Blogs » A Constitutionalist & Believer in Natural Law » Making Sense Of The Payroll Tax Cut


We have been told that the Social Security Trust Fund is going broke. However, this year a 2-percent-point cut was made in the payroll withholding tax for employees. The cut was in the Social Security withholding tax.

The tax cut was part of the deal that President Obama negotiated with Republicans last December to extend the Bush-era tax rates. It reduced for one year the Social Security payroll taxes withheld from employee paychecks from 6.2 percent to 4.2 percent. The cut represents an extra ten dollars for every $500 earned to the wage earner or a extra $600 on annual wages of $30,000. The cut to the Social Security Fund represents about $112 billion.

And now, President Obama says the cut needs to be extended another year to keep the economic recovery from stalling. Nothing is being said about how the cut will affect the Social Security Trust Fund.

What we see is not a cut in Washington’s spending to fund the payroll tax cut, but a cut in the Social Security Trust Fund; does this make sense?