Skip to comments.Social Security advocates fear payroll tax cut (SS taxes "ought to be held sacrosanct")
Posted on 12/12/2010 9:11:36 AM PST by Libloather
Social Security advocates fear payroll tax cut
By Stephen Ohlemacher, Associated Press
Sun Dec 12, 8:18 am ET
WASHINGTON President Barack Obama's plan to cut payroll taxes for a year would provide big savings for many workers, but makes Social Security advocates nervous that it could jeopardize the retirement program's finances.
The plan is part of a package of tax cuts and extended unemployment benefits that Obama negotiated with Senate Republican leaders. It would cut workers' share of Social Security taxes by nearly one-third for 2011. Workers making $50,000 in wages would get a $1,000 tax cut; those making $100,000 would get a $2,000 tax cut.
The government would borrow about $112 billion to make Social Security whole. Advocates and some lawmakers worry that relying on borrowed money to fund Social Security could eventually force it to compete with other federal programs for scarce dollars, leading to cuts.
Social Security taxes "ought to be held sacrosanct," said Rep. Earl Pomeroy, D-N.D., chairman of the House Ways and Means subcommittee on Social Security.
"When you start to signal that the (Social Security) tax levels are negotiable, you end up in long-term trouble, I think, in terms of making absolutely certain that the entitlement funding streams are secure," Pomeroy said.
Social Security is funded by a 6.2 percent payroll tax on the first $106,800 earned by a worker. The tax is matched by employers. The package negotiated by Obama would reduce the tax paid by workers to 4.2 percent for 2011. Employer rates would stay unchanged.
(Excerpt) Read more at news.yahoo.com ...
Absolute humbug. As if the revenues from the Social Security tax were really kept separate from the general Federal Operating budget!
If they’re so “concerned” about finances, then they should oppose any COLA or other extensions of coverage. They’ve know for DECADES the system is headed for massive shortfallls. The concern is misguided, it should be directed at the politicians and selfish interest groups that avoid responsibility for financing this Giant Ponzi Scheme.
“The government would borrow about $112 billion”
Stop right there. The gov’t is broke, and shouldn’t be borrowing any money, period.
How about the gov cease all foreign aid until they get their own house in order? How many billions does our country give away to other countries every year? It’s a funny thing but foreign aid is the one thing I never hear mentioned when the gov talks about cutting spending.
Let me propose the idea that instead of bringing back the Bush tax cuts, that they be converted to SS tax cuts. That is, offer those receiving SS benefits a deal, that they can either take the money, *or* they can take a little *more* money in equivalent tax deductions (cuts).
This is “means testing”, without the “means testing”, so wouldn’t face the bitter resistance to real “means testing”. If you are still earning income, you can save more of your current income by taking the deduction instead of the SS check. But if you really need the SS check, you can keep getting it.
Just by them *not* taking money out of the SS system, it would make the SS system much more secure for those who need the money.
And then, make a similar deal to those still earning money in the SS system. That is, give them a tax deduction (instead of the Bush cuts), so that they wouldn’t pay the SS part of their FICA tax, if they instead put that money into their IRA.
Make it even sweeter, by allowing them to put a *second* years worth of FICA money into their IRA as well. This would take them entirely out of the SS system in just ten to twenty years or so, yet they would have a substantial IRA waiting for them.
If they were close to retirement, they would get a similar deal, but a smaller SS check.
The bottom line is that in exchange for the Bush tax cuts, we get other tax cuts equal to the Bush tax cuts, but also restore SS to solvency, and downgrade it so it is much less likely to have problems in the future.
Yeah, just like that trust fund!
but makes Social Security advocates nervous that it could jeopardize the retirement program’s finances.
The retirement program is so far in the red that if it picked up a thousand dollars a day in black ink it wouldn’t be solvent for a thousand years. Maybe the Social Security advocates should consider that before making such ridiculous claims.
Shoulda thought about that years ago before you and your ilk started writing IOU's Earl.
Of course there is no actuarial justification for a temporary reduction of FICA tax for Old Age and Survivors “insurance”. Beside the salutary effect of any tax reduction, there is another possible upside to this tax cut: it should eradicate the argument that Social Security is anything other than a tax-and-spend welfare program like food stamps, unemployment “insurance”, Medicare/Medicaid, and Section 8 housing.
Everyone pays both shares, the gov’t just collects it differently.
Uh, that's outgoing/loser Rep. Earl Pomeroy (snicker)
When over half of this country does not pay income taxes and does not work (unless they're trying to get the 40 quarters to qualify for lifetime SS payments), the remaining workers get fewer and fewer. I've been paying the maximum SS contributions for longer than I can remember. This is the year I check out from that. I'm not funding this foolishness any more.
Exactly. Money is fungible.
FICA taxes, income taxes and medicare taxes are merely bookkeeping entries.
Take a look at the form that employers send in with ONE check and ONE check only to cover ALL the taxes owed.
The money is divided up after it gets to Washington.
Indeed ... it is a flat out raid on the lockbox and no one is making a fuss. Sheesh, he grasped the third rail with both hands and nothing happened. Furthermore, for this raid to work it needs to come from the employer’s side of the tax, not the employee’s (several articles make that point, I have one bookmarked).
Theoretically, we pay for our SS separately (I’m self employed, so I pay the entire 16+% of my gross income every year). There should be no question about SS and no problem supporting it - if the government really had kept the money separate, invested and grown it.
But as someone else pointed out, money that goes to the government is fungible. Years ago, SS dollars all started getting dumped into the general pot that Congress raids for its various welfare vote-buying programs, and the government has squandered our money. And now they’re blaming us for being stupid enough to think we were going to get a return on it.
Democrats Stopped the Social Security Lock Box Act