A Modest Proposal to make the "Payroll Tax Holiday" even BETTER!

[bvar22]

Lets just KILL the whole damned "Payroll Tax" thing.
Just do away with if Once and For ALL!
Lets take a BIG step, instead of all these small incremental little steps.
First, a one year holiday,
then an Extension of the one year holiday,
then another reduction on the Employer side of the FICA contributions,
...HELL, everybody can see where all this incrementalism is heading.
The DIRECTION and ultimate GOAL couldn't be more clear.
So lets Just Do IT!

I've listened to our Democratic Party Leadership campaign for extending this "Holiday",
and read all the justifications for it on DU.

Apparently there is absolutely NO Problem What-So-Ever with covering shortfalls in Social Security funding with
cash taken from the General Fund, so WHY do we NEED FICA Deductions at all?
We can do away with the "Payroll Taxes" all together,
and simply fund the Social Security entitlements directly from the General Fund!!!

THAT would make Government smaller,
reduce the accounting workload for employers,
...and just THINK of the wonderful, everlasting Stimulus!

The creators of the most successful Social Program EVER in the United States
and one that was running a SURPLUS had NO IDEA What They Were Doing
when they insisted on a funding mechanism that was entirely separate and distinct from the General Fund.
What WERE they THINKING???


So, really, Lets stop fooling around and Go ALL the WAY!
[font size=6]End ALL FICA Deductions NOW!!![/font]




You will know them by their WORKS,
and determine direction from the increments.
[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
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[SammyWinstonJack]

1. It's not like this isn't already the Plan.

[bvar22]

2. Apparently, there are many who can't see the Forest...

...through the increments.



[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
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[leeroysphitz]

9. Yup and it's already WELL underway.

The rich won't be rich ENOUGH until the rest of us are all living in 1 bedroom shacks living with and taking care of our parents until they die from lack of affordable health care and our children until they are thirty and finally find a job at burger King and can afford a 1 bedroom shack of there own.

The American people have had it too good for too long apparently.

[bvar22]

3. I'm surprised this Modest Proposal generated so little "discussion".

It is an open invitation to those who support the Democratic Party Leadership's direction
on this issue that is so important to the Working Class, The Elderly, and those lucky enough to become elderly,
and a cornerstone of the modern Democratic Party.

Hopefully, framing it this way has caused some distress and internal conflicts.

If you favor a series of progressively larger cuts to the independent mechanism that funds Social Security,
why not just do away with it all together?

Remember, a year ago the first "Payroll Tax Holiday" was marketed as a "one time only temporary stimulus".
At THAT time, those of us who were paying attention laughed at the idea that President Obama and the Centrist Party leadership
were going to "raise taxes" in an election year when the one time only "holiday" expired.
Our predictions were 100% correct.



If replacing shortfalls due to the cut in FICA Contributions with cash from the General Fund is A-OK,
then WHY have a separate system at all?



You will know them by their WORKS,
not by their excuses.
[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
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[muriel_volestrangler]

4. You just knew that someone had to propose this seriously too, don't you?

The 'Reason' libertarians:

Why Not Abolish Payroll Taxes Altogether Instead of Screwing Around With a Short-Term, Low-Percentage Cut?

Here's an idea: Let's stop the fiction of "payroll taxes" altogether. FICA taxes are sucked out of every dollar of earned income from dollar one through around $110, 100 (starting in 2012); they are split between employer and employee and the total comes to a touch over 15 percent. Ostensibly, these funds go to cover Social Security and Medicare. But that's not really true in either case. Social Security's "trust fund" has been raided for a very long time to pay for general government outlays and, more recently, doesn't provide enough cash to cover day-to-day expenses anyway. The funds collected for Medicare were never intended to cover the full costs of that program and they just keep falling far shorter every day.

Let's be adult and admit that "payroll taxes" are just another form of income tax; it's a mental dodge to pretend call them by a different name. If they were named accurately, perhaps it would allow us to discuss spending more accurately too. If we want a payroll tax "holiday," then why not actually kill the taxes altogether? What sort of vacation from reality are we getting by trimming 2 percentage points anyway? What a strange time for a government that borrows more than 40 percent of every dollar it spends to miser out!

