This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
It has become an article of faith among some in politics, particularly Republicans in Congress and on the presidential campaign trail, that taxes should not go up. That includes anything that might possibly be spun as a tax hike, such as closing loopholes, narrowing deductions or, horror of horrors, ending the Bush-era tax cuts for the rich.
So what happens when President Obama and his fellow Democrats see a tax cut that they like and want to save?
Tax and be damned, comes the reply. It's only a tax on working families.
Last year, Congress approved Obama's request to cut the Social Security payroll tax that is deducted from the paychecks of working Americans from 6.2 percent to 4.2 percent. Because the payroll levy is a particularly regressive tax, not even touching income above $106,800 a year, it is more of a burden to many working families than is the income tax.
Thus the idea that a payroll tax cut would not only be of more help to people who were suffering the most from the economic downturn, it would also put money into the hands of people who would immediately spend it, helping to ease said recession.
Did it work? There are too many variables to be sure. The recession is officially over, but unemployment is still high and every few days brings renewed fear of a double dip.
What we do know is that, without congressional action, that small tax break will expire come Jan. 1. That would bring about $120 billion a year back to a federal government drowning in deficit and debt, and specifically to a Social Security trust fund that is flirting with a deficit of its own. That's why some members of the Republican House leadership have said the tax cut should be allowed to sunset.
But ending the payroll tax cut would also take $120 billion out of the pockets of families living in the economic strata where most like to spend every extra dime. That's why Obama, who has the better of this argument, wants to continue the lower payroll tax rate.
The idea that tax cuts for the rich create jobs has been empirically proven false. Rates on both the super rich and the relatively comfortable have been parked for a decade at 60-year lows, and job creation remains a distant dream.
The payroll tax break could be traded away as a bargaining chip to also end the Bush tax cuts, which are the largest single cause of the federal deficit. But it's not likely to happen.
Going to the wall for tax cuts for the rich, which is what many GOP voices remain devoted to, doesn't encourage job creation. It encourages hoarding.
The rich do that. The poor can't afford to.