You may have recently heard about the
payroll tax cuts that were extended for an additional two months by Congress. Many Americans, especially the lower and middle class, have viewed this as a good thing. Anytime less money is taken out of your pay check it's got to be a good thing, right?
Not necessarily, unfortunately. You see the problem is that the tax cut comes at the cost of not adding funds into the Social Security Trust Fund. Typically, 6.2% of your salary is taxed and added to the Social Security Trust Fund. Additionally, your employer contributes 6.2% of your salary to the same fund. In 2011, many Americans were pleased when it was announced that their contribution would be reduced to 4.2%. Multiply that 2% deduction being paid into the Social Security Trust Fund by every working American's contribution and that's a huge chunk of change (estimated to cost over $33 billion).
Money was taken from the United States general revenue to offset the reduction of money being contributed into the Social Security Trust Fund. But, there is no guarantee that Congress will continue to allow that deficit to be made up by just taking funds from the general revenue or charging fees to banks and mortgage companies and placing it into Social Security. Instead of the Social Security program depending on itself to fund retirement and disability benefits, the program now relies on Congress to direct funds from other places into the Social Security Trust Fund.
This may not seem like a huge problem now. But, there is no doubt the
Social Security program is currently under attack by many politicians.
The overwhelming majority of Americans live pay check to pay check and the only income they expect to have when they retire will be their Social Security check. If Social Security disappears, or the funds available are greatly reduced, where will retirees or disabled individuals turn for financial assistance?
Read more about the problems this poses for disabled individuals
here.
American workers usually pay a tax of 6.2 percent on their earnings to build the Social Security Trust Fund.
Read more here: http://www.bellinghamherald.com/2011/12/28/2327482/why-the-payroll-tax-deal-is-bad.html#storylink=cpy
American workers usually pay a tax of 6.2 percent on their earnings to build the Social Security Trust Fund.
Read more here: http://www.bellinghamherald.com/2011/12/28/2327482/why-the-payroll-tax-deal-is-bad.html#storylink=cpy
