April 2, 2011
Those of you still collecting a paycheck should have noticed an increase in what you took home starting in January of 2011. If you got a raise, you might not notice the difference. However, we did, and when my husband asked the payroll department at his company what caused the difference, all they could tell him was the tax rates were different. Of course I immediately wondered what was done, but could find no answers. Then my husband came across a small article in our local paper taken from the Wall Street Journal that told about the social security rate cuts for 2011.
The 2011 tax rate is 4.2 percent for employees, 6.2 percent for employers, and 10.4 percent for self-employed people. These rates apply to earnings up to the maximum taxable amount ($106,800 in 2011).
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced 2011 Social Security tax rates for employees and self-employed people by two percentage points, from 6.2 percent to 4.2 percent for employees and from 12.4 percent to 10.4 percent for self-employed people. Without further changes in the law, these tax rates will return to 6.2 percent and 12.4 percent, allegedly beginning in 2012.
The payroll tax reduction temporarily gives employees extra take-home pay. The tax rate reduction allows a worker earning $50,000 to take home an extra $1,000 over the year and a worker making $80,000 would take home $1,600. This reduction of the payroll tax levied on most workers is intended to accelerate economic recovery by leaving more than $100 billion in employees' wallets over the next year - money they would presumably spend. S'cuse me, but I think we're at an all time unemployment rate high, and I don't see signs of recovery like the Obama loving media seems to see.
In August of 2010, it was reported in Washington's annual trustees' reports on the fiscal health of Social Security and Medicare, that social security will be paying out more than it's taking in, which has come six years sooner than what was projected in 2009. The financial collapse and the continuing retirement of many baby boomers has prompted the United States Social Security system to be in the red. In an annual trustees' reports on the fiscal health of Social Security and Medicare, U.S. Treasury Secretary Timothy Geithner said it is expected to pay out over $41 billion more than what it takes in from payroll taxes.
C'mon folks, we've been told social security is broke for years now...we know the congress criminals have sanctioned using social security monies for various a sundry entitlement purposes other than social security! So, it defies logic that government would choose to reduce the tax revenue on a program that's going broke! Guess who was behind this program. Yep, you've got it...President Obama and the democrats proposed this one year reduction as an economic stimulus and of course our Republican congress criminals jumped in bed with their leftist commie buddies in a bi-partisan vote. Both supporters and opponents agree this is opening the door to major changes in how social security is financed in the future.
I wanted to know more, so of course I called my congress critter's office and asked to speak to someone about this subject. A young man named Patrick tried to answer my questions. As an aside, my congressman was first elected to Congress in 1988, in a special election to succeed his late father, and elected to the seat for a full term in his own right the same day. He has been reelected every two years since then from a district that has been held continuously by Republicans since 1857. He has never faced a serious or well-funded challenge for reelection, and was reelected without major-party opposition from 1994 through 2000. He does vote conservatively for the most part, although he voted for NAFTA and Goals 2000 which raised the ire of his constituents, including me. He backed the RINO for governor in 2010 rather than the true conservative who is our Lt. Governor. His son is being groomed to take over his seat when he retires. I guess that's how it works in a family business.
So, Patrick couldn't tell me the exact bill number where this tax change occurred. When I asked how long the reduction would last, he stated it would definitely be for only one year. I've since read in several articles that it could likely be renewed for a second year and perhaps indefinitely.
Patrick told me that this simply replaced a tax credit that wasn't working. I wondered, what tax credit and what wasn't working...but didn't get an answer there either. When I asked how much social security would lose over the year, Patrick told me that since it was a stimulus that it was agreed by both sides of the aisle that what it would stimulate would make up for the losses. I thought, yeah, sure and a chicken has lips. Guess what the losses are for one year? The estimated revenue loss for the trust funds for 2011 is $112 billion. Okay, so the economy is booming again, and small business and large corporations are hiring again, right? And that's going to increase the social security trust fund income for 2011 even with the tax rate reduction of 2%, so what, me worry? Nah, it'll all work out. Remember, it was FDR who said, "Nothing, absolutely nothing, happens in politics that isn't planned."
Clashes over how to keep social security solvent have been loud in recent years, but this debate over the reduction has been so muted that few actually know about it. Since the inception of the Social Security Act (PL 74-271) was enacted in 1935, the program has relied strictly on a payroll tax that workers and their employers pay equally. With the exception of some government employees, workers who earn up to $106,800 annually now pay 6.2% of their income in social security taxes, and their employers match that amount. Self-employed workers like me pay the full 12.4%.
For decades after its founding, supporters sought to have the government's general fund support the program in much the same way that it pays for the military rather than having it allegedly (cuz it's not there) in a trust fund strictly for social security usage. If social security has to depend on general revenue (which I'd guess is what the congress criminals and this administration are wanting) it starts having to compete with every other federal program for money and can easily be cut from the budget.
I don't know about the rest of you, but I found it total insanity to cut the rate of deductions when social security is paying out more than it's taking in each year. At $50,000 a year income, an increase of $1000 for the year because of the deduction would net the employee so little money per week after taxes that the fractional increase would simply go to pay for the exponential increases in the cost of family groceries. Stimulate the economy? I really don't think so.
Although congress voted in the big omnibus spending bill of 2009 to not receive a pay raise in 2010, they did not vote to eliminate their automatic cost of living raises each year unless they vote against it. Here's the link on how they voted on those automatic raises.
The social security tax reduction actually gave federal employees a 2 percent raise on all income below the social security ceiling. The military received a pitiable 1.4 percent raise, but still will get that additional 2 percent added on for at least 2011. This social security reduction gives everyone who works a pay raise.
Those who have already retired and have paid into social security since its inception, receive nothing. Recently retired seniors paid social security tax while they worked for the benefits received by those who retired before them. The promise was that those who retire after them would pay their benefits. I'm sickened to see that once again things seniors deserve are being taken away from them and given to someone else. They've paid their share of social security tax while they worked and everyone else should do the same. Social security recipients haven't had an increase in cost of living for two years and prices have soared although the government says there's no inflation. I expect the politicians are planning to cut even more from social security recipients and over 50 million Americans are collecting today because of the baby boomer generation hitting collection age.
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Our country has allowed the murder of 53 million innocent babies in the womb since 1973. Now the target is the elderly and the glut of baby boomers who will break the government Ponzi schemes of social security and Medicare/Medicaid. See my article, "It Has Nothing to Do With Health Care" for a full report on the elderly as the new targets of the death culture.
We'll have to wait to see what the criminals in congress plan for the elderly and social security, but from the looks of things so far, it certainly doesn't bode well.
Nevertheless, remember Proverbs 1:33 and put your trust and hope in God Almighty.
© 2010 Kelleigh Nelson - All Rights Reserved
Kelleigh Nelson has been researching the Christian right and their connections to the left, the new age, and cults since 1975. Formerly an executive producer for three different national radio talk show hosts, she was adept at finding and scheduling a variety of wonderful guests for her radio hosts. She and her husband live in Knoxville, TN, and she has owned her own wholesale commercial bakery since 1990. Prior to moving to Tennessee, Kelleigh was marketing communications and advertising manager for a fortune 100 company in Ohio. Born and raised in Chicago, Illinois, she was a Goldwater girl with high school classmate, Hillary Rodham, in Park Ridge, Illinois. Kelleigh is well acquainted with Chicago politics and was working in downtown Chicago during the 1968 Democratic convention riots.