Does tax break harm Social Security?

Congress extended the payroll tax reduction for taxpayers through February 2012.  Each party structured the tax cut in the best light for their own political goals, according to Don Schmidt of the Lacrosse Tribune.

Unfortunately, explains Schmidt, their proposals were not sound financial actions.

This tax cut is an irresponsible act, said Schmidt. Reducing the amount going into Social Security Trust Fund when it is forecasted to run out of money in our lifetime is unconscionable.

With more retirements and significantly fewer people working, obviously we are heading for disaster.

This disaster can only be averted if the Social Security Trust Fund is funded on a sound basis as required of private pensions, Schmidt said.

A provision of this bill is that the payroll tax break will be “paid for” with increased fees for home mortgages. If these new taxes were  to be paid back to the Social Security Trust Fund, that would be a good thing, but unfortunately, these funds are earmarked for the general treasury. They will probably be used for more spending.

Providing tax breaks for working Americans is a good idea, but not if it reduces the funds for Social Security. Such tax breaks need to be set off with spending cuts, not more fees and taxes elsewhere.

Are Schmidt’s ideas about the Social Security Trust Fund sound fiscal solutions?

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