Many people were surprised a couple of weeks ago when President Obama proposed a one year decrease in the amount of social security withholding tax from 7% to 5%. This eventually became part of the recent tax bill that Congress approved which continued the Bush era tax cuts.
Millions of Americans are expecting a 2% raise on 1-1-11 and millions will be disappointed. Why you say? Lets take my magical time machine as I often like to do back to 1982 when the Reagan tax cuts took affect.
My coworkers were excited in 1982 when the tax cuts were announced. The percentages varied but most people got a 6 to 8 percent cut in their taxes. We had just gotten our annual cost of living increase ( yes boys and girls they actually used to do this) and several of us had gotten raises for promotions. But then something unexpected happened. The large behemoth corporation I worked for at the time made an announcement that all employee salaries were to be cut by 8%. You see we were in the midst of a massive recession in 1982 and my company as many were was struggling.
Of course we employees howled with displeasure when our salaries were cut. Our corporate masters replied with stone cold logic."Why are you complaining? You are taking home the same amount on your paycheck as you were before the tax cut are you not?"
At the present time tens of thousands of businesses are just trying to survive and cannot afford to give their competition any leg up. On January 1st 2011 look for history to repeat itself, millions of Americans will receive a 2% pay cut after not seeing a raise for over two years. Their taxes will go down by 2% giving them a net raise of zero on their take home pay. Bushiness will take this "saved" money to reduce overhead costs to keep their doors open.
I also predict in 2011 that the old school media will be receiving the same cut in pay as the rest of us and will cry in unison "So much hope so little change in our pockets."
A Voice In the Wilderness
PS Below is a link which shows simple tax rate tables over the years. To be honest this was almost impossible to find. What I could find were tons links with multicolored pie charts berating or praising lowering taxes.
I had an old professor in college who said anything designed by the French and mathematically explained by the English was of no good to mankind. That is my feeling about most web pages who discuss taxation,
http://www.taxfoundation.org/files/federalindividualratehistory-20080107.pdf
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