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Payroll Tax-Burdened Consumers Cut Back On Spending

February 21, 2013: 12:00 AM EST
Leading United States retailers, including Wal-Mart, said they are feeling the impact of the restored payroll tax on sales. Burger King Worldwide Inc., Kraft Foods Group Inc., and other companies are revising downward their sales forecasts, taking into account consumers' reluctance to spend due to smaller paychecks. Consumers' take-home pay fell 2 percent, with a household with $65,000 annual income, for example, losing $1,300 to tax payments. Wal-Mart said it is stocking its shelves with lower-priced products and smaller-size packages, while Kraft and Tyson Foods Inc. are introducing cheaper products. Smaller take-home pay is prompting 45.7 percent of consumers to reduce spending, according to a survey by the National Retail Federation.
SHELLY BANJO, ANNIE GASPARRO and JULIE JARGON, "Payroll Tax Whacks Spending", Wall Street Journal, February 21, 2013, © Dow Jones & Company, Inc.
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