Will payroll tax hike hit jobs market next?
Fallout from 'fiscal cliff' fix
- Duration 8:37
- Date Jan 12, 2013
Fallout from 'fiscal cliff' fix
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May Day May Day.
Millions of Americans seeing their paychecks take a hit.
For the first time this week and that payroll tax hike kicks and up full -- And with 77%.
Of workers in the crossfire virtually no one is say.
-- -- -- That they took Texas a lot of taxes.
It's one of those things that that nobody's happy about that -- it not -- -- -- now.
Makes it makes a little bit of a difference maybe with a little less spending on stuff.
Why did you let that sixty dollars last this month that says she knew including groceries I'm not happy about that less money in my pocket -- when expend.
Less money the economy.
So are they right does this new payroll tax hike mean less spending and an even weaker economy.
Hi everyone I'm Brenda battered -- his bold -- bears can't say I double that there's this week we've got Gary B Smith Tobin Smith Jonas Max Ferris.
A lot with walker Stapleton and the fan -- -- everybody okay charity turns out it's not just the rich that payroll tax hike smacking just about all workers will it smacked the economy acts.
I don't see how it can't Brenda you know the person in that little clip sum -- up perfectly.
They said it makes a little bit of a difference in a little bit of a difference times a few hundred million people.
Makes a big difference is already been studied by economists they predict for.
Jobs lost a half percent lopped off the GDP.
The fact of the matter is -- if you look around in the studio there every one that gets gets a paycheck.
But they said in that little clip seems less money that's what's -- -- we're gonna spend on groceries at the drugstore -- gas station.
That money gets sucked out of the economy -- -- jobs.
Now this does hit lower and middle class Americans harder because there is a limit to the amount of income that is tax.
But Toby do you think the higher income Americans can make up the spending.
Well -- that yes it -- and the fact is whether this sounds fair not fair here are the facts.
That the top 20% -- the United States not the 50% who don't pay any taxes by the way to the top 20%.
Are the ones that we look at and -- -- For the discretionary spending is that -- the margin that's the spending that's certainly Gary's right that we will have some reduction.
But look it we've made it out of the depression we made it out of ahead of the 1980s we didn't cut payroll tax we didn't come up with some -- -- deal.
I'd say ran up a little bit here we'll we made it -- was temporary everybody knew his temporary -- higher income people are staying at a spending level it will keep let's go.
I don't walk -- people have less they spend less so businesses make glasses that and I hurt hiring.
I think it's gonna hurt jobs -- I think when you're talking about this is really -- and switch on the middle class in terms of what their expectations.
From a policy standpoint with the changes that were made in this in allied to the payroll tax holiday.
In that -- -- actually paying an extra 2% which which matters if you're making fifteen to 35 grand I mean these here.
These these are disposable income that is being taken away from them from their paychecks that they can't spend to go to the movies that they can't spend it on groceries or go to restaurants and I'm not so sure.
The higher wage earners will make up the difference because you what we have to remember that they're being taxed.
I at a higher -- at a higher percentage -- well and and it's it's worth noting.
That this extra 2% is going to eight.
I entitlement program in the former Social Security that is in bad need of fixing.
And to go back to the 6% contributions is no security without finding an underlying fixed is really not solving anything it.
All people you know just to give you some some hard numbers somebody making about 50000 dollars annually we'll have -- thousand dollars less a year -- -- but Smith fan you say in -- fifteen trillion dollar economy this is really just a drop in the bucket.
Well I mean more than a drop in the bucket but it.
It amounts to some like you know hundreds call billion a year at -- fifteen trillion dollar economy that's not a killer number but it looked.
For a middle class family making 50000 bucks is eighty dollars lesson month for a while a slightly what more well off and it's -- extra 160 bucks a month.
These are real numbers and it's -- really unfortunate that the disgusting thing about.
How this went down to what congress really blew it on this was they could have phase this in they could have given people more warning.
-- that the fact of the matter is walker raises a good point you probably do need to short Social Security or public to raise this tax again.
-- -- need is a little bit of more fear awarding.
Quite honestly what Hannah and give people a chance to play -- and.
Now we're talking about the fiscal -- for quiet a lot of time Jonas this doesn't raise the cost of hiring but is that a full story.
I blew my holidays and they don't and gradually drew back door in his apparel holiday.
It's not the whole stripper pole at thousand dollars is coming out it's on page -- it's going into the paycheck of somebody the villages in Florida whose minds this is much stuff for the other person was gonna buy.
It's unfortunate the government can't borrow this difference -- given imaginary tax -- forever but two years is enough of that that's where it was coming from was borrowed money.
-- we weren't having as payroll tax revenue to pay the Social Security benefits and they didn't cut -- abortion.
Dating back to the point is the economy long haul it won't affect people because your wages will go up to adjust for this higher tax.
It will hurt employment because employers not to pay more to hire somebody than they did last year because.
Due to higher tax -- -- out there volatile and there's attacks caught your wages go down ultimately just forty fewer employee that's the way it works because.
You're willing to do the job for an after tax wage not a pre tax wage.
-- -- -- -- -- Probably waited through 2002 reception and we didn't do well -- tax holiday on Social Security would somehow we made it today -- -- 1980 why does it now is all they can't do that.
Theory be issued this -- that the recovery is very very fragile this comes at a very difficult time doesn't it.
-- -- Exactly -- so -- at a Jonas who took about so many turns its will look there are -- about about that third juncture.
If somehow we managed to make this that's a good thing about our went to Pittsburgh let it go up but apart from not -- -- -- they all they have looked.
Tom -- took them to a certain extent -- that -- it's no big deal normally if this was the Internet bubble would not not be a big deal but you hit it.
It's war -- ten US recovery every single dollar right now.
Matters like I go back up even I think it's a big deal economist says we're gonna lose 4000 jobs.
-- now we don't have a lot of jobs to go around would take 400000.
Out of the economy -- Think that's a big deal we have a hundred and an eighty million.
People -- the United States -- 400000 honor relative basis is going to be replaced -- like -- probably better jobs.
Then how is going to be how wasn't going to be replaced how how is that gonna happen because -- in the accident -- -- automobiles -- -- to other parts of the industry that are going quite well and the sixty dollars.
Thanks paycheck is not it's not gonna -- -- -- -- -- as everything Al's going to be better the point is it does this kind of thing affect the economy the answer is unequivocally.
-- if nothing else got better that he doesn't like but you're not what -- That's not paying.
Gary is not gonna make other things better what as walker said he think we're gonna fix the Social Security bug because of this.
Us Gary is right ahead.
Celebration I don't.
-- but I also go ahead yeah.
Because we're gearing is correct there's no solution where it could -- lower and yet -- the benefits that it's supposed to be paying for indefinitely there so the -- would have to calm if not from the payroll tax increase.
From the people getting Social Security which case that would hurt the economy through spending just as much it's gonna do by raising the payroll -- these people it's one person another the fantasy is making up to the difference of borrowed money that can't go running well -- very good at that why Aaron locker I had.
I would just say I do not -- -- all.
Jonas is utopian view of Social Security being able to efficiently and effectively re distribute anything in the way of benefits I think it's one of the most.
Ineffective inefficient systems it has ever been created I think.
We we it is deep need of reform.
I and I think congress better address that if we want.
Two actually I have some economic sustainability here for the future -- they're gonna get a chance to hopefully I'll when they had this debt ceiling discussion -- -- Given that Democrats because there's a treasure Antony.
Actually agreed that this is a bogus thing that this is a temporary fix and that the one thing they agreed on in the fiscal clip why that we need to get.
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