Other pundits are writing about tax cuts and wondering how aloud how the Republicans vote against a tax cut. The answer is simple: the temporary payroll Social Security tax reduction is not, never was, and never will be a tax cut.
There are many ways to look at the 2% reduction in the Social Security tax that is being collected. But effectively, it is no more than a spending increase all dressed up to look like a tax cut. The cost to taxpayers was $120 billion dollars. Congress simply decided to put more money into the hands of the lower and middle class. Rather than write a check, they made the 2% payroll decrease on the Social Security tax collection rate so workers could see a tangible benefit in their paychecks. But because it is temporary, and because it is limited, it has none of the effects of a true tax cut. As it’s been shown in history, most recently with the Making Work Pay tax credit for example, such temporary items have none of the stimulative effects on the economy. It served no purpose other than to create political turmoil among voters, party lines, and taxpayers.
What’s worse, no one is talking about the fact that the Democrats plan to pay for this holiday and its proposed extension ($265 billion), by levying a surtax on successful Americans earning over $1 million. This is legal plunder. It is redistribution of wealth at its core. Our government borrowed money directly intended for the Social Security Fund, and now wants someone else to pay for it. The so-called tax cut is really a net tax increase on the very Americans who are most responsible for job creation in this country. Just the effect of debating this nonsense in Washington continues to stifle businesses and harm our economy.