Democrats Floating Idea of Expanding Tax Cut on Employee Portion of FICA

Discussion in 'Politics' started by InTheLight, Aug 14, 2011.

  1. InTheLight

    InTheLight
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    I read in the newspaper today that Obama is considering expanding the payroll tax reduction of the FICA tax into 2012. There is even some talk of reducing it even more than the amount it was reduced in 2011.

    Background: For 2011 the employee portion of the FICA tax, normally 6.2% of your wages was reduced to 4.2%. So less money is being withheld from your check for FICA taxes in 2011. This tax cut will expire on December 31, 2011.

    Example: Suppose you make $800 a week. The FICA tax cut of 2% for 2011 has put $16 a week back into your pocket. Over a year that is a $832 tax cut.

    Now supposing they reduce it by 3% for 2012. The rate would now be 3.2% The person making $800 a week would keep $24 a week compared to 2010 rates. Over the course of a year that is $1,248, a significant amount.

    Thoughts? Good idea or bad idea?
     
  2. carpro

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    It's just as dumb a move this time as it was last time. Politically motivated theater and wil have no positive effect on the economy at all.
     
  3. TomVols

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    Better idea? Restore this rate but overhaul the tax code. But at least Obama is proposing something. He's been asleep at the wheel for way too long.

    You're sure he proposed this and didn't outsource it to Harry Reid and Nancy Pelosi as usual? They're the most forward leading Democrats in Washington.
     
  4. mandym

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    So Plan B is failed plan A?
     
  5. InTheLight

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    Agree with the overhaul as being a good idea. The NYT reported it was Obama's economic advisors floating the idea.
     
  6. InTheLight

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    It's an extension of a tax cut. It puts money into the consumer's hands. We're not borrowing money to accomplish it. What's wrong with it?
     
  7. StefanM

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    Here's the problem--all it will do is make a tax increase that much harder in the future.

    The rates can't stay this low forever. I don't want them to go up at all (partially because I don't have any confidence that I will ever receive SS benefits of any significance), but I definitely don't want to get shocked overnight by a sudden increase.

    Also, I don't think it really makes that much of a difference. It doesn't seem like people spend an extra 15 bucks here and there with any significance. If I received a lump sum of $500, I'd probably spend at least some of it.
     
  8. InTheLight

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    I'd say the extra $15 or $20 a week people have been receiving have been going straight into their gas tanks. It's been an invisible tax cut because it's being absorbed by higher gas prices at the pump. Kind of reminds me of the Bush tax cuts.

    Agree with you that the lump sum payment would probably get spent, but we tried that with Bush and it was deemed to not have been a factor in picking up the economy.
     
  9. StefanM

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    The problem with the direct stimulus is that it was just a check. IMO, we should have done a gift card or something similar that required individuals to spend them instead of just applying the funds to debt.
     
  10. webdog

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    Any time you take money out of the government's hands and put it into the people's hands it's a good thing.
     
  11. carpro

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    We'll be borrowing money later this year to pay social security benefits because of it.
     
  12. carpro

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    The right hand gives and the left takes away.

    Social security benefits have to be paid. It's a pay as you go program and benefits can't be cut just because we don't collect the contributions. We collect less , we'll have to borrow to pay the benefits. There is no free ride.

    This is one of the worst ideas democrats have ever had. But they know what they're doing. Buying votes while they chalk up more debt.
     
  13. InTheLight

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    Warren Buffett has endorsed extending the 2% FICA payroll tax cut.
     
  14. Robert Snow

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    It was put forth by a Democratic Administration. If this had been put forth by a republican, Carpro would be all for it!
     
  15. targus

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    Republicans need to start saying that "The Democrats want to kill Social Security".

    First they cut funds for Medicare now they are cutting funds for Social Security.
     
  16. InTheLight

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    So I'm putting Carpro down as being for a tax increase on January 1, 2012, since he opposes extending the FICA tax cut.
     

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