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Mon Dec 31, 2012, 09:34 PM

The Payroll Tax Holiday is and has always been a poison pill for Social Security

It's only purpose is to 1) place the concept in less active brain cell Americans
that it contributes to the deficit, and 2) less money is paid into SS.

If they really wanted to implement a tax cut for those earning under $106k,
how about just writing it into the tax code.

This too was an Obama initiative...and it seems far too many progressive/liberal/democrats
caved into allowing this to happen.

Solution: re-implement full FICA tax rates, and move the tax cut into the IRS code. Simple.

34 replies, 2580 views

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Arrow 34 replies Author Time Post
Reply The Payroll Tax Holiday is and has always been a poison pill for Social Security (Original post)
TheProgressive Dec 2012 OP
doc03 Dec 2012 #1
bigbrother05 Dec 2012 #2
TheProgressive Dec 2012 #3
freshwest Dec 2012 #4
TheProgressive Dec 2012 #6
In Truth We Trust Dec 2012 #5
TheProgressive Dec 2012 #8
JDPriestly Jan 2013 #30
grantcart Dec 2012 #7
TheProgressive Dec 2012 #9
Jackpine Radical Dec 2012 #10
Yo_Mama Dec 2012 #11
DevonRex Dec 2012 #12
TheProgressive Dec 2012 #13
grahamhgreen Dec 2012 #14
SoapBox Dec 2012 #15
BainsBane Jan 2013 #17
BainsBane Jan 2013 #16
TheProgressive Jan 2013 #18
BainsBane Jan 2013 #19
TheProgressive Jan 2013 #21
BainsBane Jan 2013 #25
TheProgressive Jan 2013 #27
BainsBane Jan 2013 #28
BainsBane Jan 2013 #22
RB TexLa Jan 2013 #23
BainsBane Jan 2013 #26
MzShellG Jan 2013 #20
TheProgressive Jan 2013 #24
snot Jan 2013 #29
Demo_Chris Jan 2013 #32
Demo_Chris Jan 2013 #31
TheProgressive Jan 2013 #33
TheKentuckian Jan 2013 #34

Response to TheProgressive (Original post)

Mon Dec 31, 2012, 09:39 PM

1. I totally agree. But from the news the payroll tax cut has been

extended for another year. Just like you say now instead of the payroll tax going into SS, money comes out of the general fund. The money is borrowed for the general fund and therefore SS is now tied into the deficit.

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Response to TheProgressive (Original post)

Mon Dec 31, 2012, 09:49 PM

2. The FICA cut was something the Prez could do w/o the Congress

He could see the need to put money into the hands of the working man to keep the economy going. He wasn't going to get another stimulus from Congress, so he went with an option that was in his control. The risk was reduced investment in SS for the short term in exchange for a spur to the recovery. As feeble as it has been, we might have already swung back into recession without it.

Not the long term solution, but given the options, not a bad choice. It looks like we'll be seeing more 'creative' things in the months to come. With RW obstruction continuing, am fairly certain there will be things that we won't like and are not sustainable over the long term.

Until the GOP is broken at the Congressional District level, it will continue to be trench warfare in DC.

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Response to bigbrother05 (Reply #2)

Mon Dec 31, 2012, 09:53 PM

3. Well, that's a load of boloney...

The President cannot singlehandedly implement tax code...

Which makes your post --- a load of boloney.

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Response to TheProgressive (Reply #3)

Mon Dec 31, 2012, 10:19 PM

4. There's a lot of baloney being posted here lately. I'm amazed at the lack of civics knowledge.

Just part of the dumbing down of America...

Happy New year, TheProgressive.

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Response to freshwest (Reply #4)

Mon Dec 31, 2012, 10:24 PM

6. Lack of civics schooling is part of 'their' plan.

And Happy New Year to you too freshwest...!

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Response to TheProgressive (Reply #3)

Mon Dec 31, 2012, 10:20 PM

5. good op Progressive! The intent is as exactly how you describe it. watch the apologists tell you he

is playing 37 dimensional chess.

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Response to In Truth We Trust (Reply #5)

Mon Dec 31, 2012, 10:28 PM

8. It is our duty to continue the democracy that the founders established...

And to make it modern and better for all citizens....

If 'we' don't speak up *loudly* to the things we don't agree with, then
our politicians will go with their plan and not the peoples... That is why it is
important for all of us to loudly and constantly tell them our desires.

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Response to bigbrother05 (Reply #2)

Tue Jan 1, 2013, 02:28 AM

30. If you believe that, I've got a bridge . . . .

The intent in letting the payroll tax cut remain is to undercut Social Security for future generations.

It's a really bad move for currently working people. Really bad.

