Oct 1, 2012

FICA Tax Cut Likely To End

     The New York Times reports that the temporary cuts in the F.I.C.A. tax that supports Social Security are unlikely to be renewed when they expire at the end of this year. Neither party wants to champion renewing this temporary tax cut.


Anonymous said...

How soon everyone forgets in this twisted web we weave. Isn't this the same tax cut that the Fed printed money to make up the difference?


Don Levit said...

Exactly correct. The void was filled with revenues from the general Treasury. It is the same way the void has been filled between cash receipts and cash disbursements since 2010 - through new general revenues. It will be the same way benefits are paid when the trust fund is exhausted - through general revenues.
So, you see, from a cash perspective, the trust fund is not exhausted in 20 years; rather the trust fund is already exhausted for every dollar tapped requires new general revenues to redeem the interest and principal, all the way down to when the trust fund "balance" is zero.
Don Levit