And let's be even more adult and try not to spend more than we're willing to pay for. I'm not even being brave or super-principled in suggesting that. The bill's going to come due some day and it's not going to be any easier when we're older. As we've shown here at Reason, it actually wouldn't be that tough over the next decade or so to bring revenues and expenses in line with one another. Indeed, if we kept spending to 19 percent of GDP (more than it was at the end of the Clinton presidency), outlays and revenue would match up. It requires small (3.6 percent) year-over-year cuts from a federal tab that has basically doubled over the past decade-plus.

http://reason.com/blog/2011/12/21/why-not-abolish-payroll-taxes-altogether

[Yo_Mama]

5. Makes a point

The problem is that this proposal is popping up on all sides now. Few wish to propose an alternate funding mechanism sufficient to fund SS & Medicare.

Du'rs were yelling their heads off about the Deficit Commission, but they are perfectly willing to accept this much more radical attack on SS.

[sad sally]

6. Who didn't know that these temporary payroll tax cuts would never be restored

Look at the Bush/Obama tax cuts. We heard our candidate tell us for over two years that these "temporary 10-year long" taxes would not continue for a very small wealthy portion of taxpayers. For two years as President he repeated that idea. Did that happen? Will it ever happen? No and no. It's very easy to be santa clause and cut revenue and very hard to be a grinch and increase it. So what if the country falls into ruin - as long as there's money for war and homeland security, all is well.

If employees thought their wages would be raised even a fraction of what the wealthy have seen in income increases it might be sellable to restore the FICA taxes to 2010 rates. Knowing that won't happen, threats of pending doom (no $953 for you) are drummed into peoples mind. It was sold as a temporary tax, but it's not working out to be that.

Congress and the President can and someday probably will do whatever they want with SS. They have the authority, all they need to do to deny benefits is turn us into Nestors.
#####

The fact that workers contribute to the Social Security program's funding through a dedicated payroll tax establishes a unique connection between those tax payments and future benefits. More so than general federal income taxes can be said to establish "rights" to certain government services. This is often expressed in the idea that Social Security benefits are "an earned right." This is true enough in a moral and political sense. But like all federal entitlement programs, Congress can change the rules regarding eligibility--and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.

There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not contractual right.

http://www.ssa.gov/history/nestor.html?du

[bvar22]

8. Many here pretend NOT to know.

I was hoping some would respond in this thread
and explain to me HOW cutting FICA contributions does absolutely NO harm to Social Security,
and its A-OK to transfer the shortfall from the General Fund.

[link://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1538388|Payroll Tax Holiday Directly Connects Social Security to The Deficit]


I guess none were willing to so blatantly and transparently expose their hypocrisy.

Even the Democratic Party Leadership is using the NLP Republican Framing on this issue"
"Payroll Tax Holiday" instead of its proper name, FICA Deductions (Federal Insurance Contributions Act)

Who doesn't want a fucking HOLIDAY!!??



Just like the Republican propagandists came up with "Death Tax", "Democrat Party", and "Death Panels",
all created to sway public opinion on important issues.
It galls me to hear our "Democratic" President use Republican Framing on any issue, but especially Economic Issues.







You will know them by their WORKS,
not by their excuses.
[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
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[Major Nikon]

7. It was Raygun's idea to make SS run a surplus, which was a stupid idea to begin with

Prior to Raygun, FICA was set to match what SS was paying out. It was a system that ran beautifully for decades and still would be today at 4.2% FICA.

[bvar22]

10. Since our Party leadership dropped the ball on a Public Option, not to mention Single Payer.

it is absolutely essential to protect, and INCREASE the funds collected through FICA contributions to pay for the extravagantly over priced "Uniquely American Solution" For Maximum Profit Health care System.

As a candidate in 2008, Obama promised to INCREASE FICA contributions by Raising the Cap.
Lobbying from the Bully Pulpit for a Payroll Tax Cut is a 180 degree "CHANGE".

