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Friday, October 21, 2016

Why Extending The Payroll Tax Cut Could Hurt Social Security

Tom Margenau explains why the payroll tax cut extension may be bad news for the future of social security in the latest edition of his column, “Social Security And You:”

Many people have written to ask my opinion of the proposed expansion of the so-called payroll tax holiday. As any working American knows, the Social Security payroll tax, normally 6.2 percent, was lowered to 4.2 percent for all employees in 2011. And now the administration is proposing not only to extend that reduction for another year but also to reduce the withholding even further — to just 3.2 percent.

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  • Cuney Luke

    So wat is the 2.5 trillion dollar trust fund for if not times like this

  • fairlysharon

    Margenau says Social Security is “a program that will soon be strapped for cash”. So now 2036 is “soon”? Social Security is fully funded by its own dedicated tax revenue through the year 2036, at which time, if nothing is done, there will still be funds to pay 75% of SS obligations. Margenau argues that the GOP has offered a number of ways to cover the cost of this continued reduction in SS (an obligation to cover out of the general funds), yet poo-poos the Dem. proposal of paying for this with a small tax increase of earnings over $1million. His proposal for correcting the 2036 shortfall is to increase the SS withholding by .5% right now…. how about, instead, raising the cap on earnings from which these funds are withheld (currently $106,800)

    When our economy improves, when unemployment is not so high, when employers realize they need to pay a living wage, THEN to let this reduced percent return to 6.7. Right now the middle class, working class and poor need every dime we can get just for basics