Obama: Congress should extend payroll tax cut

[Freddie Stubbs]

Source: Associated Press

WASHINGTON -- President Barack Obama is calling on Congress to extend a payroll tax cut for one more year to boost the economy.

In a news conference Wednesday, the president pressed Congress to approve other measures he said could help spur job creation. Among them were legislation to make it easier for entrepreneurs to patent their ideas, a bill that would make it easier for states and construction companies to obtain loans for road and bridge projects, and trade agreements with South Korea, Panama and Colombia.

Obama made his remarks amid persistent signals that the economic recovery has slowed. Obama has been promoting job creation initiatives as public opinion polls show that the state of the economy has weakened his job approval standing.

Read more: http://www.miamiherald.com/2011/06/29/2291188/obama-congress-should-extend-payroll.html

[TheWraith]

1. Extend it permanently in exchange for removing the earnings cap.

The payroll tax is currently regressive. Lowering it means substantially more money for working class folks, while lifting the cap means more money in total going into the SSTF.

[SoapBox]

3. You are absolutely correct.

[exboyfil]

4. Good suggestion

I proposed something like this to my Congressman earlier this year. My opinion is that we should not be putting any additional dollars into the "Trust Fund" - it was a horrible idea at the time, and we see now why that was so. It appears the S.S. creditor does not have the same status as the other U.S. creditors based upon comments which we hear.

My proposal would be to capture a smaller percentage of income over $105K based upon the participation rate for those making about $60K-$105K. Right now that earnings group is carrying the system for everyone. I do not see why a maximum dollar cap should be set on subsidization which is effectively what the $105K does. Dollars over $105K should not count towards calculating benefits though to avoid skewing the system.

The system should be pay as you go until the economy improves. After it improves then the Trust Fund should be depleted by keeping the reduced rates until only an operational balance remains. At this stage the maximum withholding rate should be no higher than 7.5%/7.5% ever (it is currently 6.2%/6.2%). Benefits for everyone should be adjusted downward to make up any shortfalls but mainting the guaranteed approx. $9-10K/yr for everyone. No additional means testing beyond what is already applied through the tax code.

[dkf]

6. Sounds like you put a lot of thought into this...

I'm not sure people understand enough about how it works to know why what you are suggesting makes sense.

[cascadiance]

9. Remove the cap and lower the rate so that $250k salary pays the same...

... amount of payroll tax as a percentage of their entire salary, not just the first $106k.

That way, no one's tax is raised under $250k (keeping to Obama's commitments), and in fact those under $250k get a progressive tax CUT, and those over it pay a flat rate of tax (they all have been advocating a "flat tax" so they should get it!).

Everyone under $250k gets a payroll tax cut and the system is fully funded with a flat tax, and you don't have to manage the donut hole boundaries or the cap for inflation. Just adjust the rate itself over time if need be.

We have to be careful that we don't bring in less revenue (like just a tax cut will do), which will fuel the right's reasons to try and privatize it later. That's what Obama has to watch out for. I hope he's doing so and not trying to help the Republicans in this regard.

[exboyfil]

22. Only because Obama made that silly promise

during the election. It is unfair in the extreme that individuals making $60-$105K are asked to carry the Social Security system while any societal obligation is suddenly removed when you make more than $105K on any dollars above that level.

Using approximate numbers:

The first $10K/yr of income has benefits calculated at 90% of that amount
Between about $10K-$60K the benefit is 32% of income
Between $60K-$105K the benefit is 15% of income
Above $105K then withholdings are not taken and that salary is not used in the final benefit calculation.

Benefits are calculated by making a yearly adjustment that increases for your older year withholdings. Up to 35 years of earnings history is used. More than 35 years history (which will be you lowest adjusted values) are lost.

Formula is

Total of top 35 years of earnings/35 (actually it is in months but this is simplified)

That number is then applied by the percentages shown above (90%/32%/15%). The way I figure it somewhere along the line in the 38% band you go from being subsidized by the system to subsidizing the system.

[cascadiance]

23. That's why I propose removing the cap along with an overall rate decrease...

The people making $60-$105k, which I've been in through most of my career, will not be bearing the burden any more, and with the tax cut I propose will wind up paying around half or less than half of the tax they used to pay.

I'm proposing that the people further up the ladder pay more of the burden now, and the burden is taken off of the people making $60-$105k when you lower their rate, and those above $105k pay more in to the system.

Especially when you figure that 1/3rd of the payouts aren't back to "retirees" but to those in the safety net that receive them as survivor or disability benefits. A VERY unfair burden for those making $60k-$105k to have to bear, and especially when they pay a far bigger portion of their income to help provide for this safety net they may never benefit from than those making more than them.

I think we're both saying the same thing, are we not? I very much dislike the proposal for donut holes and don't want them implemented, as it is unfair to those making less than $105k compared to those that are within that "donut hole". Lowering the rate allows Obama to keep his commitment, AND give a tax cut, AND be fairer to everyone so that they all pay the same percentage of their income on payroll tax.