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Response to TheProgressive (Original post)

Mon Dec 31, 2012, 10:26 PM

7. It was part of a temporary stimulus package and should now be eliminated.

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Response to grantcart (Reply #7)

Mon Dec 31, 2012, 10:30 PM

9. Agreed. However, the 'news' people say it is reinstated...

A simple IRS tax code change would accomplish the same thing.

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Response to TheProgressive (Reply #9)

Mon Dec 31, 2012, 10:43 PM

10. It's fine if they wanna retain the cut.

As long as they raise the cap to make up for it & detach the whole boat from the General Fund.

But of course nobody's gonna do that because it would hurt the poor dears with incomes over 106k. That wouldn't be prudent. The 3rd Way Neos wouldn't like it at all.

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Response to TheProgressive (Original post)


Response to TheProgressive (Original post)

Mon Dec 31, 2012, 11:06 PM

12. The Social Security rate will be restored:

http://www.democraticunderground.com/10022107170

Social Security payroll tax cut

Allows a 2 percentage point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.

http://t.news.msn.com/politics/details-of-tentative-deal-averting-fiscal-cliff

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Response to DevonRex (Reply #12)

Mon Dec 31, 2012, 11:12 PM

13. Decent humans has no problem paying their way....

I believe this is the natural way - to individually contribute to society and self.

So, if it is absolutely true that the payroll tax holiday has lapsed - then this is a good thing.

Of course, a better thing would then to implement the equivalent cut in the
IRS tax code! {all sorts of smiley face things!}

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Response to TheProgressive (Original post)

Mon Dec 31, 2012, 11:30 PM

14. Big K&R! Good riddance!

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Response to TheProgressive (Original post)

Mon Dec 31, 2012, 11:54 PM

15. Agreed.

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Response to SoapBox (Reply #15)

Tue Jan 1, 2013, 12:01 AM

17. so you agree that the president's secret plan

is to destroy Social Security? If Obama and the Democratic Party are so evil, why would you support them?

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Response to TheProgressive (Original post)

Tue Jan 1, 2013, 12:00 AM

16. its purpose is stimulus

to put more money in the hands of lower and middle income Americans, who in turn spend that money, stimulating economic growth and job creation.

So your assertion is that the President implemented the payroll tax holiday because he wants to destroy Social Security? You could say the above are effects of that holiday that you don't like, but to argue that is the purpose of the payroll tax holiday is factually inaccurate and undermines your argument.

The payroll tax holiday goes to those who don't earn enough to pay federal income tax. That is precisely why it is stimulative and why writing something into the tax code doesn't help those working Americans.

Why are you so wedded to the most regressive tax in our nation's history? The payroll tax penalizes the poor and rewards incomes above $110, which are exempt from the tax. Why not propose a progressive payroll tax rather than a regressive one?

And I really don't care to hear the empty-headed response that what I've written above is remotely Republican or right wing. The GOP has always hated the payroll tax holiday and opposed it at every turn. They want tax cuts to go to the wealthy. The payroll tax holiday is in keeping with demand-side economic theory as opposed to supply-side, trickle down that the Republicans advocate. They are two different models of economic growth.

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Response to BainsBane (Reply #16)

Tue Jan 1, 2013, 12:16 AM

18. All I can say is... wow- what a post!

Yes, the reason for the payroll tax was to put more money into the pockets of workers...

BUT, it detracts from Social Security and it is *bad*. All Obama had to do was to *change the tax code*. But no...

And you have no clue (really?) that payroll taxes goes to those who don't earn enough to pay federal income taxes?
What? are you a beginner human?

Finally, the payroll holiday tax is a republican ploy to destroy SS...

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Response to TheProgressive (Reply #18)

Tue Jan 1, 2013, 12:29 AM

19. what are you talking about?

Do you read the newspaper? Did you read my post? Obviously payroll taxes are charged on all working incomes under $110,000. That is precisely why changing the tax code does nothing for the poorest workers who don't earn enough to pay federal income tax.

If the payroll tax holiday is Republican ploy, why has the President had to go to battle with them at every turn? Did you bother to look at Obama's website during this campaign? Did you bother reading Romney's economic plan or any of the analysis about it? How is it that Romney and Ryan proposed repealing the payroll tax holiday, that the House GOP has worked assiduously to end it, and the President included it as part of the Stimulus if it is a Republican ploy? There is a recent political history that exists in reality. You have dreamed up an alternative universe that bears no relation to actual legislation or party positions. That could be avoided by keeping yourself marginally informed on politics.

Since President Obama and the Democratic Party have such nefarious designs to destroy Social Security (because the reality is the payroll tax holiday is entirely their doing), why do you participate in a political website that promotes the Democratic Party? Or are you one of those people who decides whatever you like is attributed to one party and whatever you hate to another, without bothering to inform yourself on actual party positions?

