CHICAGO — Only 1 in 10 Americans believe the fiscal cliff and debt ceiling negotiations will be resolved in a way that favorably impacts their personal finances, according to a new survey of 1,000 Americans by online lender CashNetUSA.com. The study finds that almost half of Americans have felt the bite of higher taxes since January 1 and are changing their overall spending habits to lessen the pain.
Approximately four out of 10 Americans (42 percent) indicate they have already felt a loss of income in their paycheck from the two percent federal tax break that expired Dec. 31, 2012. Age, family status, and income appear to alter people’s views on how the tax increase has impacted their paychecks. The majority of the pain has been felt amongst those Americans with children under the age of 18 at 52 percent, versus just 36 percent of those with no children or children over the age of 18. Only 34 percent of those individuals making $30,000 or less recognized the change in their paycheck versus 45 percent of those making $75,000 or more. Only 41 percent of those under the age of 30 have felt the loss versus 54 percent of those ages 30 to 39.
To cushion the paycheck reduction from the expiration of the two percent federal tax break, Americans polled in the survey report making the following adjustments to their spending habits since January 1:
19 percent spending less on food/eating out
16 percent spending less on entertainment
9 percent putting less into savings
5 percent spending less on clothing
While Congress and the Administration seek to resolve the fiscal cliff and debt situation, many Americans are already taking action to lessen the effect of what they believe will be a long-term negative impact on their personal finances. Almost half (45 percent) are trying to spend less on everyday expenses and 7 percent are putting more into savings as a safety measure. Forty-four (44 percent) acknowledged having yet to take action. Experience with budgeting through tough economic times might be an advantage, as Americans ages 30 to 49 are more likely to cut back on their spending (50 percent) versus those under the age 30 (35 percent).
“As our government continues to work through its debt and tax issues, the situation is indeed affecting American’s spending habits, which could have a larger impact on the country’s overall economy,” Megan Staton, director of marketing for CashNetUSA.com, a lender of cash advances for managing financial emergencies, said. “As they struggle to make the most of their paycheck they need options for credit that can help them handle an unexpected emergency.”
The White House and Congress reached an agreement to avert the fiscal cliff allowing previous reductions in Social Security withholdings to expire on December 31. Payroll taxes have increased from 4.2 percent to 6.2 percent in paychecks since January 1. In further debt-reducing efforts, about $85 billion in across-the-board spending cuts will also begin on March 1 as part of a decade-long $1.2 trillion budget savings plan unless Congress acts by that date. It is estimated that half of the cuts would be in Department of Defense programs with the remaining half spread across other government agencies, which could result in the loss of jobs and government contracts.
About the Survey:
The online lender regularly surveys Americans for their perspective on issues impacting their paycheck and personal finances. This CashNetUSA.com survey was conducted online in February 2013 by TNS Omnibus among a nationally representative sample of 1,000 Americans 18 and older. The margin of error for the national sample is approximately three percent. Surveys are subject to other error sources as well, including sampling coverage error, recording error, and respondent error.