It would also make those making less than $!05k less vulnerable to layoffs I think, since the payroll cost is factored in to the budgets of companies when they decide who to cut to reduce costs. Putting more of a cost on higher salaries in a company's payroll, and lower costs on lower salaries will make those at higher level positions more apt to be laid off to reduce costs, or perhaps not be given as high salaries at those levels to keep costs down, which hopefully might help reduce the wealth gap over time too.

[Better Believe It]

10. So how much could Social Security benefits be cut under your proposal?

"benefits for everyone should be adjusted downward to make up any shortfalls"

That's easy for you to say.

[ieoeja]

16. With tech progress, we require fewer people to do the same work. And he wants to CUT SS?

We should be EXPANDING social security.

Outsourcing is *not* the #1 killer of jobs. The #1 killer of jobs is technology. In a "natural" economy, the need for less labor would mean we would all work less. Shorter week, shorter work hours, etc.

There is a reason the unions suggested decreasing the work week to 30 hours during the Great Depression.

[exboyfil]

20. How much over 7.5%/7.5% do you plan

to collect from individuals in the future? Remember the withholding rates started at 2%/2%. Was about 4.5%/4.5% for most of program's history. I am proposing to tax all wage income irrespective of amount. At some point the retired workers need to step up and take the bullet for shortfalls. We still would have a guaranteed $10K/worker (adjusted for inflation) even if everyone else is zeroed out. The problem with Social Security is that it started out being a tremendous deal for the first retirees and has gotten progressively worse as we go along. Far more is asked in income for folks working now than folks who were were working 25 years ago for example. Are we talking about asking for 15%/15% of income in the future? Remember we still are going to need to adjust the Medicare withholding rate up tremendously.

[exboyfil]

21. Well I still am proposing a $10K adjusted for inflation floor

on benefits. Which is easier to say - lets raise withholding rates to 15%/15% or recognize at some point retirees have to have skin in the game? Would you propose any maximum withholding rate, and, if so, then what would it be. I set it at 7.5%/7.5% of all wage income as a starting point for discussion.

[SomeGuyInEagan]

5. That makes sense and is fair. n/t

[jmowreader]

8. It's not "substantially more money"

The FICA tax rate is 7.65 percent, or $76.50 per $1000 of gross earnings. It was lowered to 5.65 percent, or $56.50 per $1000 of gross earnings, for 2011.

The company Center Partners is headquartered in my town. They own two call centers--one's in Coeur d'Alene, the other is in Hayden. A lot of people work there, and they make $9.50 per hour working full-time. (They also get performance bonuses, which we won't add in here. One of my nieces worked there before she got her Master's degree, and with performance bonus she was making the equivalent of $15 per hour, so if you have a talent for the work you can make quite a bit of money.)

One week's gross pay: $380
FICA tax on that before the Obama cut: $29.07
FICA tax after that: $21.47
Difference: $7.60

I don't know about your town, but eight dollars a week doesn't go very far in this one.

The problem I've got with this particular tax cut is it's basically imperceptible to the employee but it really fucks the country as a whole.

[Mojorabbit]

15. That is my opinion also

and in the end it underfunds the program which gives tptb more cover to decrease benefits and mess with the program

[aquart]

11. I like that. Logical and essentially painless.

[JDPriestly]

13. That would be a solution, TheWraith.

[Name removed]

2. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Melissa G]

7. Why is it good strategy to make your opponent stronger?

Obama seems to be in the business of propping up republican ideals. Where is an FDR when we need one?

[JDPriestly]

12. This is blatantly anti-Social Security.

Why doesn't he just give a tax break for hiring a new person? That would be much better and not harm the Social Security fund which Geithner claims is headed into so much trouble.

[EFerrari]

19. Yes, it is anti-Social Securty.

Shame on him.

[PSPS]

14. More of Obama's plan to eliminate social security

Never before in history has social security been on the federal general fund. This idiotic scheme puts it there, where it suddenly becomes an item "on the table" for cutting to "control spending."

[Fuddnik]

17. Payroll tax holidays used to only be muttered by Republicans.

This is utterly stupid. You claim on one hand that the system is running out of money, and at the same time, you cut it's funding.

As a poster above said, $7.00 a week doesn't go very far to stimulate the economy. Not to mention that retirees haven't had a raise in two years, with non-existent inflation skyrocketing.

The Catfood Commission is alive and well!

[2Design]

18. is this the one that cuts into medicare = NOT continue

[Nossida]

24. perhaps its time to

Drop all Payroll Taxes.

Drop all Tax Cuts for the Wealthy.

Drop all inflated Sin Taxes, and
stop making smokers and drinkers
pay for Puritan based punitive
Taxes.

Drop all Tax exemptions on Churches
as they use Church money to support
their Politicians of choice. This is
a Sacred Cow no Politician in DC has
the guts to challenge.

And then
Install a Value Added Tax on all purchases made.

[Ian David]

25. The tax cut needs to come in the form of a check with a cover letter that the dipshits can SEE.

Right now, they don't believe they're actually getting one.

[Angry Dragon]

26. So you extent the payroll tax cut for one more year

and then you take it out of general taxes
Where is the benefit?? People are still paying for it one way or another..............

[Odin2005]

27. This is Insanity.