LA CROSSE, Wisconsin (WXOW) – At the start of 2013, people taking home a paycheck noticed their take-home pay lower than usual.
President Barack Obama enacted the payroll tax cut, which took effect in 2011, as a temporary fix. It was a way to put more money in employees' pockets while the economy recovered.
Since this tax break wasn't renewed for 2013, every workers' paycheck is now two percent lighter.
For a small business owner, an extra dollar stretches a long way.
"I get a paycheck just like everyone else," said Kathy Bauer, owner and manager of Cabin Coffee in La Crosse.
Bauer may own Cabin Coffee, but she also takes home a paycheck for being the coffee shop's manager.
"Small business owner, self-employed or not, getting a paycheck, it does mean you have less money at the end of the day," Bauer said.
After the payroll tax cuts expired at the end of 2012 the social security tax rate reverted from 4.2 percent back to 6.2 percent. That means take home pay is now 2 percent less.
"The goal was to put more money into employees' pockets. That happened by reducing the payroll tax by 2 percent. But that couldn't go on forever because that's shorting social security effectively," said University of Wisconsin – La Crosse assistant professor William Maas.
A worker making $50,000 dollars a year will now have $1,000 of that paycheck go toward the payroll tax.
Maas, who works in UW's Department of Accountancy, said it was only a temporary cut.
"The payroll tax cut has been the same since 1990 and it was only the past couple of years that they did that temporary drop for employees."
To many, that two percent is a lot of money.
"It definitely impacts you because you have to somehow make the payroll… make ends meat," Bauer said.
Bauer's paycheck is 2 percent lighter. And she's feeling that weight.
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