About That Payroll Tax Cut

[Donnachaidh]

http://www.counterpunch.org/2011/09/09/about-that-payroll-tax-cut/

Is President Obama trying to kill Social Security without explicitly saying so?

He put Social Security “on the table” for consideration by his Deficit Commission — even though Social Security has not contributed to creating or sustaining the deficit/debt in the first place. He kept Social Security on the table when he made a deal to delegate deficit reduction authority over entitlements to an undemocratic Super Committee. Now, in a speech reportedly about jobs, he proposed to extend and increase the ill-considered FICA tax cut he embraced last December — a tax cut that directly undermines the financial integrity of Social Security.According to the White House Fact Sheet on “The American Jobs Act” the FICA tax holiday for workers will be increased to a 50% reduction, lowering it to 3.1%. Under the 2010 tax deal, the payroll tax for workers was reduced from 6.2% to 4.2%. Inaddition to expanding the tax cut for workers, the President proposes to extend the FICA tax holiday to employers by cutting in half the employer’s share of the payroll tax through the first $5 million in payroll.

Big questions about the wisdom, efficacy, and implications of a tax-based jobs strategy need to be debated. Even bigger questions about the consequences of the payroll tax holiday in particular need to be answered. These questions are not just about the relationship between payroll tax cuts and job growth. They are about the future of Social Security.

:snip:

In the worst case, Congress could choose to enact the payroll tax cut without actually appropriating revenue compensation for the Trust Fund. This would mean that the payroll tax cut directly depletes the Trust Fund, creating financial/actuarial problems far sooner than the currently anticipated shortfall date of 2036.

More at the link --

[Warpy]

1. The RATE needs to be cut and has needed it for a long time

The tax CAP needs to be raised drastically. It's laughably low.

Remember, it was REAGAN who jacked OASDI taxes sky high and that was to shift the tax burden off the backs of rich men and onto the backs of all of us who were working for a living.

Rolling back Reaganism is a good idea. Let's hope he's able to do the second half of the job after the 2012 elections.

[mindem]

5. Everyone needs to quit farting around with it!!

Period. The idea that the shortfall this little tax break is going to generate is going to be made up in the future is laughable. It just opens the door to the repukes to take even more pot shots at it. The idea that a Dem president is doing this is maddening.

[hfojvt]

9. yeah, it's funny though

increasing the rate would be regressive, and yet cutting the rate confers most of its benefits to the top 40%, far more than it does to the bottom 60%.

[Demit]

2. And they used to call messing with Social Security touching the third rail. Bush couldn't do it.

But Obama did! Who would've thought. Back in 2008, who ever would've thought that this was the kind of change Obama represented.

[Modern_Matthew]

3. Money is being moved from the general fund to pay for these tax cuts.

Hands off my money, please. I don't want to pay for something (I'm 23) I'll never see when I'm making less than $10,000 a year.

[Donnachaidh]

6. then call the WH and tell them to stop sabotaging the SS fund

You do know all this slight of hand cutting the rate, and paying it off with the general fund is a way to commingle funding - thus breaking down the wall of security the SS fund had before? Let's blur the lines, so the argument about HOW the SS fund didn't contribute to problems, and was funded by itself can no longer stand up.

The *intentional* co-mingling of funds, in order to weaken a fund that Obama has had in his sights since he first ran for office is a lovely little trick.

He put SS on the table, and the uproar about that made them nervous. So this is a backdoor weakening of the retirement program that has served the working class for 75 years. I'll bet Larry Summers and Timmeh Geithner are laughing their asses off, as all the sheep bleat about this *impressive* tax cut that will give folks a few bucks - but will ultimately cost them their retirement.

Certainly NOT the *hope and change* people voted for. Not even close.

[Generic Other]

10. The point is you are supposed to see it kiddo

And I will fight to see that you do with every ounce of my being. As will a lot of others.

[Angry Dragon]

4. As stated elsewhere on DU this week

FICA is not really a tax, it is actually an insurance payment.
So politicians are using the wrong words to define it...........

Federal Insurance Contributions Act (FICA)

[Igel]

8. It's a tax.

Those who try to play clever games with the title serves mostly to outwit themselves.

Let's cite the document that is claimed to demonstrate that FICA isn't a tax:

Title 26, Subtitle C:

" 3101. Rate of tax
How Current is This? (a) Old-age, survivors, and disability insurance
In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121 (a)) received by him with respect to employment (as defined in section 3121 (b))—

In cases of wages received during: The rate shall be:


1984, 1985, 1986, or 1987 5.7 percent
1988 or 1989 6.06 percent
1990 or thereafter 6.2 percent.


(b) Hospital insurance
In addition to the tax imposed by the preceding subsection, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121 (a)) received by him with respect to employment (as defined in section 3121 (b))—
(1) with respect to wages received during the calendar years 1974 through 1977, the rate shall be 0.90 percent; ...

=====================

So the title is claimed to mean that the actual text of the law is wrong. The problem is that an act is actually a bill with a House or Senate number, and inside the bill there's usually language that says, in essence, "You can call this bill __________." This bill called itself the "Federal Insurance Contributions Act". It could have said its name was Fred or Tatyana. The legally binding bit is the actual text, not what's stenciled on the package.

Seriously: Do you really think the Patriot Act is the act of Patriots--whether "true" patriots or the New England Patriots?

[tblue]

7. First salvo, foot in the door, boiling frog

Any way you wanna say it, this seemingly innocuous little cut is just a set-up. If we let this happen, it will be easier for them to go deeper. That's why this has been taboo for so many years. Thanks a lot, potus.