What does an extension of the payroll tax holiday mean?

[sad sally]

Payroll tax, Social Security Tax, has always been paid at the rate of 6 1/2% from employees and 6 1/2% from employers. Granted, the federal government has been "borrowing" this money for several decades. The "borrowed" money fund is issued "intragovernmental" bonds (IOU's) from the Treasury. which aren't the same as other bonds - they aren't guaranteed; however, they've never been counted as part of the national debt.

Treasury Short Term bonds (1 year), Treasury Notes (2-10 years), Treasury Inflation Protected Securities (TIPS) (5, 10 and 30 years), and Treasury Bonds which mature in 30 years - are all guaranteed - good as gold, the government likes to say.

By giving everybody a 2 1/2% holiday from payroll taxes this year, $118 billion dollars was added to the national debt, with the promise the general funds would repay the SS shortfall. This has never been done in the entire history of SS. Now, the President says he wants to give everybody another holiday which will add another approximately $120 billion to the national debt. By the way, has the $118 billion been transferred?

There is also a companion Senate Bill 12 - Job Creation Act of 2011 (Introduced in Senate), which calls for a TEMPORARY EMPLOYER PAYROLL TAX CUT of 2 1/2%. It never made it to the floor, but is sitting patiently waiting for action.

Just imagine employers saying to congress (remember they have lobbyists that influence and write legislation), "it's just not fair that employees get another holiday from those pesky payroll taxes while we're paying our full share. Besides, if you'd just give us a temporary holiday of 2 1/2%, we promise (you can't see our fingers crossed behind us that negates this promise) to hire people. Jobs, jobs, jobs." Oh yeah, there would be another $120 billion added to the national debt.

Or the other plan to make this debt increase more palatable would be to temporarily lower the tax rate for bringing US corporate profits held overseas back home, known as a repatriation-tax holiday, or to lower the top corporate tax rate. Don't those both sound like warm fuzzies that will help everybody?

This payroll holiday tax scam is a sure way to bankrupt Social Security even faster. I can't believe that this is sold as a benevolent gift of $1,000, or if you're fortunate enough to make anything over $106,800 the gift is a generous $2,136.

Seems to me this is a well-thought out plan to defund Social Security.

[dkf]

1. The social security tax is the most regressive tax we have.

And yet we insist it be funded. Whatever.

[jpgray]

3. What drives your incessant hatred of social security?

It is at heart an insurance plan, where the workers of today insure the elderly of today against the perils of poverty, despair and misery.

[dkf]

6. It should have never been over funded.

It could have existed just fine as a pay as you go system as it has to be reevaluated for the times anyway. If it were truly out of funds now, it could be made into something more progressive now and more attuned to ability to pay.

But overfunding it in the past was a travesty and robbed people of their ability to save thus making them even more dependent on social security The more I read about it the more outraged I get.

After they increased the social security tax to overfund it, household savings disappeared.

We were so duped by Greenspan and Reagan.

[jeff47]

12. Wow....lots of math errors there. (nt)

[dkf]

14. Daniel Patrick Moynihan knew what I am talking about.

Moynihan Urges Social Security Tax Cut, Return to Pay-as-You-Go Benefits System

December 30, 1989|WILLIAM J. EATON | TIMES STAFF WRITER

A key senator Friday advocated cuts in the Social Security payroll tax that would save 130 million workers and employers a total of $62 billion during the next two years.

The proposal by Sen. Daniel Patrick Moynihan (Y.) would cancel a 0.14% increase in the levy scheduled to take effect on Jan. 1 and would lower the rate by an additional 0.96% for workers and employers in 1991.

Moynihan, who as chairman of the Senate Finance subcommittee on Social Security is in a crucial position to advance his plan, said that it would put the retirement system back on a pay-as-you-go basis instead of amassing trust fund surpluses exceeding $200 billion in the coming decade.

"The Administration is content to see the budget deficit gradually eliminated by the growing Social Security tax revenue," Moynihan said at a news conference. "This . . . perverts the original purpose for the surpluses--to provide for the retirement of the baby boom (generation) in the next century."

http://articles.latimes.com/1989-12-30/news/mn-974_1_social-security

[jeff47]

18. So your argument is other people can't do math too? (nt)

[dkf]

19. So show me your math.

[jeff47]

22. Baby boom followed by baby bust.

SS relies on taxing current workers to pay benefits to later workers. "Generation X" is too small to pay for the baby boom's retirement because the baby boom outnumbers generation X.

