All signs point to the likely end of the controversial tax-holiday legislation that reduced employees’ deductions for Social Security.
The original legislation lowered employee payments into Social Security from 6.2% to 4.2%. That law is scheduled to die at the end of this year. Odds are, Congress won’t move for an extension into 2013. Here’s why, according to Jim O’Connell, who tracks HR legislation for benefits provider Ceridian:
- It’s part of the year-end “fiscal cliff.” A number of tax cuts and programs are scheduled to expire at the end of the year, and it’s unlikely Congress will move to extend them, no matter who gets elected in November
- Its effect was mixed. While the cut did save the average family about $1,000 a year, there’s been little effect on the unemployment rate or GDP growth, and
- The Social Security Trust Fund can’t take the continued hit. The two-year holiday cost Social Security about $240 billion. Both political parties know that can’t continue.