While both candidates for President have spoken about the economy, neither man has brought up the tax increase that will fall on 163 million workers in January 2013, and no, it’s not Obamatax. Further these 163 million workers can expect to feel the pinch of this tax no matter who wins the election.
A temporary reduction in Social Security payroll taxes is due to expire at the end of the year and hardly anyone in Washington is pushing to extend it. Neither Obama nor Romney has proposed an extension, and it probably wouldn’t get through Congress anyway, with lawmakers in both parties down on the idea.
In 2010, the U.S. Congress cut the Social Security payroll tax from 6.2 percent to 4.2 percent for 2011 as part of a compromise between the president and congressional Republicans. At the end of 2011, Republicans argued that the revenue loss from the tax cut was not offset by spending cuts as it was supposed to be, but an extension was narrowly passed.
According to the Tax Policy Center, the payroll tax cut reduced taxes for working families by approximately $934 per year, but has also cost the federal government around $120 billion a year.
However, when that tax cut expires this year, no one in the White House is going to push for another extension.
“That was always intended to be a temporary measure to support job creation and economic growth,” Jason Furman, a top White House economic adviser, said recently. “It’s not something that we have at this stage called for extending into next year.”
But, it’s not just Democrats and the Obama administration. Sephen Ohlemacher of AP writes, “Even Republicans who have sworn off tax increases have little appetite to prevent one that will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.”
“I’m not for that,” said Rep. David Camp (R-Mich.), who heads the House’s Ways and Means Committee, which oversees tax policy. “I don’t think we can keep cutting into Social Security.” House Speaker John Boehner (R-OH) has made very similar statements.
Some representatives think that the American people will just go along with payroll tax cuts without incident and they are probably right because we are not the ones who were hired to do their job and look out after these things in the first place. “I think people realize that was a temporary thing,” said Sen. Mark Begich (D-Alaska).
Others have tried to claim that it did little to stimulate real economic growth.
For example, Rep. Richard Neal of Massachusetts, a senior Democrat on the Ways and Means Committee, said that while he believes there’s evidence that the tax cut did help, he added, “I’m not sure that it met expectations.”
Rep. Paul Ryan (R-Wis.) disparaged the payroll tax cut, calling it “sugar-high economics” that wouldn’t promote long-term growth.
the problem is that the federal government has not managed it’s socialistic security. Now they find themselves in a bind. their fears concerning how benefits will be impacted and such are based on the notion that there is a Social Security trust fund. There isn’t.
Today Social Security is collecting more money than it needs to pay benefits, but by 2018 it will begin running a deficit—collecting less in taxes than it pays in benefits. Many shrug off this looming shortfall thinking that the Social Security “trust fund” will help pay benefits and put off the need for tax increases or benefit cuts. This is not the case.
The government does not save our Social Security taxes for future retirees. Congress borrows this extra money and uses it to make up for deficits elsewhere in the budget. Thus the Social Security trust fund contains nothing but IOUs the government has written to itself. And when Uncle Sam goes to repay those IOUs, you know who pays the bill: we do. That means that in order to repay those IOUs, the government will have to either raise taxes or cut programs.
You see there is no Social Security fund. It all gets lumped in the same general fund and then the politicians speak to us as though there is a separate fund for Social Security.
For 2012, the maximum taxable earnings amount for Social Security (OASDI) taxes is $110,100. There is no limitation on taxable earnings for Medicare’s Hospital Insurance (HI) taxes.
- The Social Security tax rate for employees is 4.2 percent through the end of the year
- The Social Security tax rate for employers is 6.2 percent
- The Medicare tax rate is 1.45 percent for employees and employers
- The Social Security tax rate for self-employed is 10.4 percent through the end of the year. The Medicare tax rate is 2.9 percent for self-employed.
Just imagine that figure of 10.4 jumping back up to 15% or worse yet, the feds not get the money to continue to perpetrate the fraud that they have money to actually pay for Social Security benefits and begin jacking it up even higher to around 20%!
AARP CEO A. Barry Rand said, “Further extension of the payroll tax holiday would undermine confidence in Social Security and put at risk the program’s dedicated funding stream and the hard-earned benefits of millions of Americans and their families.”
Here’s a little hint for Mr. Rand: Confidence in Social Security was undermined a long time ago and the program was at risk the day it started as many people received Social Security that didn’t pay a dime into it and those of us working now are paying the Social Security of the people ahead of us, just like they did when they worked and it’s all because the government was never called to be an investment firm or a charity. They do not know how to manage our money and shame on us and those before us who allowed them to pontificate in such a way as to have people believe it.