Tax Cuts and the Working Poor

For working poor, tax tweak cuts pay, By Brian J. O’Connor, January 31, 2011, Detroit News: “If you haven’t seen the new 2 percent payroll tax cut reflected in your paycheck yet, look closely at your pay stub. But if you don’t make a lot of money, you might not want to look too closely. Today is the deadline for employers to adjust their payroll systems and lower the rate on Social Security payroll taxes to 4.2 percent from 6.2 percent. They’ll also have until March 31 to adjust checks to give back any excess amount withheld so far this year. Sam Morgan, a tow truck driver, said he would be glad to see anything extra in his next paycheck. ‘I would like a tax cut,’ the 25-year-old Madison Heights man said. ‘I can always use more money in my paycheck.’ But for taxpayers making less than $20,000 a year, the new tax cut will turn out to be a tax hike. Workers making $15,000 a year, for example, will pay $100 more in taxes during 2011 than in 2010. And if they file a joint return, they will pay $500 more…”