Although millions of Americans are seeing smaller paychecks as a result of the Social Security tax increase of 2013, many student employees at St. Thomas don’t have to tighten their wallets to pay the tax.
On Jan. 1, the Social Security tax jumped to 6.2 percent from last year’s 4.2 percent. According to the tax code, students who are employed at their university are exempt from both the Social Security and Medicare taxes.
While certain criteria, such as the number of hours worked weekly and the number of credits enrolled in, must be met to receive the exemption, most student workers at St. Thomas are eligible for the tax break. However, when the summer break rolls around, many students end up paying the taxes if they are not taking classes while working on campus.
The Social Security tax hike of 2013 isn’t an increase at all because of a Social Security tax holiday in 2011, which reduced the tax to 4.2 percent in an attempt to give taxpayers a more disposable income. The holiday was extended until the end of 2012 before it returned to 6.2 percent at the beginning of 2013. (Gabrielle Martinson/TommieMedia)
St. Thomas payroll manager Barbara Clausen said although it may not seem like anything major, being exempt from these taxes can really help students.
“It’s definitely substantial. It more or less gives you an extra 25 cents or so an hour that you don’t have to pay,” Clausen said.
Students who work off campus aren’t so lucky. They still have to pay both Social Security and Medicare taxes, together totaling about 7.65 percent.
Sophomore Rhiannon Murray said although the taxes seem substantial, they might not necessarily mean a huge pay cut considering the number of hours that students work.
“When you have less of an income, for more of it to go to taxes would suck, especially as a student,” Murray said. “But at the same time, because they (students) work less hours, I think the tax won’t affect them as much as someone working more.”
Murray said the tax exemption for students seems to unfairly favor on-campus workers.
“I guess it’s fair because they are student workers, but what about the rest of the students who are picking up shifts at Target or fast food places?” Murray said.
Junior Brooke Capelle, who works off campus at a pharmacy, was unaware that on-campus student employees were eligible for tax exemptions.
“It seems kind of unfair because we (students) are all in the same boat,” Capelle said.
The Social Security tax hike of 2013 isn’t an increase at all because of a Social Security tax holiday in 2011, which reduced the tax to 4.2 percent in an attempt to give taxpayers a more disposable income, encourage spending and stimulate the economy. The holiday was extended until the end of 2012 before it returned to 6.2 percent at the beginning of 2013.
“They shouldn’t have given us the decrease using the Social Security tax to begin with. They were kind of robbing Social Security to give people a break,” Clausen said. “It would have been better if they had done it on the income tax side, but that was the way they chose to do it, and this year they chose not to renew it.”
Senior Chris Savageau works on campus in the Anderson Student Center and said while he understands giving students a break, he also realized the need for taxes.
“I can see how that makes sense, just to give (students) a little relief, but I’m not opposed to taxing,” Savageau said. “I’d like to get the most out of my paychecks as possible, but I do feel that everyone should be taxed.”
Although her paycheck has taken a dip in 2013, Capelle said the effects of a lower income might not hit students as hard when they are in school because of the financial help they receive.
“I’m getting a lot of help from my parents right now. I think that’s the case for a lot of students, but sometimes people don’t think about that,” Capelle said. “A lot of times you are either getting help from someone else or you have gotten a loan.”
Social Security and Medicare aren’t the only taxes affecting students. When Gov. Mark Dayton released his proposed tax plan at the end of January, he called for lowering the state’s overall tax rate while adding a tax to several goods and services including clothing, haircuts and tattoos.
Savageau said the financial strain of the taxes may be necessary.
“I do agree with some of the tax increases that Minnesota implements because I see the need for it. I’d like to see our community grow and the ability for the government to create healthy parks and well-conditioned roads,” Savageau said.
Murray said the constant talk of taxes sometimes raises concerns for the future.
“Taxes are there for a reason, but at the same time, it’s my money and I’m working for it,” Murray said. “If taxes keep going up, it’s just stressful for everyone.”
Gabrielle Martinson can be reached at firstname.lastname@example.org.