Tax cuts possibly affecting Social Security funds. by Milota Sidorova

A payroll tax cut program has been discussed in American media past weeks. The compromise that emerged between Democrats and Republicans meant extension and modification of Bush era tax reduction program – that in fact targeted mostly wealthy people. President Obama has taken it as one of main points of Democratic agenda after Congressional elections when it turned out to be clear that Democrats would no longer pass their reforms that easily. Obama and Republicans agreed that tax cuts would prolong and be reachable by everyone, although it was seen as a very pro-social step aimed for the poorest class. This week more details came out – it has been decided that w! orkers could reduce their 6.2 percent payroll tax for Social Security down to 4.2 percent for the next year. That means that worker will pay less into Social Security with a tax cut of about $400 for each $20,000 wage. The tax cut will increase following an increasing salary. The person or couples earning $40,000 will get reduction about $800 and people earning $106,800 the maximum amount of wages subject to Social Security taxes will get $2,160 cut. Optimists say people will spend these money on local level, boosting economy, realists say it will empty some other funds (Social Security) and pessimists say it will crash hard these funds. 2 percent tax reduction has been seen as a hammer on retirement funds which are to be emptied in 2037 according to the worst scenario taking into account aging population and other factors. In 2010 a retirement fund has ended in red lights for the first time since 1980 showing there were less people willing or able to donate this fund. Th! e tax cut will finish by the end of 2011.

related stor! y (sgx18751): http://news.yahoo.com/s/ap/us_payroll_tax_holiday;_ylt=AoAAQ...

by Milota Sidorova for Cantell TV (http://cantell.tv)

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