Senate Democrats Need to be Educated About Payroll Tax Holiday. Let's Help Bernie Out.

[jtown1123]

Why are we in this mess? Many Democrats in the House and Senate simply don't realize the historical implications a payroll tax holiday will have on Social Security. We need to educate them. Social Security has been independently financed since its inception. We cannot allow it to be defunded and left to fight for general revenue dollars. This is a REPUBLICAN idea. This ensures Social Security will become fiscally unsustainable and ripe for cuts. This payroll tax will not expire. Many republicans have come out and said they will frame this as a tax increase on the middle class during campaign season. Do we really think Obama will let it expire and be accused of raising taxes on the middle class? I sure don't.

Our representatives need to hear from us that this is unacceptable and harmful. Many are alarmed when they hear the implications this payroll tax holiday has on Social Security (I am on the inside and can attest to this).

NCPSSM has a legislative hotline you can call today: 1-800-998-0180

or you can send an email (Select "Tax 'Holiday' is no holiday at all"): http://capwiz.com/ncpssm2/home/

We need to provide some support for the wonderful fortitude Senator Sanders is showing right now. He is approaching four hours on the Senate Floor.

[myrna minx]

1. This is the most important point I've read here today. K&R. n/t

[ProSense]

2. There is nothing wrong with a payroll tax

that doesn't touch Social Security or is offset by increasing the threshold. Robert Reich, in his post criticizing the deal, advocated a payroll tax holiday:

<...>

The solution is to reorganize the economy so the benefits of growth are more widely shared. Exempt the first $20,000 of income from payroll taxes, and apply payroll taxes to incomes over $250,000. Extend Medicare to all. Extend the Earned Income Tax Credit all the way up through families earning $50,000. Make higher education free to families that now can’t afford it. Rehire teachers. Repair and rebuild our infrastructure. Create a new WPA to put the unemployed back to work.

<...>

The CBC also advocating a similar tax holiday

[jtown1123]

3. So a payroll tax holiday for very low income earner and a higher one for higher incomes?

[ProSense]

4. No,

if the payroll tax holiday has a cuttoff, in the deal it's up to $40,000, but from the general fund.

Currently, payroll taxes are only levied up to about $106,000. Instead of being replenished by the general fund, the income threshold could be increased to offset any shortfall caused by a tax holiday.

[DURHAM D]

7. If the $106,800 level is erased then -

the maximum on SS pay out would have to be raised. Its not a pure trade out.

SS is regressive on the front end (everyone pays the same % on their income) and progressive on the back end (middle and lower earners receive a bigger percentage back of what they paid in than high income earners). Currently its a good program for middle and lower earners and a bad program for upper income earners. I don't know the break point but I think the "upper" part begins at a much lower level than most think.

However, I still think the level should be raised from the $106,800 to a reasonable amount like $150,000 or $200,000. IOWs - income redistribution is ok with me but the current maximum SS distribution for retirees would have to be raised also or the backlash against SS from higher earners would be very destructive for the program.

[Still a Democrat]

5. The package requires the general to reimburse SS for the holiday amount

It doesn't come out of SS

[jtown1123]

6. That is why this is incredibly problematic. Social Security is designed to be independent.

Say they pay for it one year, then it begins to add to the deficit. Obama & Republicans are not likely to allow this to expire as it will be framed as a huge tax increase during the elections. This will increase unsustainability. Republicans will say we can't afford to reimburse SS every year to the tune of $120 billion, therefore, we should privatize, means test, etc. This is a Republican strategic tactic to undermine and de fund Social Security.