Washington State’s 2013 minimum wage: $9.19

The Washington State Department of Labor and Industries has announced that Washington's minimum wage will increase to $9.19 per hour effective January 1, 2013.

This increase is a $0.15 per hour increase from $9.04. Washington has the highest minimum wage in the nation, the second highest is Oregon at $8.95 per hour.

Although a rise in the minimum wage rate may be good news for minimum wage workers, the Washington Policy Center argues that Washington's high minimum wage results in increasing the cost of creating jobs and therefore reduces job opportunities for the unemployed.

Payroll taxes, going up!

The New York Times reports today that the temporary payroll tax holiday (2% point reduction on the employee's share) will likely expire at the end of 2012. This will result in $95 Billion increased tax revenue and reduced working family paychecks.

From the article:

Independent analysts believe that the expiration of the tax cut could shave as much as a percentage point off economic output in 2013, and cost the economy as many as 1 million jobs. That is because the typical American family had $1,000 in additional income from the lower tax.

I have written about payroll taxes before, and you can find those here:

• Medicare's $90 Trillion (with a T!) Unfunded Liability
• Payroll taxes not covering costs of Medicare.
• Payroll tax cut expiration

Medicare’s $90 Trillion Unfunded Liability

According to Michael D. Tanner of the Cato Institute, Medicare's future unfunded liabilities could be as much as $90 trillion (yes that's trillion with a T). For perspective, $90 trillion is greater than worldwide GDP for 2011.

From Tanner's article:

Let's try to put the ongoing debate over the future of Medicare into a little bit of context. Last year, Americans paid $274 billion in Medicare taxes and premiums. At the same time, the program paid out $564 billion in benefits. That amounts to a shortfall of roughly $290 billion. Looking into the future, even the most optimistic estimate by the program's trustees puts Medicare's future unfunded liabilities at more than $38.6 trillion. More realistic projections suggest the shortfall could easily top $90 trillion.

With such astronomical unfunded Medicare liabilities, don't be surprised if politicians start debating whether or not to increase the Medicare tax rate (1.45% for 2012) in the not so distant future.

2% payroll tax cut on track to expire: Per WSJ

The Wall Street Journal reports that both the Republicans and Democrats now appear willing to allow the current temporary payroll tax cut expire at the end of this year. Under the current temporary cut, the employee portion of payroll tax that funds social security is 4.2% and after expiration will revert to 6.2%. Thus, for all American employees, the payroll tax on wages will rise 2% by the end of the year unless the cut is extended.

From the article:

This time, the White House isn't pushing for another extension. "That was always intended to be a temporary measure to support job creation and economic growth," Jason Furman, a top White House economic adviser, said recently. "It's not something that we have at this stage called for extending into next year."

Republicans were unenthusiastic about the tax cut to begin with, preferring instead a broad overhaul of the tax code and contending it would weaken Social Security. Now the party is openly opposed to extending the tax break.

"I'm not for that," said Rep. David Camp (R., Mich.), who heads the House's Ways and Means Committee, which oversees tax policy. "I don't think we can keep cutting into Social Security." House Speaker John Boehner (R., Ohio) has made similar comments.

Therefore, absent changes in political climate before the end of the year to extend the current cuts, wage earners can expect to take home 2% less of their wages starting in 2013 than they are now.

Washington State & Local Sales Tax Rate: 8.83% (4th highest in the nation)

The Tax Foundation has released its July 2012 comparative State & Local Sales Tax figures for July 2012.

Washington State's average combined State and Local Sales Tax rate rose to 8.83% from 8.80% reported in February 2012.

According to the Tax Foundation, Washington's sales tax still ranks 4^th highest in the nation right behind Louisiana (8.86%).

The combined rate applicable in the city of Wenatchee is at 8.3% and East Wenatchee is 8.1%.