Beware the Payroll Tax Break!

14 Aug
Trump's Payroll-Tax Deferment Plan and Social Security - WSJ

In a recent interview, President Donald Trump said he won’t approve another COVID-19 stimulus package if it doesn’t include a payroll tax cut for workers…but what does this mean? Simply put, a suspension of payroll taxes would halt money being taken out of worker’s paychecks to pay for government programs like Social Security and Medicare.

However, the payroll “tax cut” would also put more money in the pockets of wealthier people, do absolutely nothing for the 37 million people who have lost their jobs in the last few weeks, and cut Social Security’s dedicated revenue.

Generally speaking, payroll taxes are split by the employer and the employee, with each paying 7.65 percent of the worker’s compensation for a total of 15.3 percent. In theory, this means that employers and employees would benefit from a payroll tax cut since both would enjoy similar savings.

But Self-employed people would benefit the most because they pay 12.4 percent of their pay toward Social Security and 2.9% for Medicare…and while many small businesses and self-employed workers are struggling right now, a payroll tax cut for all self-employed workers could largely benefit people who may not even need any financial help because Payroll taxes phase out for people after only $137,700 in personal income in 2020, so the potential savings for self-employed workers who may not even need it could be enormous.

And Businesses would also save money on payroll taxes whether they need the savings or not and a payroll tax cut for businesses across a company’s total workforce could lead to huge savings that would grow the bigger they are…for example Amazon pays over 2.4 billion dollars in payroll taxes. A payroll tax cut would result in tremendous savings for employers like Amazon.

It’s also likely that successful businesses would just pocket the savings and use the money to boost profits versus using the funds to hire more workers or grow their operations – especially if there is no demand for their products or they simply don’t need more workers. Why would a company hire someone if they don’t need the work due to no demand?

Unemployed workers (23% of the workforce since Covid-19 hit) don’t stand to gain anything from a payroll tax cut. Without employment, they aren’t currently paying payroll taxes anyway. Plus, those who’ve retired, stay at home, or are disabled, won’t get any benefits from this proposal either.

And while those “essential workers” who are still working do stand to benefit from a payroll tax cut, it won’t amount to very much money. If you are a worker earning $15 per hour and working 40 hours per week right now, a payroll tax cut would give you back 7.65 percent of your income. This only works out to around $46 per week or a little over $180 per month.

But most importantly Social Security and Medicare are the biggest losers in this scheme and stopping payments into each program only stands to exacerbate their ability to survive. Social Security is already expected to have to decrease payments to beneficiaries by 2035…when,  According to a  the most recent report on the status of Social Security and Medicare, only around 76 percent of promised benefits will be able to be paid out.

And If payroll taxes come to a halt this year and most likely beyond should the President get re-elected, (which he has promised BTW) it’s not hard to imagine how quickly the Social Security system and Medicare will… collapse completely

And just so you know: Today (August 13th) the unemployment rate in the U.S. is about 10.2% with over 16 million Americans filing for benefits…meanwhile the Dow Jones Industrial Average is again approaching 28,000 and has almost fully recovered from the Corona-virus downturn that began in March. Have you?

Our economic health basically has nothing to do with workers or people who are not wealthy. A new study released in late November by The Brookings Institution’s Metropolitan Policy Program found that 44% of U.S. workers between the ages of 18 and 64 are in jobs that pay only median annual wages of $18,000… and The study noted that 53 million of these low-wage jobs were people in prime working-age of 25 to 54, not just recent high school or college graduates.

So cutting the Payroll tax means cutting Social Security and Medicare for all of these workers…forever! Make no mistake about it. You can’t save money for your retirement if you don’t save money for your retirement… and especially so if your employers are no longer matching  the amount that you are/were saving.

But that is not all of it!…Basically, the Social Security Administration is loaning money to the federal government, (currently 2.9 trillion dollars) which, in turn, pays interest to the Social Security program each year. (2.2%interest) For the federal government, this arrangement is incredibly beneficial because it means not having to rely on foreign countries to buy even more debt….and did I mention at ONLY 2.2% INTEREST!!!

Wait stop! We (working for wages people) get 2.2% interest on a 2.9 trillion dollar loan to the U.S. government?!!!! What if this were a college loan? We’d get 8%!!!! and the government could never legally renege on the loan. What if we were your average billionaire (Let’s say president Trump?) We’d get over 8% interest on an investment like that!!! Why? Because we’d be in control of our own investments and not being taken advantage of by a government of millionaires and billionaires who…wait for it…WORK FOR US!!!!

So Social Security is headed for insolvency because it is mis-managed… not because it doesn’t work. What about the Social Security Board of Trustees who oversee our program? Why don’t they put a stop to this government borrowing at ridiculous interest rates?

Well…There are six Trustees, four of whom serve by virtue of their positions in the Federal Government: the Secretary of the Treasury, (Steve Mnuchin: net worth 400 million) the Secretary of Labor, (Patrick Pizzella: net worth 5 million) the Secretary of Health and Human Services, (Alex Azar: net worth 15 million) and the Commissioner of Social Security (Andrew Saul: net worth 2 million)

The other two Trustees are public representatives (that’s good isn’t it?) appointed by the President, subject to confirmation by the Senate. And…wait for it… The two Public Trustee positions have been vacant since July 2015. (net worth?: 0)

Our country’s debt currently stands at 26.6 trillion dollars! (with a bullet upwards) It was 19.9 trillion dollars when President Obama left office less than 4 years ago. What will happen to our debt when the SS piggy bank is gone? And the Federal Government continues to borrow at a rate of at least 1.7+ trillion dollars more than it has per year?

Without the 2.9 trillion dollars that it practically steals from SS now and the 1.7 trillion that it doesn’t have to pay its bills to begin with, that would make for a 4.6 trillion dollar short fall every year!… Glorioski! Mr Money Bags!… I mean Daddy Public Bucks!

So let’s cut the payroll tax! Great idea huh? Sounds like the kind of idea a financial wizard would come up with to pay one’s debts, doesn’t it? Or rather maybe someone who has declared 6 business bankruptcies during the course of his life time?

So Beware the Payroll Tax Cut! It’s a con job! A payday loan! A scam!

And If you work for a living…rest assured…in the end, You’re really gonna get it!

3 Responses to “Beware the Payroll Tax Break!”

  1. cindy knoke August 14, 2020 at 4:46 am #

    Do you worry we have a dictator for life? Worse then Lukashenko? Maybe more like Stalin, Hitler, Pol Pot?

    • gpicone August 17, 2020 at 1:10 pm #

      Oh yes…this is exactly how it starts…

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  1. Beware the Payroll Tax Break! – Evans for Calhoun County Treasurer - October 3, 2020

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