The payroll tax holiday -- a direct transfer of payroll taxes to the general fund

[JDPriestly]

Think it through. You pay 2% less in payroll taxes for two years. The money you now pay for payroll taxes is not taxed a second time.

If you get a tax break for 2% of your payroll taxes, the amount of your income that is taxed for the general fund will rise by the amount you would otherwise pay into the Social Security Trust Fund. That means that, instead of paying the payroll tax, you will pay a good part of the money you now pay into the Social Security Trust Fund into the taxes that go into the general fund.

The vacation for the payroll taxes would literally steal money from the Social Security Trust Fund and put it in the general fund.

This idea makes no sense for you and me. How could Obama's people dare to suggest this sneaky deal?

[myrna minx]

1. It *is* a sneaky deal.

I can't believe this is happening. :-(

[jtown1123]

5. Call your Reps Now 1 800 998 0180. This is a Republican idea.

This stinks to high heaven. President Obama does not understand this program and has showed time and time again he is clueless on this very important subject. This will unravel Social Security. The Republicans will never allow this to expire thus de funding Social Security. Crazy no tax loonies like Grover Norquist are licking their lips.

http://www.ncpssm.org/entitledtoknow/?p=1415

[myrna minx]

8. I have called them.

I'm rather fortunate to have some really great representation, like Keith Ellison and Al Franken. :hi:

[jtown1123]

10. You are lucky!

[yourout]

2. I think the answer to your question is obvious.

They want to start chipping away at SS and this is a starting point.

[Autumn]

3. It's theft, plain and simple, but they have

been stealing from it for years. I don't expect it to change now.

[donco6]

4. They want to show SS becoming "insolvent" at a faster rate.

That way, they can reconvene the Catfood Commission in order to deal with the SS "crisis".

[KT2000]

6. This is the worst

part of the deal in my opinion.
This is how Social Security is bankrupted, destroyed and replaced with retirement accounts that Wall Street will consume periodically, leaving most people broke.
The case will develop that finding Soical Security will compete with the defense budget, congressional perks and corporate bennies etc.
It is the beginning of the end of Social Security.

[lldu]

7. They would have to move 120 Billion from the general fund...

to the SS fund each year. After a couple years, they would say we cannot sustain this and that SS was failing and needed "redone" or eliminated.

Pretty wily

[jtown1123]

11. Yes, this is right.

[BzaDem]

9. This is actually the opposite of what you say. The bill says that the general fund will write a

check to the Social Security trust fund for 120 billion (the amount it loses from the payroll tax holiday).

So in the end, the fund isn't touched at all.

[JDPriestly]

13. That makes the Social Security fund dependent and subject to the general

fund. That is the problem.

The Social Security Trust Fund must be kept separate and independent. The money cannot be made fungible. If it is made fungible, if the separation between the Social Security Trust Fund and the general fund is blurred through measures like this tax "holiday," it will be much easier to destroy Social Security.

Besides, you are not responding to the message in my post. What I pointed out is that when you lower the individual taxpayer's payroll tax, you increase the amount of the taxpayer's income that is subject to ordinary income taxes. Thus, you are transferring a part of the individual taxpayer's income from the payroll taxes that go into the Social Security Trust Fund and putting that part of the individual taxpayer's income into the general fund. The amounts will not be exactly the same. But this will not be a 2% decrease in the individual taxpayer's taxes. It will simply shift a portion of what the taxpayer would have paid in payroll taxes from the Social Security Trust Fund to the general fund.

[BzaDem]

20. Um, I don't think people can deduct any social security tax paid in the first place.

Taxes are paid on the pre-tax income, not income after you pay the payroll tax. So they are not paying income taxes on a "higher amount" -- they are paying income taxes on the "same amount."

I could be wrong, but my understanding is that FICA taxes aren't deductible in the first place.

As for your trust fund argument, I do not see how it will be easier to destroy social security if the funds are blurred. Social Security is hard to destroy because everyone knows that it is a program for everyone (not just the poor). The public neither knows nor cares about accounting fictions, and accounting fictions are not the reason the program is so popular. As long as the trust fund is fully reimbursed (which it is), I don't see a problem here.

[Roland99]

12. Exactly! If *we* get it, why can't the Dems? Oh wait...they do but they don't care.

[bvar22]

14. Taking Money from our Children....

...and giving it to Millionaires is insidious.

De-Funding Social Security is beyond treachery.

The curtain has been completely pulled back for EVERYONE to SEE.
There is no longer ANY defense.

[glitch]

15. K & R. Have the filibusterers mentioned this yet? It is the most important part

of the sell out.

[Horse with no Name]

16. Yes.

One of the things Bernie said (paraphrased) about it was that what will happen is that it is paving the way to make them permanent because in a year we will be coming into an election year and the Democrats will have to reinstate the Social Security deductions and then they will be saddled with "the Democrats are going to raise your taxes"....which will lead to another holiday and another holiday and another holiday, ad infinitum!