You are arguing that this isn't a problem. That somehow the smaller generation can easily afford to pay for the larger one, so Social Security should not have collected a surplus over the last 30 years.

[eridani]

16. Pay as you go would not have worked for the demographic lump of baby boomers

The fund is supposed to go away when the last of us kick the bucket, and then go back to pay as you go.

[indurancevile]

17. accelerating the already planned fica hikes isn't what killed households savings.

FLAT WAGES did that.

[coalition_unwilling]

20. It's actually one of the most successful anti-poverty programs

ever instituted by a Western democracy. Those interested should check out and compare poverty rates among the elderly prior to 1935 and poverty rates among the elderly since 1935.

Now if only we could institute a similarly successful anti-poverty program for infants aged 0-5 . . . :) Ah, that dream will never die.

[sad sally]

4. Do you think that because more poor, widowed, diabled, or kids who've lost a parent

actually depend on this tax program to exist than the more financially well-off do?

[Imajika]

8. Social Security is a retirement savings program...

It was never meant to just be a tax. It should never have been mixed with general revenue. And as much as I like the extra money each year I get from the payroll tax cut, if Social Security were being managed properly it would probably not be a good idea.

[jeff47]

13. 1) It was always a tax.

It has never been a savings program. Since it was introduced, it taxed people and immediately turned around and sent that money to retirees. "Savings" entered the picture to deal with the Baby Boom-Baby Bust problem, but it was never a savings program.

2) It hasn't been mixed with general revenue. Gotta invest any surplus somewhere, and treasuries are the safest investment there is. As a side effect, the interest rate on our debt is _slightly_ lower. Like 1%. Not enough to radically alter policy.

3) Please explain how managing social security 'properly' would deal with the Baby Boomers.

[William769]

9. "folks who claim the payroll tax is regressive

do not take into account that it is not so much a tax, but a contribution to a forced saving/social-insurance scheme. Over 12% of payroll taxes fund Social Security (this includes old age and disability). The amount of payroll taxes paid during your working years determines your benefit. The benefit formula for Social Security is highly progressive. The lower your average earnings the higher a benefit you get relative to your contribution."

[RC]

2. What about us retired fogies? Do we get a COLA this year?

[sad sally]

5. The COLA is estimated to be 1.2%, which if you receive $1,000 is

about $12 increase a month (now don't get all excited thinkin' you're gonna' go eating out big or anything - ha!), but the Medicare increase is set to go up from $96.40 to $113.80, which means you got an increase, but your monthly amount will go down $5.40 a month. Somebody in charge failed math, I think.

[zeemike]

7. Undermine SS and medicare....plane and simple

SS was solvent until 35 or so before...this will make it happen sooner.
George Carlin was right....they are coming of our SS and they will get it all eventually.

[Angry Dragon]

10. It is not a good idea

[bvar22]

11. It means,

Say Goodbye to the last vestige of the New Deal,
and say HELLO to a New & Improved Gilded Age 2.0.

Payroll Tax Holiday Directly Links Social Security to The Deficit

NOW, when the Republicans scream that Social Security is causing part of the Deficit Problems,
they will be telling the TRUTH.

Almost nobody noticed.
It was all packaged up as a brilliant progressive move that will "stimulate spending"
and give a break to the suffering wage slaves,
but THAT was all just fancy marketing so you wouldn't notice that Social Security
is NOW directly connected to The General Fund and The Deficit.
Clever HOW "they" did that, eh?

This WILL come back,
and cause MAJOR PAIN.









Cherish your memories, SUCKERS!
because we're TAKING everything else!
Hahahahahahaha!

[JDPriestly]

15. Yes. Obama is an anti-Social-Security mole, and I will not be voting

for him again. I want to see a Democratic House and Senate and some other Democrat who supports Social Security and believes in public schools and a progressive tax as well as civil rights for all.

[xchrom]

21. Recommend