Social Security Tax Cuts

There's nothing like waiting until the last minute to get your chores done. And that's exactly what Congress is doing in regards to the extension of the Social Security tax cuts. There is a House bill right now that will, in all likelihood, be shot down by the Democratically controlled Senate. If it somehow miraculously passes the Senate, President Obama has vowed to veto it.

So, what's the problem? First off, there's the usual partisan bickering over how much the tax rate should be. It is currently at 4.2 percent rate (down from it's previous 6.2% rate). The Republicans are ok with extending the 4.2 rate. Of course, nothing can be simple. So, there are some other things thrown into the bill (we'll look at those shortly). The Democrats want to drop the temporary tax cut down to 3.1 percent. Hey, I don't usually usually side with the Dems, but I kind of like this idea.

The real problem comes in when we add the follow things to the mix:

• The Republicans want to reduce unemployment benefits to 59 weeks. The Democrats want to keep it at the current 99 weeks.
• A federal government worker pay freeze through 2013and eliminating unemployment insurance for millionaires. This is the Republicans idea for offsetting the tax cut, while the Democrats want to raise the taxes on millionaires.
• A cut in the amount that Medicare reimburses doctors
• A proposal to begin work on the 1700 mile Keystone oil pipeline that will run from Canada to Texas. Of course, this will create a lot of jobs in an ailing economy. But it doesn't appeal to the tree-hugging crowd. Plus, President Obama wants to deal with the pipeline issue after the election. Hmmm.....

Ok, here's what really bothers me. Why can't we just vote on one item at a time? Since the tax cuts are due to expire in a couple of weeks, shouldn't we make it the priority? This isn't a barbarque, so what do you say we   put the pork back in the freezer?

So, if the bickering continues and the tax cuts are not extended, 160 million American workers will be affected next year. In a nut shell, the rate will increase by 2% on January 1, which means that a household making $50,000 will pay $1000 more in taxes in 2012. A household making $100,000 will send Uncle Sam $2000 more in taxes. You get the drift........

And there are some that want the rate to increase. The argument being that the Social Security fund is already in bad shape and needs all of the tax dollars that it can get. Last year, for the first time, Social Security paid out more than it brought in. However, from what I understand, the fund can continue to pay out full benefits until 2037. But I have my doubts. Personally, I would rather not contribute anything to the Social Security fund and instead, direct the "tax" into a legitimate growth fund. Further yet, how about if Uncle Sam just gives me a full refund on all of the Social Security taxes that I've paid over my working career? Just send me what I put in, I don't want a dime more. I figure I'll be bet better off rolling it into almost any other investment rather than taking my chances with the government's retirement idea.

Our government really needs to get their ass in gear and start doing the job that we sent them to Washington to do. One way or another, make a damned decision!

kw