“The new law effectively raises taxes for all wage earners (and those self-employed) by not extending the 2012 payroll tax holiday that had reduced OASDI taxes from 6.2 percent to 4.2 percent.”
We were surprised to see this statement in a release from CCH, which is generally known for highly accurate, and studiously nonpolitical, reporting of tax developments. It’s well known that the payroll tax holiday was always intended as a temporary measure that would expire when the economy was in recovery. An extension of this measure was never part of the fiscal cliff discussions leading to enactment of the American Taxpayer Relief Act of 2012 (“ATRA”).
The suggestion that ATRA was somehow responsible for terminating this measure has become a talking point for conservatives who want to pretend that the law raises taxes on middle income taxpayers. CCH dropped the ball in permitting a misleading, partisan statement in one of its normally neutral tax reports.