The headline is misleading
The headline reads "Get ready to pay $500 more in taxes in 2017." That ought to catch anyone's eye, unless the reader doesn't pay any taxes. So does it apply to you? Depends.
Did you earn at least $118,500 or more in salary or self-employment income in 2016? Will you earn more than $127,200 or more in salary or self-employment income in 2017? Unless you did and will, then this change won't have any impact on your total tax bill in 2017.
What is happening is that the maximum amount of employment earnings subject to the Social Security tax is being raised and not by a small amount. Look at the history of that maximum earnings amount since 2000.
2000 - $76,200
2001 - $80,400
2002 - $84,900
2003 - $87,000
2004 - $87,900
2005 - $90,000
2006 - $94,200
2007 - $97,500
2008 - $102,000
2009 - $106,800
2010 - $106,800
2011 - $106,800
2012 - $110,100
2013 - $113,700
2014 - $117,000
2015 - $118,500
2016 - $118,500
2017 - $127,200
That represents an increase of 7.3%, the largest such increase in 34 years. This isn't the new Congress taking action. The so-called "FICA Cap" isn't based on inflation. It is based on growth in the National Average Wage Index, which grew by 3.5% in 2015. It also grew by 3.6% in 2014 but they couldn't raise the cap last year. Seems that the law mandates there be no increase in the FICA Cap in any year where recipients of Social Security do not receive an increase in their benefits.
Unless you are fortunate enough to earn more than those amounts, you won't be paying any extra taxes. And if you do earn that much and will pay this additional amount in taxes, that's a good problem to have.
* * *
Apparently the hypocrisy of Senate Majority Leader Mitch McConnell is even worse than we originally led to believe.
When President Obama nominated Merrick Garland to fill the vacancy on the U.S. Supreme Court created by the death of Antonin Scalia, Senator McConnell made it clear that there would be no hearings on the nomination until after the election. This was historic. The Constitution does not limit the power of a lame-duck president to make appointments to the Supreme Court.
After Democrats began talking about delaying confirmation hearings for whoever Donald Trump nominates to fill that vacancy, Senator McConnell began talking about how wrong it would be to attempt to block confirmation hearings.
Now the Senate's Minority Leader, Chuck Schumer has recycled a letter that Senator McConnell sent to former Majority Leader Harry Reid, regarding President Obama's cabinet nominees.
How time changes things. Now Senator McConnell wants the Senate to confirm the nominees of President-Elect Trump without all of the vetting he mentions in this letter.
In point of fact, had the aforementioned Senator Reid not invoked the nuclear option back in 2013, the Democratic minority in the Senate could have filibustered the nominees of Donald Trump indefinitely. But that is no longer possible. The most that can be done in terms of delaying those confirmations is a maximum of 30 hours of debate.
I wish Senator Reid had not invoked the nuclear option. I'd have been fine with the Senate's Democrats filibustering any Trump nominee to the Supreme Court for the entirety of Trump's time in the Oval Office.
* * *
Did you earn at least $118,500 or more in salary or self-employment income in 2016? Will you earn more than $127,200 or more in salary or self-employment income in 2017? Unless you did and will, then this change won't have any impact on your total tax bill in 2017.
What is happening is that the maximum amount of employment earnings subject to the Social Security tax is being raised and not by a small amount. Look at the history of that maximum earnings amount since 2000.
2000 - $76,200
2001 - $80,400
2002 - $84,900
2003 - $87,000
2004 - $87,900
2005 - $90,000
2006 - $94,200
2007 - $97,500
2008 - $102,000
2009 - $106,800
2010 - $106,800
2011 - $106,800
2012 - $110,100
2013 - $113,700
2014 - $117,000
2015 - $118,500
2016 - $118,500
2017 - $127,200
That represents an increase of 7.3%, the largest such increase in 34 years. This isn't the new Congress taking action. The so-called "FICA Cap" isn't based on inflation. It is based on growth in the National Average Wage Index, which grew by 3.5% in 2015. It also grew by 3.6% in 2014 but they couldn't raise the cap last year. Seems that the law mandates there be no increase in the FICA Cap in any year where recipients of Social Security do not receive an increase in their benefits.
Unless you are fortunate enough to earn more than those amounts, you won't be paying any extra taxes. And if you do earn that much and will pay this additional amount in taxes, that's a good problem to have.
* * *
Apparently the hypocrisy of Senate Majority Leader Mitch McConnell is even worse than we originally led to believe.
When President Obama nominated Merrick Garland to fill the vacancy on the U.S. Supreme Court created by the death of Antonin Scalia, Senator McConnell made it clear that there would be no hearings on the nomination until after the election. This was historic. The Constitution does not limit the power of a lame-duck president to make appointments to the Supreme Court.
After Democrats began talking about delaying confirmation hearings for whoever Donald Trump nominates to fill that vacancy, Senator McConnell began talking about how wrong it would be to attempt to block confirmation hearings.
Now the Senate's Minority Leader, Chuck Schumer has recycled a letter that Senator McConnell sent to former Majority Leader Harry Reid, regarding President Obama's cabinet nominees.
How time changes things. Now Senator McConnell wants the Senate to confirm the nominees of President-Elect Trump without all of the vetting he mentions in this letter.
In point of fact, had the aforementioned Senator Reid not invoked the nuclear option back in 2013, the Democratic minority in the Senate could have filibustered the nominees of Donald Trump indefinitely. But that is no longer possible. The most that can be done in terms of delaying those confirmations is a maximum of 30 hours of debate.
I wish Senator Reid had not invoked the nuclear option. I'd have been fine with the Senate's Democrats filibustering any Trump nominee to the Supreme Court for the entirety of Trump's time in the Oval Office.
* * *
posted by me at 6:25 PM
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