The tax hike that nobody is talking about

If you work, your taxes will be going up at the end of the year even if Congress slams on the brakes just before the national bus plunges over the much feared "fiscal cliff."

That's because neither party — and neither presidential candidate — has shown a bit of interest in talking about, let alone renewing, the 2 percent Social Security tax holiday.

Yet, ironically, everyone would be screaming bloody murder if a politician announced a 2 percent increase in income tax rates on middle-income Americans.

The Social Security tax hike is sliding under the radar for two reasons:

First, it was presented as a one-year tax holiday in 2010 to put more money in consumers' pockets when the economy was in danger of slipping back into recession. It was intended for 2011, then extended through 2012.

Second, Americans overwhelmingly support the concept of Social Security and restoring the 2 percent will give the popular illusion of returning support to the program.

We say illusion because the federal government doesn't bank that money, it just borrows it and spends it. But let's not get into that.

For a person earning $50,000 per year in taxable income, the Social Security tax hike will cost $19.23 cents per week, which adds up to about $1,000 over the course of the year, according to


So, why is nobody fighting to extend this tax break?

The White House has a clever answer: "We'll evaluate the question of whether we need to extend it at the end of the year," Press Secretary Jay Carney told reporters last month.

Read that to mean "this tax is going away." If it were good news, he'd want you to know about it BEFORE the election, not after.

Many Republicans, meanwhile, opposed passage of the tax when it was extended last year, but by that point they were opposing everything Obama wanted, even tax breaks.

Here's our best guess why this tax break will be abandoned.

While some can't admit it before the November election, there is a growing awareness that both budget cuts and tax increases will be required to ultimately balance our federal budget.

With the growing demands of an aging population, Americans are not willing to simply see the deep sort of entitlement cuts that would be necessary to balance the budget by cutting alone.

That leaves either growing the economy or increasing taxes.

The economy is growing, although slowly. But nobody is projecting the sort of economic boom that might alone eliminate budget gaps.

So there is a gradual understanding that it will take a combination of all three approaches — spending cuts, a growing economy and broad-based tax increases — to balance the federal budget.

And the Social Security tax hike is seen as the least painful way to impose a significant tax at the least risk of upsetting taxpayers or hurting economic growth.

The bigger challenge will be reaching agreement on extending most or all of the Bush tax cuts. Republicans will fight tooth and nail to keep them, and Democrats will insist on higher taxes on higher-income earners.

Then there's the real elephant in the room, sequestration, which demands automatic cuts to social programs and defense and would likely throw the economy back into recession.

Congress will have a lot of very sobering realities to deal with after the November elections, and not much time in which to act.

Allowing the Social Security tax break to expire will seem like the smallest problem in the room.

The opinions expressed in this column reflect the views of the ownership and the editorial board.

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 's picture

Proves being on an editorial board doesn't say anything

about your common sense.
The 2% is not a tax increase. Its the end of a tax cut designed for a specific purpose for a specific length of time. The cut was unwise when it was done and its unwise now to let it continue.
Social Security, the most successful and important government program ever implemented, is the rock on which middle class stability is built. To endanger it by cutting its revenues is a terrible idea. If you believe the Republicans and who can since they have taken every position on every issue in this election, social security is going broke. How can you cut revenues when the program is going broke unless you want to bankrupt the program. Social Security is not going broke, the 2% will aid in stabilizing it and a few minor tweeks will preserve it for the next 75 years. And the middle class should go to the barricades to defend Social Security.
We are paying lower federal taxes now than in anytime in the last 70 years. The revenue the government has lost because of shrinking rates and ballooning loopholes is the primary cause of our fiscal problems. All income from all sources needs to be taxed at the same progressive rates and all loopholes need to be eliminated. Income tax reporting needs to be simplified so a 12 year old with a postcard can complete it, accurately. And rates have to be corrected to cover Federal spending.

Steve  Dosh's picture

The tax hike that nobody is talking about

all 12.10.09 11 am ish ?
Social Insecurity ?
Try not to worry too much about things you can not change :D
You'll experience or develop an aneurism . .. or worse ?
\/ote or they win • /s Steve and ohana , HI u s a

PAUL ST JEAN's picture

And be sure to vote early and

And be sure to vote early and often.
P.S. Don't forget to throw a tantrum when asked for your voter ID.

 's picture

How much SS are you collecting, Steve?

You should thank those of us still paying into the system. You do know, of course, that current benefits are paid from current "contributions". The famous lockbox is just a paper fairytale.

You better hope that some adults change the system before it implodes. When that happens, no amount of voting will fix it, no matter how cute your spelling.

When did you have your aneurism? Just curious ...

FRANK EARLEY's picture

Conservatives will address these tax games????

From everything I've read and watched in the past couple of weeks, conservatives couldn't address an envelope, and get it right. This election comes down to one thing, Democrat or Republican. I don't know who should win, but one side at least has something resembling answer's. The other, just the same old "rhetoric".