[JDPriestly]

17. But that does not deal with the fact that the cut is a bit of a hoax.

A reduction of 2% of the payroll tax would either be a reduction from 2% of the entire income of the person or just 2% of the amount that the person pays as payroll tax.

Assuming a person is earning $50,000 per year. Assuming that the reduction is 2% of the person's entire salary. That would be $1000 per year. Per month, that is only $100 per month. It does not begin to make up for the reductions in income that we have all suffered in recent years as the wealthy have further grown their bank accounts and investments overseas instead of jobs in America. While it might help some families, this tax break is nothing more than an insulting joke to working people who deserve better.

But on top of that, the $1000 that would be reduced from the person's income would be taxable for ordinary taxes. It may be that a person would pay nothing on that amount because of other deductions and credits. But I still have a problem with this. Because there are enough single people and others who actually will pay taxes on the income other than the payroll tax, this will mean that tax revenue will be transferred away from the Social Security Trust Fund into the general fund.

This is a dangerous precedent. Future Congresses will be tempted to transfer even more of the money that is now subject to the payroll tax into the general tax revenue. This is a slippery slope.

I watched this with free trade. We started on a slippery slope and now have lost our industrial capacity, are impoverished and have lost the very means to make a living. Let's don't make our awful situation any worse.

[BzaDem]

21. As I said above, I don't think you can deduct any FICA tax paid in the first place. Which means you

aren't paying a PENNY more in income taxes because you get less of a payroll tax.

[JDPriestly]

22. Your FICA is subtracted from your income for tax purposes I believe.

I believe that your taxable income is your gross less your FICA taxes. Am I wrong about that anyone?

Check your tax returns.

[BzaDem]

23. This site doesn't think you're right

http://www.businesstaxrecovery.com/articleupdates/social-security-tax-deduction

"This is sometimes confusing to tax payers who are itemizing their deductions without help from a tax expert. Many taxes that you pay during the year such as sales taxes and personal property tax are allowable itemized deductions. Your social security tax is currently not allowed as a tax deduction."

[JDPriestly]

25. I don't think it is included in your taxable income.

I don't think you pay income tax on the sum that you pay in Social Security tax. It isn't a deduction. It just doesn't count. I could be wrong, but that's the way I remember it.

Check your W-2 and your income tax forms.

[BzaDem]

26. Looking at the 1040 form, I don't see anywhere that says it isn't included. The W2 always has the

total income (before any taxes are taken out), and that's the value that gets transferred to the 1040.

I could be wrong though. I'm no accountant. :)

[JDPriestly]

27. I don't know any more about this than you do.

I have no special knowledge of tax law. I just saw this on my tax statements and on the W-2s my employers have given me over the years. It's different if you are self-employed i think.

If your claim were true, you would pay a tax on a tax. Let's say that your employer takes $2,000 out of your check to pay for Social Security taxes. You don't deduct that $2,000.
Your employer does not include that amount in calculating your annual salary. Therefore, you don't declare it as a part of your taxable income.

You don't pay it to the government when you pay your taxes if you are a regular employee. Your employer has already taken that amount out of your paycheck and paid it to the government as a part of payroll taxes. It just isn't included in the amount of income that you declare.

That was my experience when I was an employee.

[somone]

18. It is the poison pill to kill Social Security

Republicans have been dreaming about it for years.

[Rex]

19. They think most Americans are dumb and won't know what is

going on and if you look at the M$M...well that is probably right. I mean shit, GWB got away with pillaging and plundering everything his greedy group of cronies could get their hands on and NO ONE CARES TO PUNISH THEM. Punishment. Correct a mistake, oh well if we can't do that then we will never move forward. Even with a 'progressive' POTUS, for FUCKS SAKE we have another country wanting to stick our last VP in prison! COME ON PEOPLE, wake up and do the right thing! Stop fucking over the poor to help out criminal elite steal another trillion from the treasury! That is where this money will eventually go, the working poors tax 'holiday' is the stimulus needed for the NEXT ROUND of fuckovers by the ruling parties.

If you don't make an example out of warcriminals, then what the fuck good are you at running a country? Letting them go, while the working class starves for justice.

[reformist2]

24. We need to make stopping this our #1 issue.

I know Democrats have a difficult time prioritizing, but protecting Social Security is going to be the single most important issue in the years to come. Social Security has been the main component of the safety net for the past 75 years, it is the heart and soul of the New Deal. And as such, it is the heart and soul of what the Democratic Party stands for. We need to let the Republicans know that this is OFF LIMITS!

[sad sally]

28. Do you know if the bill includes a 2% reduction for employers in addition to employees?

If so (and I can just imagine employers will demand it), this will take SS down even faster.

[Poboy]

29. recommend.