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Response to BainsBane (Reply #19)

Tue Jan 1, 2013, 12:34 AM

21. Three paragraphs of total gibberish...

Thanks for that - At first I thought I was drunk but it turns out, no, your post is drunk...!

HNY....

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Response to TheProgressive (Reply #21)

Tue Jan 1, 2013, 12:42 AM

25. you have no idea what you're talking about

You're managed to keep yourself entirely uninformed on the issue. Here are some articles you can read to inform yourself.

They both show that the payroll tax is a Democratic measure, something you could easily discover yourself if you cared enough to google the issue.

http://www.reuters.com/article/2012/12/12/us-usa-fiscal-payroll-idUSBRE8BB1UC20121212

http://www.nytimes.com/2012/11/25/opinion/sunday/douthat-our-enemy-the-payroll-tax.html?_r=0

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Response to BainsBane (Reply #25)

Tue Jan 1, 2013, 12:48 AM

27. Well it is not a 'democratic' idea however it is an Obama pushed idea...

Real Progressives/Democrats want to strengthen SS - never harm it.

It is a higher level thinking/civil idea - we care for our elderly and an extremely fair
and easy means to care for our seniors is to 'pay' a 'FICA' tax throughout their working
lives to provide financial assistance when they get older....

Questions?

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Response to TheProgressive (Reply #27)

Tue Jan 1, 2013, 01:12 AM

28. questions about your misunderstanding?

You've obviously haven't bothered to inform yourself even marginally on the issue. Why would I care what you think?

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Response to TheProgressive (Reply #18)

Tue Jan 1, 2013, 12:35 AM

22. google regressive taxation

You obviously don't understand that basic concept. I said the payroll tax is regressive because it is a flat tax. I NEVER said it isn't charged to lower incomes. I said incomes above $110 are exempt. In fact I explicitly said the opposite. The fact that the payroll tax is borne by lower and middle-income Americans is precisely why a 2% reduction is stimulative.

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Response to BainsBane (Reply #16)

Tue Jan 1, 2013, 12:35 AM

23. That didn't work on me. I up'd my 401k contibution by 2% when it went into effect.


No way I spend it.

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Response to RB TexLa (Reply #23)

Tue Jan 1, 2013, 12:44 AM

26. but the poor spend it

they spend it because they have to. They spend everything they have. Raising wages would be a better approach that would have the same result, but there never seems to be enough political will for that.

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Response to TheProgressive (Original post)

Tue Jan 1, 2013, 12:34 AM

20. It is definitely a help......

Especially to those of us who live paycheck to paycheck.

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Response to MzShellG (Reply #20)

Tue Jan 1, 2013, 12:38 AM

24. How about just a normal tax cut instead...

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Response to TheProgressive (Original post)

Tue Jan 1, 2013, 01:22 AM

29. This is becoming my fave post:

http://www.informationclearinghouse.info/article33471.htm :

"{W}hy do politicians only create new spending power for the purpose of waging war and destroying property, not to build or repair bridges, roads and other public infrastructure? Why should the government tax employees for future retirement payouts, but not Wall Street for similar user fees and financial insurance to build up a fund to pay for future bank over-lending crises? For that matter, why doesn’t the U.S. Government print the money to pay for Social Security and medical care, just as it created new debt for the $13 trillion post-2008 bank bailout?

* * * * *
"There is no inherent need to single out any particular area of public spending as causing a budget deficit if it is not pre-funded. It is a travesty of progressive tax policy to only oblige workers whose wages are less than (at present) $105,000 to pay this FICA wage withholding, exempting higher earnings, capital gains, rental income and profits. The raison d’être for taxing the 99% for Social Security and Medicare is simply to avoid taxing wealth, by falling on low wage income at a much higher rate than that of the wealthy. This is not how the original U.S. income tax was created at its inception in 1913. During its early years only the wealthiest 1% of the population had to file a return. There were few loopholes, and capital gains were taxed at the same rate as earned income.

"The government’s seashore insurance program, for instance, recently incurred a $1 trillion liability to rebuild the private beaches and homes that Hurricane Sandy washed out. Why should this insurance subsidy at below-commercial rates for the wealthy minority who live in this scenic high-risk property be treated as normal spending, but not Social Security? Why save in advance by a special wage tax to pay for these programs that benefit the general population, but not levy a similar “user fee” tax to pay for flood insurance for beachfront homes or war? And while we are at it, why not save another $13 trillion in advance to pay for the next bailout of Wall Street when debt deflation causes another crisis to drain the budget?"

