Posted on 01/14/2011 11:20:30 AM PST by pickrell
I'm in the office, now, doing the weekly payroll. We're part of the 'old breed', you see, who still use a combination of DOS programs and dot-matrix printers- the DOS & DOT dinosaurs, so to speak.
As a result, we have to page through the booklets each year that the IRS and the Social Security Administration send out, to glean the changes for the upcoming year.
This year, the powers-that-be have decreed that FICA withholding rates have been changed. To reduce things too english, let's say you earned $ 500.00 this week. You won't receive that money. Instead, of course, you'll take home what's left over after the various taxing agencies have taken their bite. And one of the bigger bites is from FICA.
FICA is the combination of Social Security and Medicare. That includes both the employee and the employer payments of 1.45% in Medicare, and 6.2% in Social Security. This means that the government gets $ 38.25 of your paycheck in FICA taxes, in addition to what it takes in withholding. And it demands an equal amount from your employer to match it. That's $ 76.50 , every week.
As good citizens we should already know this, given the fact that in between month-long coverages of the latest celebrity murders over the years, the networks occasionally ran with the terrifying news that the Republicans were out to destroy Social Security. Further, that the risky tax scheme that George Bush plotted was to allow part of the Social Security money being withheld from the employee, to instead be given to the employee to invest in an actual pension program, rather than into the coffers of Congress.
A surprising number of Americans were unaware of, and many still are, that a significant chunk of the amount withheld from their paychecks was going- not to Social Security, but rather directly into the hands of Congress to spend as they wished. This was not mentioned by the news. The only mention was the grave, expert testimony that if any money- ANY money- was diverted out of the torrent flowing into the Social Security Administration, [and thereby Congress], that the nation would collapse. And the many grave experts in front of the cameras all frowned identically at such an irresponsible proposal as the President made.
They further brushed aside concerns that the trust fund they touted didn't actually even exist- that all of the money paid into this "trust fund" had already been spent. "No," they condescended, "all of these funds are backed by IOU's from the government to itself; that should the government run out of money, the government would simply come to the rescue and bail out the government with more government money." Followup questions from stunned FOX News reporters were brushed aside as the normal extremism of counter-revolutionaries. No, the only problem was the Administration, and George Bush himself.
Flash forward six years to today.
That trivial and false chimera of government debt... suddenly has assumed unhideable and truly frightening levels. Citizens are not spending in a way that maintains the consumption-driven boom.
So guess what has quietly just been changed? Yeah, you got it in one.
Starting on January 1, 2011, the amounts withheld from worker's paychecks for Social Security goes down from 6.2% to 4.2%, - a net reduction of nearly a third. And that money, instead of heading into Congress's party fund, now goes into worker's pockets.
The reasoning can be broken down threefold.
First, in the insane orgy of Obama debt increases, no one will notice that part of the old debt buildup previously masked by shaking down the workers with the non-tax/tax portion of Social Security, will now manifest itself in increased debt visibility. Note- not increased debt, that would happen regardless- but rather the ability of citizens to now see the debt. Of course, buried in an avalanche of Obama debt, the small rockpile of the Social Security can now be quietly exposed, and later dismissed as 'old news'. No one will cover this in the media.
Second, the "wonderfully recovering Obama economy" is now in enough trouble to actually force Democrats to consider and implement tax cuts. Don't dwell on that too long if you wish to sleep at night.
Third, and most significantly, the absolute lie that those grave and serious experts told us nearly a decade ago, about the consequences of touching even the slighest part the sacred cow of Social Security funding has been exposed for all times. And the amounts of money that could have been accumulating interest in private, REAL, retirement accounts is not there, 8 years later... because Democrats wanted to be able to stand up and applaud in front of the nation, when George Bush, at the State of the Union Address, announced his disappointment that efforts to fix the Social Security mess has been thwarted by Congress.
But you really don't need to know this. You really need to see instead the next pep rally for President Obama, using the coverage of a celebrity killer as a vehicle.
Don't worry. If your cable bills for watching this propaganda creep upwards, you'll have extra in your paycheck each week to cover it. Never mind why.
Just noticed that in my paycheck yesterday. I’ll take it, but it was a bit of a surprise.
Colonel, USAFR
No. They actually changed the Social Security tax rate for individuals. What is means is that the already underfunded Social Security will be more underfunded.
A shame there will be no push to ‘save’ that 2% for investment toward retirement. Educational opportunity wasted on the already ignorant.
While most people see this 1/3 cut as more money, it doesn't make a damned bit of difference to people making over the max withholding; it'll just take a little while longer to make that freedom point. What this really is, is a tax cut for middle and lower income people who will never reach that withholding maximum. It isn't rocket science.
The progressives/liberals over at MSNBC have been complaining about that progressive FICA tax cut because they were very happy claiming SS is fully funded for decades (the CBO spreads this crap ) and a great success, and now no-one will believe that anymore.
...meant to say “excess used for General Corruption fund” instead of repeating....cut and paste got the best of me.
I do think that the taxable earnings cap at 106,800, same as 2010. So, you (or any max payer) will save 2 per cent on that, or a bit over $2,000.
do your math again....it keeps going if you make over that....still the same $ limit.....If you look closely, the amount they’ll hit a max/over limit earner is still $6621....it’s a middle, lower income tax cut.
I am self-employed, so looked into it. The employer’s portion remains at 6.2% of 106,800, for a total of 6621. The employee’s portion is 4.2% of 106.800, for a total of 4485.
difficult to believe, but I take your word for it...they are often unusually tricky in their wording....A cap of $106 and change is different from a max of $6621 withheld....
The 2% reduction in the employee’s SS tax rate will expire at the end of the year.
NOW is the time for a conservative in Congress to propose that when the 2% comes back, it does not go into the so-called “lock box”, but rather is invested in an individual account in the employee’s name that he can’t touch until he is eligible to draw Social Security.
Is that not exactly what Bush tried to do, and all heck broke loose? Which is the OP’s point...
"..Is that not exactly what Bush tried to do, and all heck broke loose? Which is the OP’s point..."
Spot on, gloryblaze. The difference may be that this time we have hard evidence in our hands, and a vastly expanded organizational awareness, thanks to Freerepublic and the tea partiers, so that we could just possibly pressure the House to pass legislation exactly like Bush, So Cal Rocket and you have mentioned.
Don't bemoan if it gets vetoed- MAKE him veto it! November 2012 is coming up, and we need that. If not now, when?
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