GOP may OK tax increase that Obama hopes to block

[TomCADem]

Source: Associated Press

Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a "payroll tax" on practically every dime they earn.

* * *
Social Security payroll taxes apply only to the first $106,800 of a worker's wages. Therefore, $2,136 is the biggest benefit anyone can gain from the one-year reduction.

The great majority of Americans make less than $106,800 a year. Millions of workers pay more in payroll taxes than in federal income taxes.

Read more: http://www.msnbc.msn.com/id/44218846/ns/politics/

---

I don't know why the article is so incredulous. Republicans are mainly against tax hikes to the rich. Since payroll taxes are capped at $106K (Obama and Democrats have proposed raising or removing this cap), most payroll taxes are paid by the middle class. So, sticking taxes to the middle class is perfectly consistent with the Republican philosophy of protecting the rich, er job creators. If you aren't rich, you just aren't really pulling your weight apparently.

The $2,000 in extra money to the middle class amounts to a stimulus, since the middle class will likely spend it rather than save it, and we can't have any stimulus, because stimulus is bad.

:sarcasm:

[PSPS]

1. Usual AP right-wing spin. This isn't a "tax increase" at all.

What is being discussed here is the "temporary" 2% reduction of the employee's half of the FICA tax which is used to fund Social Security in its entirety. Obama's "tax holiday" scheme was ridiculous to begin with and only served as the first step to the eventual dismantling of Social Security.

Obama's idea to "make up" the shortfall this creates is to "replace it" with money from the general fund -- something that was never supposed to happen. The Social Security Trust Fund is supposed to be completely separate from the general fund. That's why it never contributed to the national debt.

So now Obama comes along and Social Security suddenly becomes a part of the general fund, which is running heavily in the red already. This seriously jeopardizes Social Security because these "replacement funds" will certainly be cut because "we can't afford it." Social Security, thanks to Obama, is now "part of the debt crisis."

It pains me to say it, but I'm with the GOP on this. While their motivation is merely to score political points by casting Obama as "raising taxes," mine is because the idea was nefarious in the first place and seriously jeopardizes what is the main plank of the social safety net.

If a person is making $40K/year, the savings from this "tax holiday" amounts to $800/year or less than $3 per day.

[underpants]

10. I agree with you about Soc.Security but the holiday was a good idea and it probably worked

The point was to infuse money into the economy. Banks and corporations are sitting on trillions in cash that normally would entered into the system as loans and capital investments (and hirings) but they weren't. Poor and middle class people spend everything they get and that $3 a day means an extra lunch here, beer, new shoes for the kid, etc. IF I remember correctly it was 2% (or a 1/3) of employees FICA, 2% of the employers matching, and half of the employers unemployment rate - but I could be wrong about that.

I don't like that they took from Soc.Sec. either.

[Thav]

19. I hope it worked better for others

As for me, it affected my paycheck by about $8/month. When the other tax break expired, nothing really changed in the bottom line of my paycheck.

[underpants]

39. Do you spend it?

$8 X 150,000,000 working Americans a month....it adds up

[Demit]

18. Agree. This is the thin edge of the wedge.

Those 'replacement funds" will never go back. Can you picture Obama fighting for putting them back? I can't.

[a2liberal]

20. You put it much better than I could

Thanks!

[Hosnon]

24. I agree. The initial cut should never have been put in place.

However, the hypocrisy of the GOP is mind-blowing. During the whole debt-ceiling "crisis" we were told over and over that the GOP would not agree to ANY tax increases (defined to include eliminating tax cuts) WHATSOEVER.

Now, we have on the table the elimination of a tax cut that greatly affects the average American, and the GOP's response is "meh".

Assholes.

[nxylas]

32. Note the words "by their own definition"

Letting the Bush tax cuts for the rich expire isn't a tax increase either, but Republicans have been referring to it as one, in order to keep their useful idiots baying about Obama taking taxes out of their wallets and giving it to "his people", for around two years now.

[harun]

42. +1

[No Elephants]

2. "the middle class will likely spend it" What is that based on?

[NewJeffCT]

8. Most Americans have no savings

so, any extra money tends to get spent.

[semillama]

33. I wouldadd a modifier to the statement

"extra money tends to get spent...paying bills"

That's what it goes to in our household. Debt reduction is where any excess cash ends up, not spent on consumer products or saving up for a house or new car.

[underpants]

9. Based on the purpose of the tax cut - get more money into the economy

because the banks and corporations are sitting on trillions of dollars of cash that normally would be flowing into the system.

[Kolesar]

12. I am paying carpenters to remodel the house this year...eom

[No Elephants]

3. Mixed feelings.

On the one hand, I am sick of the poor and middle classes being expected to make the rich richer.


