Filipinos in the US will likely pay 33% more in payroll taxes after US Pres. Barack Obama signed the American Taxpayers Relief Act on January 2. This has a possible impact on remittances of Filipino workers in the US, according to research group IBON.
The act, which was passed to avert the so-called fiscal cliff in the US, will increase payroll taxes by two percentage points. The fiscal cliff is a term used to describe the challenge faced by the US government when temporary payroll tax cuts and government spending cuts expired by end 2012. The concept of “going over the cliff” indicated a detrimental effect on the already shaky US economy.
According to IBON, the Obama act may affect Philippine remittances from the US where 43% of total overseas Filipino remittances come from. Over half of the remittances (up to 52%) come from the US, but this has been falling rapidly in 2009 after the 2008 financial crisis. Remittances from the US account to only 42-43% share at present.
There are four million Filipino-Americans (Fil-Ams) in US with household incomes averaging US$80,000 to US$90,000. The average Fil-Am households will pay an additional US$1,600 to 1,800 more in taxes—which will be some 33% more than they were paying before.
According to IBON, the fiscal cliff deal shows the solutions of capitalist countries to their ongoing crisis reaching their limits. These do not lead to recovery but only aggravate the already dire situation of working people. Workers, migrants and their families carry the brunt of the continuing crisis, as they face slowdown in incomes, reduced benefits, and higher taxes. As for the Philippines, the crisis in the US further highlights the urgency to veer from its overdependence on unsustainable sources of growth such as overseas workers’ remittances and foreign investments. (end)