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Many in the US have probably noticed the 2% increase in FICA taxes this year. I realize my employer is not responsible for the tax increase. But neither am I, and now I'm earning 2% less than last year. Is it unreasonable to renegotiate?

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In 30 years of working, I've never had a pay adjustment due to tax increases or cuts. Pay adjustments of this sort could cost a company a lot of money when taxes go up (of course, the company could gain when taxes are cut). Also, if pay adjustments due to tax changes were common, tax policy might disappear from political campaigning (whether that's a good or bad thing is an exercise for the user! ;-). –  GreenMatt Jan 6 '13 at 21:59
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You are not earning 2% less than last year. You are earning exactly the same. You are now contributing 2% more toward the public good, of which you are partially a beneficiary. –  KennyPeanuts Jan 7 '13 at 0:46
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Did your salary decrease to account for the change when the payroll tax holiday began? –  Caleb Jan 7 '13 at 6:13
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@DQdlM What planet are you talking about? :) –  bytebuster Jan 7 '13 at 11:44
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Just as a side note, there are countries (like Brazil) where, due to high inflation (especially in the past), companies are obligated to adjust everyone's salaries. The % amount, however, is not based on the inflation but agreed between the companies and labor unions. –  Tiago Cardoso Jan 7 '13 at 13:01

7 Answers 7

up vote 11 down vote accepted

There are two parts here which are important. That you do not have any regular raises or other "standard salary increases" (a lot of companies have a small, inflation-type raise which is applied each year) is a big factor. It means your company is much less likely to adjust salaries for something like this, because they have already decided it is ok to pay you "less" each subsequent year (consider that $100 is generally worth slightly less each year). If this was present, it's easy to ask something like, "is the company going to make an additional adjustment this year to the annual raise based on how the increase in payroll taxes affects take home pay?"

Without that it's harder, because your company already somewhat doesn't care about these sorts of things.

Second, the size of the company makes a big difference. For a large company a 2% salary increase for something they don't really have control of is a big amount of money each year. An increase for this reason would probably be something applied to all employees (or none) and go through a big bureaucratic process. Smaller companies are more flexible on a lot of these things because they don't have layers upon layers of bureaucracy (although they might have less financial flexibility).

However, you can definitely still talk with your manager and discuss a raise for other reasons. It's unlikely you will be able to convince them to give you a raise because of this but if you have been taking on additional responsibilities or otherwise increasing your value to the company it's definitely something you should consider doing. Lots of resources both here and online but in general, you want to frame any request for a raise as a "win-win" - you are doing additional work/responsibilities and would like to be compensated for this additional work financially.

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Good answer; I'd just add that if the employee is providing good value to the company, they'd be better of granting the request for a raise than the employee getting the raise by going to another employer. While the company is not responsible for the tax increase, they are responsible for retaining their good employees. –  Andy Jan 6 '13 at 21:28

No, it's not unreasonable to ask. You're getting less take home pay for the same amount of work. However, it's also not unreasonable for the employer to refuse. After all, a majority of their employees voted for the people who increased the taxes. There's also the small matter that you didn't demand your pay get cut when the FICA taxes were cut two years ago.

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"After all, a majority of their employees voted for the people who increased the taxes." Citation needed. I would say that it is far from necessarily true, and definitely not generally true. –  Michael Kjörling Jan 6 '13 at 21:03
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Also remember that the FICA withheld from your paycheck is only half of what you actually owe. Your employer contributes the other half, so they're not getting out of this unscathed, either. The bottom line is that if your net pay is inadequate, you have to either ask for a raise or find a new job that pays you more. –  Blrfl Jan 6 '13 at 21:12
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@Blrfl Not really true; the FICA withholding percentage only was cut for the employee side; the employer was paying the same percentage all along (~6%, IIRC). So we're going to pay 6% again, while the employer never had the 4% rate. –  Andy Jan 6 '13 at 21:22
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-1 for "a majority of their employees voted for the people who increased the taxes". Firstly, this seems like a thinly veiled political comment, inappropriate here, imo. Furthermore, less than 62% of people eligible to vote did so. With that turnout and the closeness of the election, there's not much chance that an actual majority of people at a large corporation voted one way or the other. –  GreenMatt Jan 6 '13 at 21:47
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You are being pedantic. Not casting a ballot is a de facto vote for the plurality, and on average, a large corporation's workforce mirrors the electorate. That's not even central to my point, which is that people already have a means to addresss their tax burden, and a plurality of them chose either to not avail themselves of it, or to select people who would raise taxes. It's not an employer's job to protect the people from their political decisions. I'm not trying to make a political coment here, just point out how the system works. –  Karl Bielefeldt Jan 8 '13 at 14:28

No, it's non of the employers business. It's pretty much the same as any other personal expense - non of thier business.

However, your price should be connected to the inflation. So if this tax raise tend to drive up wages in general (I don't know if this is likely - I'm just a simple engineer) you could ask for raise given a higher inflation and the value of your salary has decreased with respect to other salaries on the market.

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You are responsible for your taxes. The government we voted in voted for this increase, thus it is ours to pay. Don't ask for it, especially since I seriously doubt you gave money back to your employer when you got a tax break.

EDIT: Wow, I got blasted for this. Here's the thing: from an individual perspective, you may have very well voted for your representatives who were against raising taxes, but that's not relevant. What is relevant is that, from an individual perspective, you participated in our democracy that resulted in who makes up our government now, and through that process our taxes were raised. Therefore, from a collective perspective, WE ALL put those representatives to office.

The OP specifically said can I get ask for a raise BECAUSE of the tax increase. Nothing about performance, nothing about cost of living (no, I don't consider tax as a cost of living increase), nothing tangible for which any reasonable employer should consider a raise. So I think it is way out of line to ask for this specific reason.

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I'd down vote this if I could. Don't assume everyone voted for those that wanted to increase taxes. Also, its perfectly acceptable to ask for more if your cost of living is going up (for whatever reason). After all, if the employee is good, he very well may get a raise by looking for employment elsewhere, and the company would be worse off than if they granted him the raise. –  Andy Jan 6 '13 at 21:25
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I don't disagree, but I think at that point it's much more of a general "how do I ask for a raise as I don't make enough" issue rather than small tax rate changes. I think if the 2% is a significant hit, the issue is that your employer needs to pay you more in general--not because of the tax code changes. –  DA. Jan 7 '13 at 21:00

You have to look at this from your employer's point of view as well as yours. The amount they pay out hasn't changed (or it may actually have increased because they pay payroll taxes too). The question they are likely to ask is "are you giving us more value than you were last year?". If not then it is highly likely they won't increase your salary. Since payroll taxes are the same for all companies, going to another company won't change your tax bill, so you can't hold that over them.

On the other hand, if you haven't had any kind of pay increase for a few years, that is a much better reason to ask for a raise. I'm assuming you've got better at your job over those years.

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Companies in generel do not give pay raises becasue taxes increased or health insurance costs increased (something that has affected my pay far more every year for at least the last ten than a 2% increase) or any other deduction from your paycheck.

If you have no annual pay raises, then talk to them about a raise but present to them why you are worth a raise. Do not under any circumstances mention the tax increase. That will only weaken your cases for a raise as everyone else is hit with this too and they do not want to set a precent of giving a raise for this reason.

In general, you never ask for a raise by saying that you need the raise because you need more money. You have to give the company a reason that is in the company's best interest to pay you more.

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Your salary should be raised by the same amount now that it was cut when the temporary cut was put into effect.

It wasn't cut, was it?

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