On the other hand, I don't like taking money away from Social Security.

The author of the article is right in that reinstating the original state of things will be considered a tax increase, so this is dangerous long-term, IMO. It has a little "starve the beast" about it.

[JohnnyRingo]

4. You're right we'll spend it

That, and the other 97% of our paycheck.

[bluestateguy]

5. At some point that tax is going to have to go back up

It is true that letting it go back up in January would have an anti-stimulative effect in a slow economy. But at some point the payroll tax will have to go back up to its set levels to keep Social Security healthy.

[AlbertCat]

16. would have an anti-stimulative effect .... set levels to keep Social Security healthy.

Sounds like a great time to negotiate...

Y'know... we'll let it expire if you agree to raise the cap kinda thing...


But with Obama, negotiating is the scariest thing around! He gives away the store for a thimble.

[grahamhgreen]

6. GOOD! The tax holiday damages SS in the long term. The thing to do is Raise the Cap!

Make those who make more than 106k continue to pay into it.

I want more guaranteed benefits from SS, not less.

Id pay even more if I could.

Read: http://journals.democraticunderground.com/madfloridian/7991 for a detailed acount of why this is a bad idea.

[tclambert]

13. Raising the cap makes high income professionals pay more, but the truly rich still get a break

because most of their income comes from dividends and capital gains, which pay zero Social Security, Medicare, and Medicaid taxes.

[TomCADem]

40. Odd That Some DUers Are Pushing Austerity That Hits The Middle Class

[kimsarah]

7. Bank fraud probe update

FYI, now Obama is frantically trying to get the New York AG to settle with the banksters and drop its investigation, for the good of the people, according to today's NY Times. Now that's looking forward -- change you can believe in. Here's the link: http://www.nytimes.com/2011/08/22/business/schneiderman-is-said-to-face-pressure-to-back-bank-deal.html?_r=1&hp

[ejpoeta]

11. well if dems and obama would go out and make that distinction then maybe they'd get somewhere.

i mean, the republicans who never want to raise taxes and won't even get rid of loopholes that give tax breaks for friggin corporate jets now want to get rid of this payroll tax break that will affect only the little people. So the republicans want to stick it to us. they are more than happy to increase taxes on US because by their metric, reinstating a tax that was there before is a tax increase, then they are now increasing taxes on the middle class who can least afford it right now while the rich who are drowning in their wealth just roll along unencumbered.

[liberal N proud]

14. They are only concerned about the RICH

NO ONE ELSE MATTERS to these thugs and the average American voter does not see this!


Until they do, we are fucked!

[customerserviceguy]

15. Sorry, the Repukes are right this time, if this article is correct

I objected to the undermining of Social Security when this came up last year. If the so-called 'holiday' is extended, it will weaken SS for years to come.

As your math shows, those at, near, or over the cap get about two grand, and they're the people least likely to need the money. If we're going to piss away FICA tax, why not do it as part of a job recovery program? If an employer hires a person who's been out of work for one year, they get an exemption on paying the employer's share of FICA for that one year. It would level the playing field for the long-term unemployed, and be at least as stimulative as tossing a couple of grand at people who are more likely to save it than spend it.

[blueclown]

17. All cuts to the payroll tax are matched with corresponding transfers from the general fund.

[madfloridian]

23. Which changes the nature of SS and makes it vulnerable...

as it becomes part of general revenue. It loses the quality of being self-funded.

"But what explains the headlong rush in Washington to use the current crisis to undermine the foundations of economic security even further?

Specifically, I'm talking about a new proposal to rob from Social Security to fund a continuing tax break for people who don't need Social Security — the wealthy.

Make no mistake: This is a bipartisan effort. It started back in December, when President Obama capitulated to the GOP on a budget deal by cutting the payroll tax, which funds Social Security. Advocates for the program pointed out then the shortcomings of this approach: It was targeted inefficiently and unfairly, skewing to the upper middle class and hurting lower-income families in comparison with the Making Work Pay tax credit it replaced.

Even more troubling, it blew a hole in the financing mechanism for Social Security by reducing payroll tax revenue by roughly $110 billion for the year. It was plain then, as it is now, that once you've cut a tax, it's ever harder to restore it.

Putting Social Security's income stream on the negotiating table for the first time in more than half a century simply provided a new opportunity for attacks on the program's stability from those who would love to see it disappear — to be replaced, no doubt, by a privatized investment program that would profit Wall Street hucksters at the expense of everyone else."

http://articles.latimes.com/2011/jun/19/business/la-fi-hiltzik-20110619

[customerserviceguy]

43. Exact;ly

It undermines SS to have it bailed out from the fund that we have to refill with borrowings from the Chinese.

