Perhaps the Only Good Thing To Come Out of the Obama Administration

Congress voted last month to extend the Social Security tax cut (6.2 to 4.2 percent for employees) until the end of 2012. The bill (HR 3630), the “Middle Class Tax Relief and Job Creation Act of 2012,” as most bills, also contains a lot of bad things—like extending TANF and unemployment benefits—and therefore should have been opposed even by those who favor tax cuts.

The cut in the Social Security tax rate was part of the Bush tax cut extension that was enacted late in 2010. Although that was a win for Democrats since the tax cuts were extended (that is, taxes were not cut), the estate tax was brought back, the payroll tax was cut (which mainly helps Democratic constituents), and unemployment benefits were extended, at least the payroll tax was cut. At the end of 2011, the 2 percent cut was extended for just two months, hence the need to extend it again by the end of last month.

My point is simply this: It will be almost impossible for anyone in Congress to raise the Social Security tax rate back to where it was. Raising it will hurt low income Democratic Party constituents and raising it will hurt Republicans because it will be a tax increase. Who would have thought that the Social Security tax rate would go down under Obama, especially since it went up twice under Reagan.

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8:50 pm on March 6, 2012