Much more at the link.

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Response to snot (Reply #29)

Tue Jan 1, 2013, 08:38 AM

32. great read, thanks [nt]

 

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Response to TheProgressive (Original post)

Tue Jan 1, 2013, 08:36 AM

31. It's not that simple. Everyone pays FICA, not everyone pays income tax

 

To refund that money would require a new program aimed at doing just that.

In any case, I find it interesting how temporary tax cuts for the well off are essentially permanent, but temporary tax cuts for the poor are gone in the blink of an eye. There's temporary, and then there's temporary.



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Response to Demo_Chris (Reply #31)

Tue Jan 1, 2013, 12:33 PM

33. Yes, everyone who receives a paycheck up to $106k. But...

I am not sure what you mean by 'refund that money'. The payroll tax holiday
just lowered the FICA on the employee side.

The payroll tax holiday had only one purpose - to put a hole in SS. They
could have easily just lowered the tax rate in IRS Code just as easy. So,
it was a bad bill and needed to go.

But you are correct - the rich get the special treatment while we get screwed.
Our Congress is bought and paid for and work only for the wealthy.

It it time to put 150 million Americans in the streets...

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Response to Demo_Chris (Reply #31)

Tue Jan 1, 2013, 12:42 PM

34. Refundable tax credit, just like the subsidies in the Wealthcare and Profit Protection Act

Has to be passed but so does this. There isn't anything magic plus your complaint is off base, it isn't like you don't get the Bush Tax cut (that probably also needs to also go away) and the whole fiscal game has been an effort to keep your Bush Tax cut without the ones for the rich and wealthy and the game is stupid. I'd make an exception for the bottom bracket but the rest, including mine needs to go if we aren't going to offset it with much more revenue from the top. I'm lower middle/middle "middle". Mine needs to go and we all need to be paying payroll to properly fund Social Security.

This country is becoming too anti-tax to be viable. We are as a whole anti-tariff, anti-income, anti-payroll, anti-estate, and anti-corporate.

The only tax that has some "bipartisan" support are various sales and VAT type taxes and of course those are the most regressive of all, some states now putting taxes on fucking groceries so that is just conservatives really liberals and poor people rightly don't want that.

The prevailing sentiment is for someone else to pay our taxes, TeaPubliKlans like fee for service and flat taxes to push the load onto the poor and working people based on scale of economy principles and Democrats want the rich and wealthy to pick up the tab but have narrowed the definition to the point that you are talking roughly 1.5% of the population and then only very, very moderately so there is still little increase in revenue.

Now, I understand payroll is flat and therefore a regressive tax but I believe the separate funding mechanism for Social Security and that personal buy in are worth the trade. I am in favor of making more progressive by lifting the cap and accept higher payouts to the well off, rich, and wealthy to do it because with the right payout formula, the program would be strengthened while it would pay them more on a relatively open ended basis (though ever diminishing rate of return as you go up but still a return).

The rate might remain flat at first but eventually we could look at making it more progressive when doing so will not create a funding crisis and can be tolerated politically without endangering the viability of the program which is not now, in my opinion.

Actually, to remain an advanced nation we need a hell of a lot more revenue than anyone is willing to discuss. We have a 5 trillion dollar infrastructure deficit just to bring what we have up to code, we need badly to modernize,
We need to be investing in renewables and energy research to the tune of the arms race, we need to take much better care of our children, veterans, and our elderly, we need to expand primary education to at least the associates level, we need to cover post primary education all the way through, we need to end homelessness forever, we need far more resources for elder care-nursing homes are expensive and we don't truly grasp that it must be paid for systemically as very few can handle the costs with Medicaid spend down acting as the most regressive inheritance tax imaginable, insuring nothing is passed on the poor and working folks.

We have revenue problems and we cannot continue to substitute tax cut schemes for wages, it creates cascade failure and that is our newest game to subsidize the "job creators". First it was substitution of cheap foreign goods killing many jobs and before long opportunities from the big box stores absorbing what was all kinds of small business and leaving shuttered stores and less upward mobility.
Once that ran out of steam the debt spigot was opened up creating a bigger and bigger shoe to drop economy wide.
Of course now that the shoe has fully dropped now our ineffective little tool is drown the government in a bathtub tax cuts.

No, now it is time for taxes and all the political energy being diverted into lifting up labor and doing what is required to increase wages, part of which is much higher top rates that are avoided by costs of doing business.
That is temporary but a necessary bridge because the reality is that there will be less and less need for labor as time goes on. Eventually we must completely remake our economic system. The current one simply cannot be made to work for the benefit of the many in emerging circumstances.

Show me your budget and you show me your priorities. Currently our priorities are insane and unsustainable.

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