Thursday, December 8, 2011

Why the Payroll Tax Cut is a Bad Idea

Extending the "Payroll Tax Cut" is a bad idea. The specific tax it cuts is the Social Security tax. Social Security is already underfunded and every politician in Washington D.C. knows it. That's reason enough to let this tax cut expire, and why it never should have been enacted, but there's an even bigger reason:

The tax cut will save most families about $1,000 over one year. The politicians pushing it say it will stimulate the economy. No, it won't. $1,000 per year is less than $20 per week. Most families won't even notice it. In fact, most people aren't even aware that this tax cut is already in effect (scheduled to expire at the end of this month), because that amount, spread over such a long period of time, just doesn't make a big difference to each family. The accumulated funds from every taxpayer, though, makes a significant difference to Social Security.

If you want to simulate the economy with a tax break, fine, but give families the $1,000 as a lump sum distribution so they actually notice it, and treat it like a windfall, and DO NOT take it out of Social Security!

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