The payroll tax cut of 2% will not cut one penny from the Social Security trust fund

[BzaDem]

http://tpmdc.talkingpointsmemo.com/2010/12/unhappy-dems-mull-obama-gop-tax-cut-deal.php

--snip--

"Progressive economists have worried that a payroll tax break along the lines of the one announced tonight could come back to bite Democrats if it undermined the solvency of Social Security. But officials tonight insisted that its cost to the Social Security trust fund will be reimbursed with a credit from general revenue."

[Arctic Dave]

1. Uh, yeah. Do you have any relatives from New Jersey?

[Abq_Sarah]

2. I'm not sure

How a 2% payroll tax cut "creates jobs". Additionally, it is of a greater benefit to high income workers vs lower income workers. It seems like just another example of giving the most relief to those who need it the least.

[bbgrunt]

3. actually, since you only pay the payroll tax on the first

about 110,000 of income earned, this will not be of greater benefit to those at the top of the income distribution--although they will get some benefit from it. Basically, the social security tax is regressive with respect to income earned so the reduction by 2% will be a relatively progressive move.

However, from what I understand, making the funds for social security more open to general fund transfers is not a good idea or precedent. While soc sec funds are often borrowed against to pay for other gov't activities, suggesting that now general revenue funds should be used to cover the decrease in social security funds is another step towards making the social security funding a part of the overall budget......and turning it into a welfare program that can more easily be cut.

[BzaDem]

4. Then just think of it as a 2% tax credit on top of the full payroll tax.

I think as long as everyone continues to receive benefits, the different rounting number of the check won't turn it into a welfare program.

You are indeed correct about the distribution of the tax. While it is regressive UP to 110,000, the fact that the tax cut doesn't go to any income above that limit makes it pretty progressive when considering the entire income distribution.

[bbgrunt]

7. perhaps I misunderstood the proposal--

you said:

"While it is regressive UP to 110,000, the fact that the tax cut doesn't go to ANYONE above that limit makes it pretty progressive when considering the entire income distribution."

are you suggesting that if one's income is past the 110,000 limit that they are denied the 2% reduction? that it is actually a tax credit for those under the limit but not for those over the limit?

[BzaDem]

8. Sorry. I meant any income over that limit, not any person over that limit. Fixed.

Though still, as a percentage of income, it is flat up to 110 and then decreases down to a tiny percentage as income rises. For a millionaire, this is a 0.22% tax cut instead of a 2% tax cut.

[Abq_Sarah]

5. Do the math

Higher income earners will get a larger tax break from that 2% reduction than lower income earners.

[bbgrunt]

6. well, technically, yes. Someone who makes

100,000 will get a bigger dollar tax cut than someone making 50,000. But the percentage with respect to income will be equal.

However, someone making a million will not get a bigger tax break than those at the top income subject to the social security or payroll tax. And in relation to percentage decrease with respect to income, the millionaire will get a much smaller percentage.

[Hannah Bell]

11. It's a flat 2-pt cut. There's nothing "progressive" about it. It just means everyone will pay less

millionaires included.

[BzaDem]

12. It is flat up to 110k, after which the cut as a percentage of one's income decreases dramatically.

A millionaire doesn't get a 2% cut with respect to their income -- they get a 0.22% cut. A billionaire gets a 0.00022% cut.

The vast majority of the 120 billion goes to people who make less than 250k.

[leftstreet]

9. Getting out in front of it. One meme at a time

:eyes:

[BzaDem]

10. So are you now about to argue that it DOES affect SS? n/t