A cut in the Payroll Tax sounds like a great idea at first blush...

[WCGreen]

And is even being pushed by such democratic stalwarts as Al Gore...

But let us get something straight right from the beginning.

The Payroll Tax is not really a tax.

The so-called Payroll Tax is your contribution to the Social Security Trust Fund and your Contribution to Medicare.

Each year or so you get that notice from the Social Security that up to now, you have this much into the system and that if you retired now, this is what your monthly payment will be.

That contribution is wrongly called a "payroll" tax.

They have been calling it a tax because most everyone on the face of the earth hates the word tax. We learn to hate it as soon as we are old enough to understand that the bad guy in the Robin Hood myth is taxing the people too much.

Now there is afoot an idea to suspend the so-called payroll tax during these economic hard times in order to jump start the economy, get money into the consumers hands, free up more money for business business to hire more people because they won't have to first collect that nasty so-called Payroll Tax and then match it.

Now when this current crisis eases some bit, I don't have any real faith that it will be complete behind us for many many years, do you think the people will be clamoring for a return of this So-Called Payroll Tax? And what if the GOP takes over sometime between now and then, do you think they are going to want to reinstate that so-called scourge of the working poor the so-called Payroll Tax?

So if you are not funding the Social Security Trust Fund with new contributors, what do you think will happen?

Kaput. Social Security will be dead.

Dead without even a whimper.

You betcha I am cynical, you betcha I do not trust anyone anymore...

[Captain Hilts]

1. But the Reagan Admin made the way it's administered regressive. A two month holiday from it.

95% of United Statesians pay more in payroll taxes than income taxes.

[Oregone]

2. Uh, its a tax

Money collected from citizens to fund a government program. A tax. Big deal. Contribution & tax are pretty synonymous here.

I'm pro-tax, so its not a big deal to me. It'd just be nice if everyone paid their fair share. Those rich people who make their dough off capital gains don't have a ton to "contribute" here proportionally to their income

[WCGreen]

5. Okay then it's a tax that is designated by law to pay for your part of a specific

benifit that is legally your when you reach a certain age or become disabled...

The amount of tax you pay into that certain tax pool over the years is directly related to how much of that pool will be paid back to you when you reacha certain age.

No other so-called tax is treated like this.

[Oregone]

7. I thought you get full benefits when you reach 40 credits

And thats not dependent on the amount you pay in, but how long you pay in. Right? Correct me if I'm wrong. I could definitely be wrong on this.

[WCGreen]

15. It's dependent on how much you pay into the system.

Look at that report the next time you get it...

[Oregone]

16. I stopped paying so it doesn't matter

:)

Ill probably move back to finish out my credits for two years or so, but other than that, Im over it

[Igel]

18. No.

You have to participate for so long and to a certain amount to be invested, to be part of the program. It's to prevent free rides. I had a couple of bosses that had never contributed to Soc. Sec.; in exchange for that they and their dependents were permanently excluded from participating in the Soc. Sec. program (unless they separately paid into it). As a grad student I was in a DCP and didn't pay Soc. Sec.

But your benefits are determined in two ways: If you're in, you're in and so you qualify for the minimum. That's not real hard. Then if you've put in more, you get increases to your monthly stipend. Possibly because you've paid in more; possibly because it's to help keep you from falling into penury, and how different people define "penury" differs based upon what their long-term lifestyle's been. Perhaps simply because it was politically necessary to reward those putting in $7k/year instead of $1k lest there be some sort of outcry.

In no sense do you get out what you put into it. It's always pretty much been a pay-as-you-go operation. What you'll get out when you're 68 will depend almost entirely on what people aged 16-63 (or so) will pay. Their "contributions" will be to your monthly check, just as most of your contributions in the last 5 years have gone to people collecting Soc. Sec. in the last 5 years.

Take my sister-in-law. She paid FICA for a long time, but it wasn't contribution to a pension fund. Then she got sick. She's on disability--she's unlikely to collect as much as she put in unless she beats the odds for bone and breast cancer. Her son gets money, as well, even though he's 16 (17?) and has put in precisely $0. It's not means tested, because they have upwards of $3 million in the bank. Yet her husband's earned $20k or so per year for the last 30 years, and will almost certainly get more out of Soc. Sec. than he put in.

You're right, there's no other tax treated like this. That doesn't mean it's not a tax. There's no other tax like Medicare, either. There's no tax like property tax apart from property tax, or like sales tax apart from sales tax. Yet they're taxes: They take money from you under threat of legal action and violence, based on some criterion; they use it to pay for some ongoing program(s).

Moreover, what you get out of it will depend upon what is legal at the time. These things change from time to time.

[WCGreen]

25. You're wrong on several points....

Just look at the statement you get from the Social Security Administration every two years or so that shows you what you will get in benefits as things stand right now.

The contribution is transferable to an under-aged child or a child going to college if the main breadwinner dies or is on disability. That is why your niece is getting benefits.

The point I am making her is that the GOP will use this Tax Cut as an excuse to gut Social Security. Social Security is not in trouble. They want us to believe it is in trouble so that they can cut the most successful government program in our country.