You will know them by their WORKS,
not by their excuses.
[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
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[Major Nikon]

11. It's not a good idea to increase FICA when there's a surplus

SS has ran just fine for the past 75 years and will continue to do so. A huge part of the GOP's voting base are old people. If the GOP actually manages to torpedo SS, they will lose that base and there will be no more GOP. Too much of the Democrats base wouldn't tolerate it either. So regardless of how many Ron Paul halfwits piss and moan about SS, it isn't going anywhere.

[bvar22]

12. FICA Deductions ALSO fund Medicare,

....and THAT is badly in the red, and any possibility of Cost Controls Gone With the Wind.
There will NOT be any Fixing it Later for the Affordable Health Care Act.
That Opportunity of a Generation is GONE.
As long as we are stuck with our Maximum Profit Private Delivery System ("The Uniquely American Solution&quot ,
ALL we can do is Pony Up More Money.

Decreasing FICA Contributions is NOT a good idea at this time,
or EVER
until we fix the Health Care Delivery in the US.




[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
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[Major Nikon]

13. The Medicare portion of FICA wasn't touched

So the argument that the payroll tax cut affects Medicare is also a dead end.

The payroll tax cut was a great idea. It pumped much needed money into the economy, gave working families a break they needed, and has zero impact to SS and Medicare.

[bvar22]

14. I will concede your point about Medicare and the current Payroll Tax "Holiday",

...but you still haven't addressed my primary concern:
WHY was Social Security directly linked to the General Fund and The Deficit
when it would have been much easier and straightforward to simply send everyone a check from the General Fund?

This linking is unprecedented,
and, despite the refrains from the choir,
does INDEED make Social Security weaker.

Do you really foresee a point where President Obama and the "Centrist" Party Leadership will reverse their course
and say, "Well, we have all had our little holiday,
but NOW it is time to Raise Taxes on the Working Class".

NEVER GONNA HAPPEN.
Social Security WILL be drawing funds from General Revenue,
and that item on the RED side of the Budget Sheet WILL make it much easier to KILL Social Security in the very near future.
No longer can we truthfully say,
"Social Security is completely separate from The Deficit" and Pays for Itself entirely through FICA Contributions.
THAT is what has made it a bullet-proof so far,
and NOW that shield is GONE!

It will be a Death by a Thousand Cuts, initiated and championed by the Centrist Democratic Party Leadership,
but the Coup de Gras "Privatization" will come when Republicans take over the White House in 2016.

The creators of Social security insisted on a completely separate and independent funding mechanism For a Reason.






You will know them by their WORKS,
not by their excuses.
[font size=5 color=green][center]Solidarity99![/font][font size=2 color=green]
--------------------------------------------------------------------------------------------------------------------------------[/center]

[Major Nikon]

15. If what you say were true, SS is already a train off the tracks

The SS part of FICA was around 4.2% for the employer and employee share prior to Raygun getting elected. So for the first thing, Raygun already convinced working Americans for a payroll tax increase. Any argument made back then (assuming it's valid) is still good today. All anyone has to do it tell the Republicans and everyone else that Raygun did it.

SS already is inseparably linked to the deficit and has been for the almost the past 30 years. The Raygun payroll tax increase became the surplus that created the ballooning trust fund. The anticipation was that trust fund would eventually be tapped to make up an eventual deficit. So far we have yet to tap the trust fund. Well guess what happens to the deficit and the federal debt when that happens? For one thing, America finds out just how much SS was proping up those two things. And even though SS wasn't the cause of this impending crisis, I don't hold out much hope the uninformed public is going to be too understanding about that. Furthermore if you think SS is going to be any safer on that day just because FICA has been designated to pay for benefits and the trust fund, you've been led down the Raygun primrose path. So like it or not, the day of reckoning you're so afraid of for SS is already coming. It's just a matter of time. Regardless of when, SS will prevail just as it has for 75 years for the reasons I stated in post #11.

Personally I like the precedent this payroll tax holiday is creating because I see things the other way. SS is very much a regressive tax. Tapping the general fund to pay into the trust fund makes it just a little less so. That's why the GOP is so pissed about it. They will be more than happy to put it back the way it was.