Americans' Income Takes Sharp Drop In January
2013 has been making a lot of people in this country feel poor. Americans saw their income drop so dramatically in January that it marked the deepest one-month decline in 20 years.
Personal income went down by more than 500 billion dollars -- a three-point-six percent decrease from December. This happened because of a combination of one-time events. Companies paid out dividends early -- at the end of last year to help high income shareholders avoid paying higher taxes. That also boosted their December income.
Because the payroll tax cut expired at the end of 2012, most workers are paying two percentage points more in taxes now. The Commerce Department has a formula for figuring out personal income. It says if you exclude those special factors, then disposable income actually increased a little in January.