In the national coverage of the fiscal cliff negotiations, much attention was given to the expiration of the break on payroll taxes. News articles may have left the impression that OPERS members would be included with all other workers regarding the Social Security portion of the payroll tax.
Two years ago the government granted contributors to Social Security a temporary, 2 percent reduction on the Social Security payroll tax. The cut put, on average, an extra $1,000 into the pockets of the typical working family, the Associated Press reported.
Recently, Congress allowed that tax cut to expire in the fiscal cliff deal.
Media reports last week have generally portrayed the temporary tax cut as affecting all U.S. workers:
- CNN reported that “for the past two years, everyone in this country has enjoyed a payroll tax deduction of 2 percent.”
- The Wall Street Journal stated that “the end of the tax break would effectively raise taxes for all wage earners (in 2013).”
- Yahoo Finance ran a story titled, “Payroll Tax Cut Expiration Is a Bigger Deal Than You Think,” which contained the following (we added the emphasis as warranted): “For as picked over and criticized as the Fiscal Cliff deal has been over the last few days, a tax break getting less attention than may have been expected is the one thing that impacts anyone taking home a paycheck. With the expiration of a temporary Social Security payroll tax everyone’s take home pay just fell 2%.”
Of course, OPERS members do not contribute to Social Security, so they did not receive the payroll tax break. So while our members will not see their paychecks shrink in 2013 with the expiration of the tax, it was just as true two years ago that they didn’t see their paychecks increased as did most other workers.
Ohio is a non-Social Security state, as we reminded members in a blog on Sept. 8, 2011. In fact, OPERS members pay at least 10 percent of their salary toward their retirement. Recent news articles that included OPERS members with all other workers regarding the Social Security portion of the payroll tax are inaccurate.