Posted on 08/11/2020 7:28:41 AM PDT by SeekAndFind
One of the great puzzles of politics is why so many are against President Trump's idea of cutting payroll taxes. The puzzle starts from the fact that this is simply the standard Keynesian thing to do to boost demand in a recession, and as President Richard Nixon said more than a generation ago, "We are all Keynesians now."
The vehement reaction that has greeted this executive order to defer certain payroll tax obligations (though Trump wants to forgive them permanently if he wins the election) is over the top. Maybe an executive order isn't quite the way to do it, and maybe too many don't want Trump to do anything useful this close before the election. But as a piece of economic policy, it seems fine, even admirable.
That standard analysis (and this really is the way everyone's economic models work — the Federal Reserve, the Treasury, near all investment banks, and so on) is that it is possible for an economy to suffer from an insufficiency of demand. This creates an ever widening spiral around the U-bend for the economy, and we think that's a bad idea. The solution is for government to widen the deficit — that is, to increase the gap between what it spends and what it collects in taxes.
It's possible to have more minor arguments about whether government building infrastructure works better than lowering taxes, sure. But then, given the amount of time it takes for government to build anything — recall Obama's two-year search for shovel-ready projects that turned out not to exist — that doesn't work as a solution. The demand gap is now, and we need the government action now, too.
(Excerpt) Read more at washingtonexaminer.com ...
The Payroll taxes are used to pay for Social Security and Medicare ... the question is — how is this going to affect the system which is already running out of money?
Because it is seen -rightly or wrongly - as a move to eventually get rid of Social Security.
“Defer” is the key word. It has to be forgiven down the road.
There is no money. I remember Bubba...and what was in the “box” was used to balance the budget.
How about someone just tell me if we will have to pay it back.
Defer is the key word. Will our liability still be the same at the end of the year? If so then it is not a tax break.
The ONLY fix for Social Security is to get rid of Social Security.
This is actually much easier than it sounds. Phase out the payroll tax completely over a period of a few years. Phase out income tax on 401K and IRA's after retirement. In other words in a few years young workers would pay zero payroll taxes, get no SS at retirement, but also would pay zero income tax on their 401k and IRA's.
People must be allowed to fund their own retirements.
I’m going to put my payroll tax cut amounts to my cash savings and see what happens at the end of the year.
“The Payroll taxes are used to pay for Social Security and Medicare ... the question is — how is this going to affect the system which is already running out of money?”
The time to ask that question was years ago when congress started taking money from those systems and writing worthless IOU’s. This executive order does not even show on the radar in comparison to the gazillion that has already been pilfered. Anyway, the government can just write another IOU. Problem solved.
One reason why they won’t have an impact is that they’re suspended and not cut. Business will just retain the money they save because they will have to pay it back in January. Employees can spend it if they wish but in 6 months they have a big tax bill so it’s likely many will just save it till then.
Right now the answer is yes, you will have to pay it back in January.
Now there's a winning campaign slogan. I wonder why nobody ever thought of it before?
In other words in a few years young workers would pay zero payroll taxes, get no SS at retirement, but also would pay zero income tax on their 401k and IRA's.
And the old folks who currently depend on Social Security?
It stays the same for those currently on SS. We need to phase it out over a number of years. It can't be done all at one time. It would just be gradual decrease in payroll taxes and paid benefits to those working. It might take 10 years or more to get to zero but it can be done. Eventually workers and employers pay zero in payroll taxes and get zero benefits at retirement. In it's place would be the ability to save any amount in 401Ks and IRAs that no tax is ever due if it's held until retirement age.
In a nutshell we need to get the government out of the retirement business that they should have never been involved in the first place.
There is no Gore “lock box”. That’s a myth. Everything comes out of the general fund. Bills to run the government always get paid. All of SS and Medicare will continue to be 100% funded as always.
How about someone just tell me if we will have to pay it back.”””
YES- It is being DEFERRED......Put off until 2021.
IF you are having $50 a week taken out of your paycheck for FICA & Medicare-— open a savings account & put that $50 a week into that account.
When the bill comes due-—you will already have the funds on hand.
It will be a whopping $40/mth for us.
Thanks (I think).
As I thought. Thanks.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.