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New Orleans, La. -- Local wage earners are bracing for a smaller paycheck. That's because a reduction in Social Security payroll taxes expired with the New Year, and there are no signs the Congress wants to reverse that.
The U.S. Senate passed the "anti-fiscal cliff bill" during the wee hours of Monday morning to avert massive across-the-board tax hikes and spending cuts. Regardless of whether the House of Representatives follows suit, most everyone will face higher payroll taxes this year -- not just the wealthy.
"It's not too good," said local taxpayer Randy Lanclos.
Under the bill approved with bipartisan support in the Senate, a 2% cut in payroll taxes enacted on a temporary basis in 2010 to spur consumer spending and improve the economy is allowed to expire, raising that rate from 4.2 percent to 6.2 percent.
For someone making $50,000 a year, that amounts to an additional $1,000 coming out of their paycheck this year.
"Every little bit hurts, you know, it all adds up," continued Lanclos.
But others are ready to stomach the pain in their wallets.
"We have to do it together, and if that means a partial pay cut and knocking down some of our own personal enjoyment for the betterment of our country, we live in the best country in the world and we just have to do it," said local taxpayer Charles Chevalier.
In New Orleans East, real estate broker Debra Pounds said the payroll tax hike will definitely impact her industry.
"My client base is primarily middle class, or those people who are striving to enter into the middle class, and so often... they just barely get over the numbers that they need in order to be able to qualify for that mortgage," said Pounds.
Pounds also is concerned that the higher payroll taxes could make it more difficult for some people to pay mortgages they currently have.
"We don't want to have the foreclosure rate, which has been going down, to begin to go up again," stated Pounds.
Others in the city said President Barack Obama and the Congress should have found a way to keep the payroll tax at the reduced rate.
"That would have been nice," said Lanclos.
And so the start of the 2013 leaves many locals anxious on several fronts because of the expiration of the payroll tax decrease.
"Any impact negatively to their disposable income is going to determine whether or not they can buy at all, or it's going to affect how much they can afford," said Pounds.
She added that the real estate industry is nervous that the ongoing national deficit will lead some in Washington to target mortgage interest deductions, which she said would further hurt homebuyers and sellers.
Tuesday, September 2 2014 10:07 AM EDT2014-09-02 14:07:52 GMT
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