percent. As the New York Times' Annie Lowrey reports today, it's highly likely that this tax cut will expire  Jan. 1, regardless of who's elected president. 

A hike on payroll tax, which funds Social Security, would affect both middle- and upper-income Americans, as the Tax Policy Center's data shows


(Tax Policy Center)

But the average benefit of the tax cut doesn't increase substantially with income: Households with incomes between $100,000-$200,000 benefit an average of $2,050 from the payroll tax cut, the Tax Policy Center calculates, while those with incomes of more than $1 million receive just a $2,711 average benefit, as most of millionaires' income doesn't usually come from payroll wages.

That's why both parties have billed the payroll tax cut as helping the middle-class — who will be the households hit the hardest if and when payroll taxes go up again.

Comments
Show Comments
Most Read
DJIA -1.29%
NASDAQ -3.25%
Last Update: 02/08/2016(DJIA&NASDAQ)

business

wonkblog

Success! Check your inbox for details.

See all newsletters

Close video player
Now Playing

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.