The legislation that President Barack Obama signed Jan. 2 that postponed the fiscal cliff means changes to military and civilian paychecks. The legislation increases Social Security withholding taxes to 6.2 percent from the “tax holiday” rate of 4.2 percent many have enjoyed the past two years.
This increase comes when many are experiencing increased health insurance rates, annual increases in rent and utility rates. Unfortunately, for those same many, increases in pay are not part of the equation.
As the military continues to implement force reductions, anxiety among transitioning service members is increasing due to the uncertainty of unemployment and the increasing cost of living.
That being said, according to the latest Thomson Reuters/University of Michigan consumer sentiment study, “Consumer sentiment unexpectedly improved in January as Americans felt Washington’s deal to avert the “fiscal cliff” at the beginning of the year boded well for the economy.”
That sentiment was reflected in the stock market as it hit 14,000 on Feb 1, 2013, the first time since 2007.
I must ask, “Are we dancing in the streets while Rome is burning?”
For those who are of lower income, which often times includes our military families, the adjustment in the Social Security withholding is significant.
As a community, we should be prepared to help those who are impacted by these changes.
To learn more about how your 2013 taxes and how you could be affected by the fiscal cliff, read “3 ways the fiscal cliff may impact taxes”
Michael Schindler, Navy veteran, and president of Edmonds-based Operation Military Family, is a guest writer for several national publications, author of the book “Operation Military Family” and “The Military Wire” blog. He is also a popular keynote and workshop speaker who reaches thousands of service members and their families every year through workshops and seminars that include “How to Battle-Ready Your Relationship” or “What Your Mother-in-Law Didn’t Tell You.” He received the 2010 Outstanding Patriotic Service Award from the Washington State Department of Veterans Affairs.