[Modern_Matthew]

21. I'm with the President on this one. But I would like to see the bottom tax bracket go to 1%...

With other brackets going up and new brackets added of course.

I would also put a 1% S.S. tax on any and all stock transactions.

[Beavker]

22. Nice of them to quote about 50 Pugs in this article.

USA! A land of morons...and soon to be wage slaves like China and India! Nice work Tea Bagger toothless morons.

[madfloridian]

25. "a new opportunity for attacks on the program's stability"

http://articles.latimes.com/2011/jun/19/business/la-fi-hiltzik-20110619

"But what explains the headlong rush in Washington to use the current crisis to undermine the foundations of economic security even further? Specifically, I'm talking about a new proposal to rob from Social Security to fund a continuing tax break for people who don't need Social Security — the wealthy.

Make no mistake: This is a bipartisan effort. It started back in December, when President Obama capitulated to the GOP on a budget deal by cutting the payroll tax, which funds Social Security. Advocates for the program pointed out then the shortcomings of this approach: It was targeted inefficiently and unfairly, skewing to the upper middle class and hurting lower-income families in comparison with the Making Work Pay tax credit it replaced.

Even more troubling, it blew a hole in the financing mechanism for Social Security by reducing payroll tax revenue by roughly $110 billion for the year. It was plain then, as it is now, that once you've cut a tax, it's ever harder to restore it.

Putting Social Security's income stream on the negotiating table for the first time in more than half a century simply provided a new opportunity for attacks on the program's stability from those who would love to see it disappear — to be replaced, no doubt, by a privatized investment program that would profit Wall Street hucksters at the expense of everyone else."

http://articles.latimes.com/2011/jun/19/business/la-fi-hiltzik-20110619

[Sarah Ibarruri]

26. The media is corporate, worthless, and an arm of the Ministry of Propaganda of the GOP

I wish I could say the news media here was really news media, but it's not. It's pure deception.

[orbitalman]

27. The GOP hasn't gone to HELL YET???

Out of sight, out of mind doesn't work. I and my family WILL VOTE against them. :mad: :grr:
:nuke: them.

[TomCADem]

41. Of Course, The Corporate Media Is Not Really Hitting Them On Their Hypocrisy

If its a tax cut to oil companies, they fight tooth and nail, but if it provides immediate stimulus to the middle class, they are against it.

[Skink]

28. Payroll tax holiday was the stupidest democratic idea ever,

The Dems were pushing for this before Obama took office. THe republicans can spin this anyway they want.

[SoapBox]

29. Ditto!

[Myrina]

36. Yeah, I thought Pence was in on it originally, too ...

... which made me suspicious from the get-go.

[zalinda]

30. This is the repubs setting the agenda again. n/t

[hfojvt]

31. the middle class does not get $2,000

almost half of the benefits of this lousy plan goto people in the TOP 20%. Not people in the middle, people in the top.

http://journals.democraticunderground.com/hfojvt/160

Given that fact, I am surprised that Republicans would block it.

However, since now Obama is fighting on the side of "tax cuts to stimulate the economy" Republicans can more easily fight for their own, even more regressive tax cuts.

[sellitman]

34. More $$ taken from SS? I'm with the Pukes on this

I hate to say it but this isn't what it looks like on the surface.

[MadLinguist]

35. Boosting Obama's popularity with voters is what GOP opposes

This is the kind of thing that gets people to vote, and GOPers know that. So in order to both make the economic situation and public perception of it worse, they must oppose any winning strategies, particularly ones that the public would immediately feel the effects of. Nothing philosophical or financial is behind their opposition. And you know that has to be true because this is an idea that actually would aid them in their desire to break the social security system. We quit paying into it, it will be gone, broke, poof! And perception-wise too, as the OP says, it is against their stated position that low taxes equal benefit to the overall economy.

[no limit]

37. I along with many others here said that this "holiday" wasn't going to be allowed to expire

and it would end up hurting social security in the long run.

We are called crazy by certain people here.

[fascisthunter]

38. there should be zero tax cuts right now

it is why we have little money going to social programs in a dire time of need. Let's not mention how much money goes into the military industrial complex, while our own citizens are suffering. Anyone really think tax cuts for the well-to-do is really going to help everyone else?

Time for the rich and wealthy to pay up and shut up! This shit is all Kabuki theater, and I'm sick of it...

[KamaAina]

44. To recap: Repukes want to raise your taxes

unless you make over $100 grand a year. :eyes: