Payroll Tax Rise: Find out what we're cutting back on
The payroll tax increase that took effect this year may cause 7 out of 10 Americans to curtail spending, especially on big-ticket items such as cars, according to a survey by the National Retail Federation.
About 73 percent of consumers said their spending plans are taking a hit, the Washington-based trade group said, citing a survey of 5,185 people conducted by BIGinsight from Feb. 5-13. More than a third said they’ll reduce how much they dine out and 25 percent said they plan to cut back on small luxuries such as manicures and trips to coffee shops.
Almost half of consumers who describe themselves as “greatly impacted” by the change said they’ll delay major purchases of items such as cars, televisions and furniture.
The Dec. 31 expiration of a payroll-tax break translates to $15 a week more in Social Security taxes for a person making $40,000 a year. The change, combined with lingering unemployment and higher fuel prices, has influenced consumer spending. Wal-Mart Stores executives last week cited the tax holiday’s end, along with delayed tax returns, for the worst monthly sales start in seven years.