President Obama called last week for extending the cut in payroll taxes enacted a year ago and set to expire at the end of this year. He said failing to extend the lower rate would mean a tax increase of $1,000 for the average American family.
"Don't be a Grinch," the president urged Congress. "Don't vote to raise taxes on working Americans during the holidays."
We agree with the president. Of course, he wanted to be a Grinch himself by pushing tax increases as part of the congressional supercommittee's fruitless effort to reduce the federal debt by $1.2 trillion over the next decade.
The payroll tax cut reduced an employee's share of the FICA or Social Security tax from 6.2 percent of income to 4.2 percent.
The employer's matching contribution of 6.2 percent remained the same. The reduction "costs" the federal budget about $168 billion a year, money theoretically added to the deficit.
But at this time of continued economic stagnation, the last thing needed is to slam families with a tax increase. The way to solve budget problems is to cut government spending, not raise taxes.
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