Social Security Payroll Tax CutsPublished:
Part of President Obama’s deficit reduction plan has been to give Social Security payroll tax breaks. Last year, the tax rate was brought down from 6.2% to 4.2% and was the first payroll tax cut in decades. However, critics argue that this will have a negative impact on the Social Security system, since the money collected from payroll tax cuts goes to the Social Security trust fund. With less revenue coming in and more checks needing to go out, the Social Security system is becoming more and more strained each year.
Social Security tax is collected only on the first $106,800 of income, which means that a payroll tax break would be particularly beneficial to low- and middle-income employees. This is something that both political parties generally agree on, so an extension of payroll tax cuts will likely encounter little opposition.
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