BTW, there are billions of dollars sent out to widows who never contributed to the system each year as benefits.

[CaliforniaPeggy]

3. If this happens, then the Republicans will have succeeded.

They have wanted (ever since the beginning) to get rid of the entitlements. Stopping the payroll "tax" would kill Social Security faster than you can say "Jack Robinson."

You're not cynical; you're in touch with reality.

[county worker]

4. To employers it is a tax.

Employers pay 1/2 of FICA and employees pay 1/2. Under accounting standards the employer portion FICA is a payroll tax. All businesses, the IRS, State employment departments say it is a tax.

Reducing payroll tax means to reduce the percentage of gross wages that goes to FICA which is more cash to the employee and to the employer. The withholding percent does not effect benefits. Benefits are based on average salary over a period of time.

[WCGreen]

6. Of course the business part is a specific tax. I'm a tax preparer...

But I am concentrating on how that is being sold to the American public, the workers because they are the ones who stand to loose the most, the ones who see the FICA and Medicare deducted from their paychecks each payday.

[county worker]

8. The reason to reduce FICA percentage is to reduce employer expense and put more

in the employee's paycheck. The idea is to help with the unemployment problem for employers and to help with rising costs to the employee. It is a win-win and I don't understand what motivates anyone to try to undermine it.

[madinmaryland]

9. Can you clarify this a bit. There are several things that are withheld:

This is straight off my paycheck

A) Federal Tax (based on the tax table)
B) OASDI
C) Medicare

Items B&C (the labeling could be a misnomer) are based on a fixed percentage of your gross pay and is not adjusted. Item A is your federal tax, and it is what is cut when they refer to a "payroll" tax and what is reduced.

[county worker]

10. OASDI is state disability insurance

Medicare is the money that goes to pay for medical insurance for those 65 and older, our current public option

Federal is federal income tax.

[madinmaryland]

20. What is strange, is that I have no FICA listed on my paystub.

The item listed as OASDI is 5.9% of gross, and the Medicare is at 1.9%.

[Statistical]

11. No A is federal tax.

The term "payroll" taxes appies to SS and Medicaire.

Yeah all taxes come out of your paycheck = payroll but the term payroll is used to diferenciaate it from other taxes.

You can modify how much federal or states income taxes witholdings are taken out (you might end up with a penalty but you can choose to do so.

Also the amount taken out is irrelivent. What matter is how much taxes you owe at end of year (hence some people get a refund other have to pay).

Try and ask if your employer if you can reduce or stop payroll taxes.

[madinmaryland]

21. Yes that is correct.

SS and Medicare deductions cannot be reduced or modified.

[WCGreen]

13. If you work for a school system or a loccal government, you may

not be paying into Social Security. If you are, there should be a FICA deduction better known as the Federal Insurance Contribution Act. This is a mandatory tax and is levied against your wages that is put aside for you to determine how much Social Security you have earned over the years.

Sure it is a tax but it is not a tax like any other tax that most of the public pays and hates. It is designated for paying out benifits from the Social Security Retirement system.

[Statistical]

12. It isn't a contribution becausethere is no contract to protect it.

If I make a contribution to a defined benefits plan, a 401K , or purchase life insurance the handling of those funds and payout they generate is subject to contract law.

There is no contract or guarantee with SS. tomorrow Obama could sign a bill ending SS payments instantly and without compensation for payroll taxes contributed. It would be massively unpopular but not illegal.

So I disagree with saying they are not taxes. If I don't have legal right to the money it isn't a contribution.

On the other hand I do agree with you that cutting them is a game to reduce public support for them. When you cut a tax and then raise it people don't see it as "the same" they see it as raising taxes. That combined with less money in trust fund means the "game" is to say well you can choose to get back in or you can go this private route.

[WCGreen]

14. Of course....

calling it a tax is the way to strangle the whole program and channel more money to the uber wealthy...

[Alias Dictus Tyrant]

17. It is a welfare tax. You have no right to your contribution.

The idea that this is not a tax is silly, the money is not yours nor does it go into an account with your name on it.

They are not obligated to give you a single dime.

[WCGreen]

19. Then why do you get that periodic statement spelling out in clear

language how much you will get as things stand right now and you start to collect Social Security...

[Romulox]

23. For those of us under a certain age, those numbers don't mean anything.

That SSA printout doesn't give you a contractual right to that amount of money...

[Alias Dictus Tyrant]

26. It is not a contract, it is an idle promise.

And even if it was a contract, it can still be invalidated. Congress can promise to give everyone a unicorn too. They have no legal obligation to not renege on that promise at their convenience.

I don't understand why people believe otherwise. It is tantamount to asserting that Congress can alter the laws of physics to suit them.

[Edweird]

22. No, cutting taxes DOES NOT sound good. It's a big part of why our country is collapsing.

We need to RAISE taxes - on the wealthy.

[dana_b]

24. +1

and I'm sure many, many more here will agree with you. It's just that people outside of this place are vey ignorant of history and how much they AREN'T paying now compared to yesteryear.