The tax hike no one wanted

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Brad Plumer explains why the expiration of the payroll tax cut at the start of the year has not affected consumer behavior.

“One possibility is that many workers aren’t even aware that their taxes have risen yet… A full 48 percent of Americans haven’t noticed the change at all… In particular, low-income Americans were least aware of the change, with 59 percent not noticing any difference.”

“So what does this mean going forward? There are a few possibilities. 1) Once most Americans realize that their disposable income has shrunk — by $1,000 this year, on average — they could cut back on spending significantly… 2) Most Americans will continue to maintain their current levels of spending anyway, even though they have less take-home pay. They’ll simply borrow more to make up the difference… 3) People will eventually notice the payroll tax hike, but… the U.S. economy has reached escape velocity and the payroll tax hike can’t pull it back down.”

The post The Tax Hike No One Noticed appeared first on Taegan Goddard’s Wonk Wire.

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.