SS with holdings lower? IS that true?
Yes it is. For tax year 2011, Obama has lowered SS with holding from 6.2% to 4.2%. Really? I thought SS need more revenue because it is going broke. That is the savings you see, not Federal with holdings. So when you are told that you are paying the lowest Federal with holding, it is not true. You are paying less because of the SS reduction.
Why is that? Because SS does not contribute to the general fund, so that way Obama can claim a tax reduction while not actually reducing taxes you pay from federal with holdings
What you're talking about is a payroll tax holiday where workers pay a reduced rate and employers continue to pay 6.2%. Withholdings and taxes are synonyms. He is doing this because he has bought into the myth that tax cuts stimulate the economy. In reality, most people will only pay debts they already have or save the money, the same way people did with the Bush tax cuts and the tax cuts that came with the Stimulus. Those tax cuts for the middle class only worked out to a few hundred dollars per person. The theory is that tax cuts stimulate demand, which they do not. He thinks he can do this because the Social Security trust fund is valued at about $2.6 trillion as of December 2010. This is projected to run out in 2032. What we really need is a serious jobs plan going forward. Even the temporary employment of infrastructure improvements will beget more jobs as those employed in infrastructure improvements will have significantly more money than they do now. This will allow them to really stimulate demand, more so than a check for about $350. You're basically correct that this will only hasten Social Security's eventual bankruptcy. What we need to do is eliminate the payroll tax ceiling and possibly increase the payroll tax rate. Raising the age ignores the fact that the people about to retire lost their savings in the market collapse of 2008. They are now particularly dependent on Social Security. Doing anything to benefits only decreases the rate of turnover. The economy never did and likely never will grow at a sufficient rate to compensate for this. The result will be a personal debt crisis among my generation as we will be unable to find adequate employment to pay our student loan debt.
S.S. actually makes a "profit" each year. Its the only government entity that brings in more than it send out. The problem is the overage is given up to the powers that be in government and used as "descretionary spending". A "promisary note" for lack of a better term is left with S.S. At issue is they have taken more than they will ecver be able to pay back. Now, guess who suffers?
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