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(8) A payroll tax holiday is another step toward privatization, a sure way to kill it, the way 401(k)s destroyed private pensions, leaving workers at the mercy of marketplace uncertainties that can wipe out life savings during hard times.
Social Security Works concluded, saying:
"There are better ways to provide stimulus to the economy - and that do less harm to Social Security - than a tax holiday."
According to the Center for Budget and Policy Priorities (CBPP), one way is by extending the 2009 Making Work Pay Tax Credit, adding much more stimulus than a payroll tax holiday. It gives workers a refundable tax credit, increasing the size of the paychecks. At 6.2% of earned income, it provides maximum $400 for working individuals, $800 for married taxpayers filing joint returns.
A payroll tax holiday is a bad idea any time, besides doing little to stimulate economic growth. "The most efficient way to boost consumer spending is to put money into the hands of people who will spend it quickly rather than save it." It's most effective when given to low and middle-income workers, not high-end ones who'll save, not spend, their windfall.
"A payroll tax holiday does not score well on this front - too little of the benefit goes to lower-income households struggling to make ends meet and too much goes to higher-income taxpayers, who are likely to save a significant (portion) of any new resources they receive."
Besides killing Social Security, that's the whole idea, of course, transferring more wealth to the rich, what Republicans and Democrats endorse, including Obama.
In contrast, the Making Work Pay Tax Credit poses no threat to Social Security. The payroll tax holiday may destroy it. Republicans signing on as a concession masks their real intent, the same one they've had since Social Security's enactment, a program they strongly opposed as well as Medicare in 1965. Now both parties oppose them.
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