One more year of savings! Congress extends payroll tax cuts
February 21, 2012 by Christian SchappelPosted in: In this week's e-newsletter - benefits, Latest News & Views, Money, Pay and benefits
Do you hear that? It’s the sound of your employees breathing a collective sigh of relief.
The income tax cuts implemented by the George W. Bush administration will be extended through 2012, once President Obama signs the extension both the House and Senate just passed.
The proposal to extend the tax holiday that has employees paying 2% less into Social Security was passed by a vote of 293 to 132 in the House and 60 to 36 in the Senate.
President Obama has said he would sign such a proposal if one made it through Congress.
Big relief for workers
The impact on the average worker is significant. If the Social Security tax was allowed to climb back up to its old rate of 6.2% from the current rate of 4.2%, it would cost the average worker $934 per year.
The tax holiday was originally set to expire at the end of 2011, but Congress extended it just before that happened. It was widely considered by lawmakers an unwise move to hit Americans with what amounts to a significant tax increase while the country tries to pull itself out of economic turmoil.
However, the extension comes with a hefty price tag. The Congressional Budget Office estimates it’ll cost $93 billion though the end of 2012.
Tags: congress, payroll tax, social security, tax holiday
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February 21st, 2012 at 10:18 am
“The Social Security tax holiday’s just one piece of the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act Of 2010 that President Obama signed into law on Dec. 17.”
February 21st, 2012 at 12:23 pm
“However, the extension comes with a hefty price tag. The Congressional Budget Office estimates it’ll cost $93 billion though the end of 2012″
I believe that is $93 billion less dollars to fund an already ailing/failing social security system.
It looks like buying votes are once again trumping the stability of our retirement system. Both Obama and the congressmen who voted for this should be called out. The media fails to discuss the unintended consequences of these types of decisions. Let’s take our medicine now so we are not even more sick later.
February 21st, 2012 at 1:06 pm
When will someone or somebodies get a backbone in Congress???? Spend, Spend, Spend with not a care in the world. Why should they care, 100% retirement with great benefits! They need to start getting what we, the American people get, then we might see a different outcome.
February 21st, 2012 at 1:46 pm
Ahhh, isn’t that the American way. Let’s worry about today, today. We’ll worry about tomorrow, tomorrow. One day, tomorrow will come folks.
February 21st, 2012 at 1:53 pm
@h2r Who are you quoting? If your quotes are not from the article, please cite the source. The quote is confusing since Obama has not yet signed the current legislation discussed in the article. Your quote seems to apply to the original legislation and appears to be over a year old .
February 21st, 2012 at 3:14 pm
I didn’t think Bush had anything to do with this. It was first effective Jan 2011, long after he left office. Obama gets credit/blame for this. Social Security is already struggling so why are we putting less money in it??? Can’t help but think that in a few years, benefits will be cut and we’ll be reminded of the $17.96 per week we got back in our checks.
February 21st, 2012 at 3:26 pm
Well, I already figured that I would never receive social security, but I still had my fingers crossed. I guess, now, I know I will never see a penny of the social security taxes that I have been paying for the last 20 years. I pray for my children!
February 23rd, 2012 at 12:55 pm
@GenXHR. In some way this is good news for you. If in fact you were never expecting to receive social security benefits, at least you are now paying less into the sysytem than you otherwise would have without the tax reduction. You are in essence flushing less of your own hard earned money down the toilet and getting the same benefit (zero).