MARK GRAVEL's picture

So what do you want? Bigger

So what do you want? Bigger government and more debt or a chance to reduce the size of government – that’s the D or R of choice.

Steve  Dosh's picture

Conservatives will address these tax games????

Frank ?
A ; No ?
\/ote or they win
/s Steve

Amedeo Lauria's picture

Mr. Rhoades...

You are correct sir!

If you think this will be correctly handled be re-electing the current administration then "hope is a course of action."

We need to elect conservatives in November, they will address these tax games. We need a coherent, well thought out tax policy and not his patchwork of tax policy, tax laws, exemptions, deductions etc. that requires a Phd. in economics to understand. Do you think they do this on purpose...hmmmm.

Just sit down and add up all the taxes you pay federal, state and local; it will make you scratch your head and ask, "where is all this money going." You will also ask who is working for whom?

Time and time we hear that we are spending too much as a country, but our politicians continue to SPEND, SPEND and SPEND. If we did this at home our phone would be ringing off the hook with calls from bill collectors. Yet we are blamed for demanding more and more "services." It is a shell game of the worst kind. We, as individuals, don't have the luxury of printing money in our basement.

Join me in voting for conservatives in November who know when to say NO to spending.

Maine's debt clock is running backward; time that the rest of the country follows our lead! See for yourself!

RONALD RIML's picture

You ask: Where is all this money going???

And you were in the Military how long, Colonel????

Last year our Defense Budget was $711.421 Billion - over 41% of the world's total military spending of $1.7 Trillion. We spent more on our military than the total of the next thirteen countries combined: the Peoples Republic of China, Russia, the United Kingdom, France, Japan, India, Saudi Arabia, Germany, Brazil, Italy, South Korea, Australia and Canada. These thirteen country's military spending in 2011 totaled $695,449 Billion - almost $16 Billion less than ours.

Reference: Military spending: how much does the military cost each country, listed

Now Romney wants to spend even more, rebuilding our Military. And what Oath have all of our Republican Legislators in the House and Senate taken? To defend our Country? Well, no.......

They've all taken Grover Norquist's Pledge to never, ever raise taxes.

Patriots all!!! Wonderful Party you belong to there, Col.

Your Presidential Candidate protested against 'Draft Protestors' during Vietnam while he was at Stanford in '66 - then boogied off to France for 30 months from '66 through '68. That's the Country that Rush Limbaugh just described as havinga long history of surrender on his August 15th update.

If Mitt couldn't exert the paternal leadership necessary to get any of his five sons down to a recruiting office after 9/11, how the hell can we expect him to lead our Nation????

Odd Party you belong to. No correlation between words and action.

FRANK EARLEY's picture

Ronald, correct me if I'm wrong here.....

I just saw yesterday Romney bragging of making a huge imprint on the ex-Navey Seal, a Mr Dogherty if I recall. Mr Romney exalted the fact that this brave soldier went to the scene of the action to defend the embassy. Let me see if I can get this strait, "He did what Americans do, WE go where WE'RE needed, not hunker down and hide". Thankfully this mans mother has requested the "Governor" stop using her son's name to aid in his agenda. Especially since Mr Dogherty himself stated, thru a friend, that Romney was weird, he kept introducing himself over and over again, as if he forgot about him every twenty minutes. Also, a couple of weeks ago, was that not Mitt Romney lying on a French beach with letters in the sand to his wife? Thats where he went instead of the Vietnam War. Is it just me or does anyone else note a touch of "hypocrisy"???????
Do as I say / not as I do...........

RONALD RIML's picture

The 'Usual Suspects' will correct you....

Mitt Romney is the epitome of hypocrisy. But don't dare call their Golden Boy out on it, Frank....

PAUL ST JEAN's picture

Ahhh...while Frank Sinatra

Ahhh...while Frank Sinatra sings, "Stormy Weather", the flies and the spiders get along together.

MARK GRAVEL's picture

Ronald, I see you haven’t


I see you haven’t stopped trying to make mountains out of mole hills.

Romney is not Obama – that’s good enough for most of us.


never should of happend

They never should have taken from the social security in the first place, I as a matter of fact think that the rates need to be changed since the average income is like 5 times what it used to be when the ceiling for deductions was made that should be increased and If we had ouir wish it would be a locked box then of course SS would not be in the situation it is in now. and the worse case is not only allowing the spend thrift goverment to rob SS but to allow both Wall Street and our goverment to rob us will cause nothing but suffering and revenge.

PAUL ST JEAN's picture

The two year SS tax holiday

The two year SS tax holiday was sold by oBAMa as a 2percent tax reduction.
Social Security contributors have had their SS pockets picked for the last two years, and most of them don't even know it. They think they had a tax cut. What they've had is two years less contributions to SS which equates to less SS benefits in the long term.
The old shell game.


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