Skip to comments.Middle Class Welfare And The Payroll Tax Holiday
Posted on 12/05/2011 11:11:40 AM PST by Shout Bits
Part of Pres. Obama's latest stimulus package involves renewing a payroll tax holiday that was to expire at the end of 2011. Because FICA taxes are one of the few income taxes that most Americans actually pay, the extension is popular and will probably pass Congress in some form. Of course Social Security and Medicare, the programs funded by FICA taxes, are hopelessly insolvent, and the tax holiday only worsens the problem. More telling is that the tax holiday finally debunks the notion that these programs are self-sustaining entitlements; the tax holiday exposes them simply as middle class welfare.
The government goes to great lengths to present Social Security as an earned right, a savings. A government TV ad opens to a young black man walking with an older man, presumably his grandfather. As is very natural on TV, the young man asks what Social Security is. The old man likens the public pension program to planting a tree. When the young man pays his FICA taxes (15.3% of most people's wages), he is planting a tree that will grow until he retires, and then he can use the value of that tree. Meanwhile, more young workers will plant their own trees, making for a beautiful forest of savings and security. Less metaphorically, every few years, the Social Security administration mails a statement to each taxpayer tallying his contributions and the benefits he has earned so far.
The use of black actors is telling because blacks' lower life expectancies compared to other races makes the value of their Social Security taxes less than zero they would on average be better off stuffing their mattresses with cash. Likewise the tree metaphor is a subtle lie. Trees are tangible, practically immoveable, and each one is a discreet asset that cannot be comingled or vanish without a trace. Trees are reliable and keep growing their whole lives. Finally, the Social Security statements suggest that an individual's benefits are fixed, like money in a savings account; they suggest that the benefits cannot be taken away because they are the property of individual workers.
The government would like people to believe that FICA taxes are more like forced savings and less like a general fund tax. Taxes pay for collective needs such as national defense or roads, while FICA taxes are personal. They are money set aside for the retirement needs of the individuals who pay them; the statements say as much. The TV ads and the statements suggest to the uninformed that these taxes are more like personal savings.
Of course Social Security and Medicare are the biggest lies a government has ever told its people. There are no savings, and there are no reserves. Indeed the programs are underfunded by perhaps $60 trillion. Any savings accounts are illusory, as Congress raided them long ago. Medicare's costs continue to climb, while the purported insurance premium remains constant. There is no connection between retirement benefits earned and taxes paid. Even worse, no retirement benefits are earned, they are just middle class welfare doled out by unreliable politicians.
Obama has taken the final step toward debunking the personal savings myth of FICA taxes. By wishing to extend the 2011 temporary tax cut, he is using FICA taxes as a political tool to lever his stimulus bill past a skeptical Congress. If FICA taxes are to pay for one's retirement, then cutting those contributions should also cut future retirement benefits, but that premise has always been a lie.
Social Security and Medicare have always been a 'pay-as-you-go' benefits package. There has never been a connection between FICA taxes and retirement benefits. Retirees currently benefit from entitlements set at the whim of Congress, not earned through savings; this is a system of middle class welfare. There is no Constitutional way to constrain future Congresses from altering benefits or eliminating them altogether. The only news is that Obama is no longer working from the 'plant a tree for a future generation' script. Like every other tax, FICA is a political tool, and those who were relying on government for their retirements should think again.
Shout Bits can be found on Facebook: http://www.facebook.com/#!/pages/Shout-Bits/191627784211089
Author’s note: I was unable to find the ‘plant a tree’ PSA on the internet. If anyone has that link, please post it here.
Yep. But even here on a conservative web site, you’ll find lots of people who will cling to the myth that social security is a pension program.
HOWEVER, I feel that it should have a HIGHER fiscal priority than ANY of the following spending programs:
1) Congressional pensions.
2) Welfare in all its forms: TAND, food stamps, Section 8, SSDI, etc
3) non-military government pension.
4) Social Science research grants.
5) National Endowment for the arts, humanities, etc.
After you have gutted 80% of what the feds currently throw money at, THEN you can talk about cutting benefits that the middle class has been paying into for decades. ONLY AFTER.
Even at my age I would prefer to opt out and take my chances, no SSI benefits at all. Just reimburse me for what I`ve paid in so far and DO NOT take another dime! When the system collapses my “account contributions” will be worthless anyway. I`d do better paying down debt and investing in precious metals or long term food storage.
This “PAYROLL TAX CUT” is a pure scam. Its a total fraud on SS system.
Just give me what I've paid in and the fedgov and I will call it even.
I'll make my own investments and if I lose it all, such is life. I starve when I'm unable to work anymore.
It all starts with character. You either are taught the value of thrift, hard work and self-sufficiency as a kid or are aren’t. You are either taught that you have to get off public assistance as soon as possible or you are taught that you can stay on and take as much as you can get for as long as you can. Way too many middle class people see nothing wrong with taking a government hand out. Then voting for middle class tax cuts and payroll tax holidays while advocating increases on “the rich.” It comes down to wanting benefits and having someone else pay for it. Way too many middle class people think that is OK now.
Well, since the SS system is a total fraud, I'll take the extra two grand now. All the federal taxes I pay come from the same place: me. They all go to the same place: the federal monster. I don't care what you call them; payroll taxes, FICA, income tax, universal service fund, etc. So, any opportunity to starve the beast is welcome.
Thats’ fine - but it still does not change the fact that both parties are lying their collective asses off on this. This is simply not a sustainable situation.
Both parties are destroying this nation.
We need to either cut benes, raise taxes, kick people off the system, or all of the above if we are going to keep the program as is. Its totally dishonest to give people a payroll tax cut without cutting benes.
social security is fine, it’s the government that’s insolvent.
Believe me, the politicians would be very glad to see the younger generation throw the previously robbed elders into the streets to starve to deflect attention away from the fact that they are the ones that stole the money but that would be an even greater injustice than the initial robbery.
We should join together and take back our wealth and end the insane Ponzi scheme forever.
I don't think there are many here that actually believe that. However, there are a quite a few that express their opinion that they have paid payroll taxes for as long as 50 years, and that they deserve some return on that.
However, what astounds me is how many have expressed the opinion that reducing payroll taxes without reducing benefits is a good idea. They won't acknowledge that it's simply another "tax the rich scheme".
Here's the basic math:
You’re right, but it’s ponzinomics with or without the tax cut. The only way to fix it is to end it.
What this author is revealing is the big secret among Democrats. Their constituency DOES NOT PAY FEDERAL INCOME TAX! They may get stuck with payroll taxes (Medicare and OSADI)but they get virtually ALL of their paychecks after that bite.
SS as it is today is a ponzi scam. We are making it even more absurd by cutting out the people apying in to the stem.
Its dishonest unless you cut benes by an equal amount in form of future promises.
To see repubs support this bogus “tax cut” is very distressing.
SS is a ponzi scam and is not ok. The money is gone.
Our Ball-less Leader knows exactly what he's doing. He's buying votes. Most poor people get money back from the tax system in some manner but they know that payroll tax is being withheld. This allows O-blame-a to reduce the tax that the poor pay without reducing the refund/EITC (the original Cash for Clunkers program*) at the end of the year.
* (Girls with bastard kids get about enough to purchase a car - $2-3,000)
I mean seriously though - can’t we be real about basic math for once on this stuff?
If you cut the money going in to SS via a phoney tax cut while the numbers of recipients are increasing - W T F is that!
Lets be real here. Its total dishonesty from both parties.
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