Originally Posted by Sikkcaden
This was a hot discussion in my Personal Finance class last semester (Business Major), it was predicted people would think they're taxes were raised, rather than a short-term tax cut expired.
Ok so the payroll tax or FICA cut expired (after it was cut in 2011 by the turrible President Obama) and the rate has returned to it's normal rate. Everyone begins to cry foul, although its back at its pre-2011 level. Taxes werent raised, the tax cut simply expired. This tax pays for social security as well as Medicare. There is no doubt that social security is in danger of running out in the mid 2030's under current projections, but this move was done to stimulate the economy in the short term rather than put money into the system over the long term.
Social Security and Medicare are very important programs. However, they are flawed due to change in population and life expectancy. Luckily, something's can be done. They can either 1) Continue to raise the retirement age, 2) raise FICA taxes or 3) both. We need to decide which is most effective and reasonable for all parties involved. People need to stop playing victim and realize the bigger picture. More $ may need to be taken from you now in order to benefit you in the long term, as well as those less fortunate/skilled than you are.
Also to the argument about privatizing your investment for social security, feel free to put $ in your 401k's and IRA's (I highly suggest everyone has a Roth IRA) however, trusting the average citizen to invest into an economy greatly increases the risk individuals are left with nothing when they reach their golden years. I would rather improve the current system which was worked pretty well, rather than create a new one.
And for anyone interested, from the Washington post about the tax cut expiration: With the end of the payroll tax holiday, a worker earning $50,000, for instance, will pay $1,000 more in taxes this year; a worker earning less than $20,000 a year will pay about $100 more. Someone in the upper fifth of households, making $150,000 a year, will pay about $2,200 more.