By Karl Henkel
Tim Ryan says it’s a bit hypocritical for his Republican counterparts to increase taxes on middle class families.
But one of the initial Congressional debates that will happen in September will focus on the payroll tax, which this year was slashed 2 percent and has saved workers anywhere from a few hundred to a couple of thousand dollars.
Republicans want to restore the payroll tax to its pre-2010 levels, something Ryan and his fellow Democrats think could be detrimental to the economic recovery.
“I think it shows where they stand,” said Ryan, who toured the Fireline TCON, Inc. facility in Youngstown on Monday. “You see some of our friends falling all over themselves to cut taxes for millionaires and then turn around on a $1,000 tax cut for the middle class and call it sugar-high economics.”
Workers and employers normally contribute 6.2 percent of their wages — up to the first $106,800 earned — for a 12.4 percent total.
But the payroll tax cuts, approved by Congress at President Barack Obama’s request last December, reduced the workers’ portion to 4.2 percent for one year. For a person making $50,000 annually, that amounts to a $1,000 tax break.
Obama wants Congress to extend the tax cuts for another year; if that doesn’t happen, the rate returns to 6.2 percent starting Jan. 1.
There are a couple of political factors that could sway Republicans to extend the tax break. The most notable is the Taxpayer Protection Pledge crafted by Grover Norquist, president of Americans for Tax Reform and signed by many GOP leaders, who used it as a reason not to raise taxes on the richest Americans during the deficit and debt-ceiling debates last month.
The second is the recent market volatility. If Americans have smaller paychecks, they’ll be less likely to spend.
Those who rely on programs such as Social Security’s disability program also may find themselves in a precarious situation. Reports say the financially strapped Social Security disability program badly needs reform, because by 2017, there won’t be enough money to pay full benefits (only about 75 percent) to the 13.6 million who depend on them.
There are a couple of solutions, and none are popular.
Congress could reapportion funds from the retirement program — as it did in 1994 — but many consider that a “rob Peter to pay Paul” scenario; funding for Social Security could be compromised within the next three decades.
Congress also could put tougher restrictions on who receives disability benefits. Currently, a person needs to have worked for 40 quarters and must meet a strict definition of disability, though there are some exceptions.
But Norman Wernet, state director of the Alliance for Retired Americans in Ohio, said the restrictions are tough enough.
It’s the second time in the last two months that Social Security’s survival has thrust into the national debate. During the deficit and debt-ceiling debates, Obama said he couldn’t guarantee Social Security checks if legislative leaders could not reach an agreement.
The constant vacillating nature of politicians has Wernet and some of the more than 230,000 retirees in Ohio he represents deeply concerned.
“We understand that politicians can pull the plug,” said Wernet. “What’s wrong with this system is that rather than dealing with the practicality of the income for retirees and those on disability, we are subjecting those people to the political winds of partisan bickering.”