Social Security off limits
Charles Krauthammer (Dec. 1) objects to Democrats placing Social Security off limits in the current “fiscal cliff” negotiations, claiming it is “absurd” to say “SS does not add a penny to our deficit.” His statement that “the trust fund is a mere fiction, a ‘bookkeeping’ device,” is an insult to citizens who accepted 1983 changes - agreeing to pay more and retire later - to insure Social Security was fully funded until about 2035.
Krauthammer implies the 12.4 percent Social Security tax (one-half from you, one-half from your employer) is just additional income tax paid into the general fund. If so, because no tax is taken on earnings above $106,800 (rising to $110,100 in 2013), high earners get a 12.4 percent reduction in their overall tax rate above that level of income. While the IRS rate continues to stair step up to 35 percent, the 12.4 percent is not taken.
Which brings me back to Krauthammer’s “absurdity.” I will agree Social Security taxes are just general fund dollars paying for federal programs, if Krauthammer agrees all income should be subject to the 12.4 percent Social Security tax.