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Associated Press - The Social Security Payroll Tax Holiday is Coming to an End

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Location: Washington, DC

By Stephen Ohlemacher

President Barack Obama isn't talking about it and neither is Mitt Romney. But come January, 163 million workers can expect to feel the pinch of a big tax increase regardless of who wins the election.

A temporary reduction in Social Security payroll taxes is due to expire at the end of the year. Neither Obama nor Romney has proposed an extension.

Politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security.

They are backed by powerful advocates for seniors, including AARP, who adamantly oppose any extension.

"The payroll tax holiday was intended to be temporary and there is strong bipartisan support to let that tax provision expire," said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee.

"I think there's a growing consensus that Congress and the president can't continue to divert such a critical revenue stream from Social Security," said Rep. Kevin Brady of Texas, a senior Republican on the tax-writing House Ways and Means Committee.

Before he was named as Romney's running mate, Rep. Paul Ryan, R-Wis., disparaged the payroll tax cut, calling it "sugar-high economics" that wouldn't promote long-term growth.

Social Security is funded by a 12.4 percent tax on wages up to $110,100, rising to $113,700 in 2013. Half is paid by employers and the other half is paid by workers.

For 2011 and 2012, Congress and Obama cut the share paid by workers from 6.2 percent to 4.2 percent.

A worker making $50,000 saved $1,000 a year, or a little more than $19 a week. A worker making $100,000 saved $2,000 a year.

The beauty of the tax cut is that it shows up in weekly paychecks, giving workers more money to spend or save.

The downside is that some workers may not notice a $19-a-week increase in pay, making them unlikely to credit the politicians who made it happen.


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