So Why Don't US Leaders Cut PAYROLL Taxes?!

[cia]

The problem I have with Social Security cavebear is that we are giving out so much money now the situation is a pyramid scheme which either I or my children will be caught in. If I am currently paying for today's receipients and SS is not solvent, I don't see how it will improve over my lifetime with the death rate slowing.

[Ramo]

Because cutting payroll taxes would actually help the poor and middle class and stimulate economy. Why would the gov't possibly do that?

[cia]

Plus if they cut payroll taxes people might see how much they actually pay instead of signing their return at H&R Block and going on their merry way. No way would the politicians get to jack up those again.

[TCO]

Gatekeeper,

the problem is that the payroll tax (Social Security) is supposedly an enforced savings plan. So sufficient funds have to be collected to pay for future liabilities.

It would be better if we admitted that social security is a welfare program. scrapped the tax. Scrapped social security except for people who are in a wlefare like status (and old), etc. Unfortunately that won't happen.

[Gatekeeper]

GP:

On my deposit notice, it breaks down the taxes into three categories (I don't have a state income tax or local municipality tax and I don't own land, so no state property tax):

1. FIT (Federal Income Tax)
2. SS (Social Security)
3. Medicare

They deduct "x" amount of dollars for each tax; what I'd like to see is a reduction in the FIT, not necessarily the SS or Medicare. Or doesn't the government break down its payroll tax collections? Is that breakdown just for our benefit and the taxes are just globbed together in the bureaurcracy?

Gatekeeper

[TCO]

You are confused.

[Gatekeeper]

How so? I am looking at one of my deposit notices right now and it's divided into FIT and FICA. The former is the federal income tax, the latter a combination of SS and Medicare, no?

Gatekeeper

[Imran Siddiqui]

I always wonder about people who talk about cutting payroll tax. How will we pay for SS, which is already in trouble? Unless, like GP says, we admit that the SS cannot be self contained (in a 'lockbox' to use Gore language ).

[DinoDoc]

Originally posted by Imran Siddiqui
How will we pay for SS, which is already in trouble?

That's why I find it strange to see Democrats advance the idea. I wonder what the reaction would be if the idea came from the other side.

[Imran Siddiqui]

It'd be 'Look the evil Republicans, trying to kill off SS' .

If Al Gore proposed Bush's tax cuts, Dems would be saying how fair it was compared to other cuts .

[Az]

how about raising the retirement age?

[DanS]

Gatekeeper: Payroll taxes = FICA. Income taxes = FIT. That's how you're confused and contradicted yourself.

Payroll taxes are mostly a social insurance and pension program, not a welfare program. You are paying for your future benefit, so if you reduce your taxes on it, you are reducing your future potential benefit.

[GePap]

Originally posted by Azazel
how about raising the retirement age?

The whole "SS is colla[psing" is based on the assumption that benefits remain the same, and kick in at the same age. By both lowering benefits and increasing the retirement age, SS is no longer "in crisis".

The problem is not the economics, but ideologies. Many opponents are simply opposed to SS on principle, and most mainstream politicans are too afraid to bite the political bullet that would follow raising the retirement age and cutting back benefits.

[Az]

What's the retirement age in the US?

I know that in Israel, with the retirement age being at 65 for men, and 60 for women, The system is working rather well. Actually the government uses it as tax, it took some 35 billion shekels out of it a year ago.

[Imran Siddiqui]

65 for everyone. Touching that age would almost certainly mean political suicide.