The Senate is expected to vote this afternoon to end debate on the bill that extends the Bush tax cuts for the wealthy and cuts $120 billion in payroll contributions to Social Security. The vote for passage could then come as early as tomorrow.Email your Senator today. NOWis the time for seniors and working Americans to say enough is enough. There are other ways to stimulate the economy without extending tax cuts for the rich combined with cuts to Social Security?s funding. Some of those other ways? Seniors advocates have proposed extending, or even expanding, the ?Making Work Pay? tax credit or reducing employees income tax liability. However, as economist and IWPR President, Heidi Hartmann, explains the White House has shown no interest in alternatives:
What is most troubling now is that even though the risk to Social Security has been pointed out to the White House, these same staffers continue to insist that the rebate must take the form of a payroll tax cut delivered in every paycheck in 2011 and that other alternatives won?t do. For example, Congressman Brad Sherman has suggested issuing a rebate check to each worker early in 2011 for 2 percentage points of the 6.2 percent FICA tax each paid in 2010. Dollar-wise, that?s essentially the same as giving workers 2 percentage points in 2011. Sure, there will be more workers in 2011 (if we?re lucky and get some employment growth), but they could be included by issuing rebate checks early in 2012 based on what they earned in 2011. Also, even though research shows that lump sums aren?t spent as readily as smaller amounts, the portion spent after 3-6 months is quite substantial. And since we will need stimulus all through 2011, the difference between these two distribution systems can?t be so great as to make the Sherman alternative totally unacceptable to the White House ? when it has the very important advantage of never reducing the payroll tax rate to 4.2 percent and so never having to figure out how to get it back up to 6.2 percent. While Sherman?s proposal virtually mimics the payroll tax cut, Nancy Altman, co-chair of Social Security Works and a leading advocate against the payroll tax rate cut, suggests a more progressive alternative, one that would likely increase the stimulative value of the tax cut ? an identical lump sum to every worker who paid FICA tax. Such a method would direct more dollars toward lower earners (the average benefits would be on the order of $800) and therefore generate more spending.
Social Security Works has created a graph which clearly shows how this Payroll Tax cut benefits higher earners. While the President and members of Congress would receive $0 under the “Making Work Pay” tax credit extension, they will receive $2,136 in tax cuts under this payroll tax proposal. A minimum wage earner received $400 from “Making Work Pay” in 2010 and could receive $800 if extended again. However, under this payroll tax plan that same worker receives $302. Under this flawed payroll tax plane, millions of state, local and federal workers who are not covered by Social Security receive absolutely nothing.The American people understand that cutting funding to Social Security makes no sense and it?s not even the most effective way to provide stimulus to working Americans.Call your Senator and member of Congress TODAY.We?ve created a number of easy one-step ways for you to connect with your Senator and Congressional representatives. To phone them?call our Legislative Hotline at:
Would you rather send an email? Go to our Leg Action Center whereyou can use our sample Payroll Tax Holiday letter or, even better, write your own.