IRS to Implement New 2% “Recapture Tax” in Two-Month Payroll Tax Cut Extension

And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed.

News to fit the season! TaxProf reports that there’s a zinger buried in the recent compromise bill that passed the Congress. Those who earn $18,350 or more during January and February will get hit with a 2 % recapture tax to offset the FICA tax reduction. It will be added to their income tax bill and can’t be offset by any tax credit or deduction.

Soak the rich—with rich now defined as earning wages at the rate of $110,100 a year.

Merry Christmas from your government!

UPDATE—For the record, I don’t think that the FICA tax holiday is wise policy, but I think the recapture tax is even more stupid.