Employee Social Security Tax 47.6% Increase
Will Congress act after the November election to fix the “Tax Cliff” as it is being called? One of the cliff’s is the Social Security Tax cut that is scheduled to be phased out at the end of this year (12/31/2012). This tax cut has gone through many modifications under the Bush and the Obama administrations. The “Pay to Work” credit under the Bush Administration ended and rebirth as the Social Security Tax Cut. The two percent tax cut on the employee social security lowered the employee tax from 6.2% to 4.2% giving employees an extra $20 (Single) or $40 (married) in their paycheck which comes out to about $400 (single) or $800 (married) a year.
Given the current status of the economy, every dollar counts when it comes to families and their budget. Sure $40 doesn’t seem that much for a family, but when gas, energy, and food prices are increasing everyday $20 or $40 will make a difference. How will Congress react when they get back from election is anybody’s guess.
Will they change this tax structure again given that the Social Security Fund needs the additional funding to stay solvent longer? Both Democrats and Republicans agree that they do not foresee this tax cut be extended given the need for additional funding for the Social Security Fund. So, the question remains “Will Congress fix the social security tax cut fiscal cliff”? Do you need the extra $40 or $20 per check? Should Congress rebirth this tax cut as a different tax credit? If so, what? Leave your comment below.
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