So says the New York Times.
Now this is a little curiosity that amounts to the Obama Tax Cut no one acknowledges. Workers in America, paying into US social security, get a 2% break on the employee contribution. (So, 5.65% from the employee; and 7.65% from the employer. This is broken out as 6.2% to pension and disability, and 1.45% for “Medicare”, which is a socialized senior citizen health insurance.)
Prior to this tax holiday, was another social-security based tax break called the Making Work Pay Credit. It was enacted as part of the early 2009 Obama stimulus package, and went for 2009 and 2010. It was $400 a person, and based on if you earned (400/.062) $6451 in the year.
Prior to that tax credit, was something from the end of the Bush Adminstration, as part of the 2008 stimulus package, that offered a $600 credit if you paid taxes in either 2007 or 2008.
So, for four years now, there has been some tax break of anywhere from $400 to maybe $2,000 (with the current holiday), that most workers in America have received. It’s been going for so long now, that it will be surprising how things continue when it gets taken away in January 2013.
The federal Fiscal Year 2013 starts in a few minutes. Already, the big tax cuts under George Bush will expire on January 1st. This social security tax holiday will expire the same day. The treasury will be receiving maybe $500 billion it wasn’t expecting. The people paying these extra taxes WON’T be happy.
What is the likelihood that Congress won’t be passing emergency tax legislation during January, regardless of who wins in November? When tens of millions of people’s checks shrink by at least 2% in those first couple weeks, it’s going to be mighty hard not to come up with a palliative to stop the screaming.
[Update 10/1/12: More on the implications of the Fiscal Cliff from Bloomberg.]