As part of his jobs plan, one suggestion that President Obama offered was to extend and expand payroll taxes. Many from both sides of the aisle immediately wondered what the effect would be for Social Security. Estimates currently predict that Social Security disability programs will run out of money around 2017 and that all Social Security programs will become insolvent by 2037. Cutting the taxes that fund these programs that are already facing severe shortages may worsen the problem.
Obama seeks a $175 billion one-year extension, and he requested halving the payroll tax for employees to 3.1 percent in 2012. Employers’ rate would be 3.1 percent on the first $5 million of their payrolls.
Will these cuts do more harm than good in the long term? The Center for Budget and Policy Priorities found that the cuts would make a significant difference in the amount that middle class families could spend. Moody’s Analytics concluded that allowing the payroll cuts to expire would reduce gross domestic product next year and mean one million fewer jobs by the end of 2012.
Certainly the economy is still in need of a boost, but at what expense? If the payroll tax cuts expand, we will have to look elsewhere for how to make Social Security programs solvent again, and that is what worries Social Security beneficiaries. Without increased funding, the other way to improve a budget is to cut costs, which could mean things like stricter qualification standards, lower benefits and higher ages for retirement benefits. More information on how changes to Social Security affect disability applicants is available from a Tulsa Social Security disability law firm.
Troutman & Troutman, P.C. – Tulsa Social Security disability lawyers