The payroll tax cut for employees that went into effect in January of 2011 is scheduled to expire Dec 31, 2011. In the name of job creation, the Obama administration is beginning the process of pushing to extend that tax break for another year. The current law reduces the social security payroll tax from 6.2% to 4.2% resulting in about an estimated $1,000 payroll tax savings for the average American family. The proposal being considered would also result in a 2% decrease in social security taxes paid by the employer…basically reenactment of the HIRE Act tax break that expired the end of 2010.
We seldom editorialize in the Advi$or, but we would question how effective the current payroll tax break for employees has proven to be on stimulating employment considering the unemployment rate seems to be steadily increasing in recent months. And we wonder why any administration who wants to reduce government debt and ultimately balance the budget would want to reduce the revenue of the Social Security trust fund when the fund is already deeply in the red and scheduled to go broke in the relatively near future.
The Advi$or will keep you posted as to how the proposed idea progresses through Washington! According to reports, the idea received a lukewarm reception from Congress, but who knows what the political climate will bring at the end of the year.