Payroll Tax Holiday Could Unravel Social Security

Strengthen Social Security has a new report on the problems of a Payroll Tax Holiday:

President Obama has proposed a 2% payroll tax holiday on employees only. Currently, employees pay a 6.2% FICA tax on wages up to $106,800. The Administration’s proposal would exist for one-year and is estimated to cost $120 billion. The revenue Social Security would lose from the payroll tax cut would be paid back from general revenues by the U.S. Treasury.

It’s easy to enact tax cuts – it’s very hard to end them. A 2% payroll tax cut significantly reduces people’s tax burden. Restoring the tax a year from now will result in a substantial tax increase.

Click here to read the rest of the report.