Now that President Obama and most of his key congressional allies are safely re-elected and the so-called “fiscal cliff” negotiated, the full consequences of the most recent elections are coming into view. Despite repeated assurances he would not raise taxes on any but the wealthiest Americans, the president (with the grudging support of many congressional Republicans), has — before even being sworn into his second term in office — enacted massive tax hikes that will affect almost every working American.
The move has come as a surprise to a majority of Americans, and especially Obama supporters, who weren’t paying close attention last fall when politicians and the media made it clear that no one in Washington had any intention of preventing one major New Year’s tax hike: the expiration of a two year-old “tax holiday” (i.e., tax cut) enacted by none other than President Obama himself, which lowered the rate of paycheck “withholding” for Social Security from 6.2 to 4.2 percent. Everyone inside the Beltway knew, of course, and neither party was prepared to say boo about it. As the Associated Press warned back on October 12, in a piece apparently noticed by very few:
President Obama isn’t talking about it, and neither is Mitt Romney. But come January, 163 million workers can expect to feel the pinch of a big tax increase regardless of who wins the election.
A temporary reduction in Social Security payroll taxes is due to expire at the end of the year and hardly anyone in Washington is pushing to extend it. Neither Obama nor Romney has proposed an extension, and it probably wouldn’t get through Congress anyway, with lawmakers in both parties down on the idea.
Even Republicans who have sworn off tax increases have little appetite to prevent one that will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.
Republicans question whether reducing the tax two years ago has done much to stimulate the sluggish economy. Politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security.
They are backed by powerful advocates for seniors, including AARP, who adamantly oppose any extension.
‘‘The payroll tax holiday was intended to be temporary and there is strong bipartisan support to let that tax provision expire,’’ said Senator Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. ‘‘The continued extension of a temporary payroll tax holiday has serious long-term implications for Social Security and, frankly, it’s not even clear that it has helped to boost our ailing economy.’’
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