Social Security Tax

Reducing the Social Security tax rate, which would benefit the lowest-income people and the middle class, is what's needed to "balance" President Bush's income tax rate reduction, which primarily benefits the highest-income people. Instead of having all of the revenue needed to support Social Security raised by a tax imposed only on incomes of up to $80,400--a tax "break" for the high-income people--make the tax payable on all income of whatever amount. This would make it possible to substantially reduce the rate, providing significant tax relief to those who need it most, and who will spend it promptly, thereby stimulating the economy now, not 10 years from now. ALAN R. GORDON Camarillo

After calling lawmakers back to Washington, the GOP-led House postponed votes Monday intended to reject a compromise measure to extend President Obama's payroll tax break for 160 million working Americans. Republican leaders were rethinking strategy after a lengthy closed-door meeting with rank-and-file Republicans who oppose the Senate-passed bill that would continue for two months the tax break, which expires Dec. 31. Votes are now expected Tuesday, but Republican resistance has put the fate of the tax cut on an uncertain course.

President Bush today denounced as "a charade" a Democratic proposal to cut the Social Security payroll tax and said it is really an attempt to force him to raise other taxes. Bush also promised that he will not acquiesce in any move that would raise taxes or lead to lower Social Security benefits for older Americans. Reporters asked the President about the proposal by Sen. Daniel Patrick Moynihan (D-N.Y.) at the start of a meeting between Bush and visiting Turkish President Turgut Ozal.

A partisan standoff in Congress over President Obama's payroll tax cut for 160 million working Americans threatens to shut down the federal government as early as this weekend, leaving lawmakers to finish the year careening toward yet another budget crisis. A must-pass bill to keep the government running has become tangled in the politics of continuing the payroll tax break, which shaves workers' Social Security tax from 6.2% to 4.2%. If the tax cut is allowed to lapse after Dec. 31, workers would have to pay an extra $1,000 a year, on average.

The Social Security payroll tax rate is going up on New Year's Day for the 13th time in the past quarter-century as workers pay a price for the 1983 bailout of the retirement program. This latest rate increase will boost the tax to 7.51% from 7.15%. It means employees will pay an extra $36 to Social Security from each $10,000 they earn.

Fearing widespread defections, the White House and Democratic leaders Wednesday urged House members to hold the line against a Republican plan that would repeal a portion of the tax on Social Security benefits. The bill--scheduled for floor action today--would repeal a tax increase on wealthier elderly Americans approved by Congress in 1993 as part of President Clinton's budget plan for combating a deficit.

A partisan standoff in Congress over President Obama's payroll tax cut for 160 million working Americans threatens to shut down the federal government as early as this weekend, leaving lawmakers to finish the year careening toward yet another budget crisis. A must-pass bill to keep the government running has become tangled in the politics of continuing the payroll tax break, which shaves workers' Social Security tax from 6.2% to 4.2%. If the tax cut is allowed to lapse after Dec. 31, workers would have to pay an extra $1,000 a year, on average.

America's mayors Sunday gave initial approval to a broad and costly domestic agenda that asks Congress to repeal the Gramm-Rudman deficit-reduction law and to cut Social Security taxes for nearly 120 million workers. The more than 70 resolutions approved by the U.S. Conference of Mayors' key policy committee contain repeated pleas for a multibillion-dollar infusion of federal funds for anti-drug, housing, education and anti-poverty programs.

After reading Richard Reeves' column (Op-Ed Page, Jan. 24) on the Bush Administration's misuse of the Social Security tax, I finally understand what conservatives are talking about when they say that they want a "meaner, leaner" government: They want the rich to get meaner so the poor can get leaner. LUCIA K.B. HALL San Diego

Sen. Daniel Patrick Moynihan (D-N.Y.) accused the Bush Administration Monday of using scare tactics in an effort to whip up opposition to his proposal to cut the Social Security tax. But White House spokesman Marlin Fitzwater said Moynihan's proposal, which the Senate begins debating today when it takes up the 1992 budget, would cause real problems by driving up the federal deficit. Moynihan has proposed slightly cutting the 6.2% Social Security tax that is deducted from workers' paychecks.

If President Obama really wants to see the "Buffett Rule" in action, he should look at California's tax system. The state has been plagued by it for years. The revenue stream is unstable and the state budget has been a deficit disaster. Soaking the rich — relying heavily on them for income taxes — has resulted in a precarious revenue roller coaster ride. It's either boom or bust in Sacramento, depending on how the wealthy are faring in the stock market and their other investments.

Dear Karen: How do I get customers for my new security business? Answer: Attracting early clients is tough for any business without a track record, particularly one in the security industry. You must persuade customers to trust your integrity and your ability to deliver on the contract you sign with them. Look for early customers within your business and social circles, where people already know and presumably trust you. Offer discounts to your first customers and ask them to write testimonials for you and send referrals your way. "Target your marketing to customers that you feel would have the greatest interest in your new approach based upon the research you should have done before launching your business," said Robert M. Donnelly, an entrepreneurship professor at St. Peter's College in New Jersey.

There are reasons to like the tax-cut deal President Obama reached with Republican congressional leaders this month, and reasons to dislike it. Here's the part to hate: The "temporary" one-year reduction in the Social Security payroll tax. We can debate whether the wealthy need or deserve an extension of their income tax breaks President Bush gave them starting in 2001. We can debate whether people who inherit fortunes need a cut in the estate tax. Or whether the overall package will have as much stimulative effect as a tax cut aimed squarely at the middle class and working class.

The problem with Social Security is that it isn't broken, which is precisely why the president is so eager to destroy it. It is the continued success, rather than failure, of the program that irks him. As George W. Bush continues to flail at Social Security, even in the face of increased public opposition, you have to wonder: "Why?" The most successful safety net program in human history is currently sitting on $1.

In an important shift from his hard-line stance against tax increases, President Bush has said he is open to raising taxes on wealthier Americans to cover the costs of transforming Social Security. Bush has been promoting a plan to let workers under age 55 divert a portion of their Social Security payroll taxes into private investment accounts.

Even as President Bush stresses his commitment to reworking the nation's immigration laws, some key supporters on the issue say it is so politically divisive that they doubt he can achieve his goal, given the administration's ambitious agenda. In interviews last week, Bush insisted he would pursue legislation that would legalize some of the estimated 8 million undocumented immigrants in the United States by granting them temporary worker status.

Treasury Secretary Nicholas F. Brady dismissed as "goofy" today a Democratic proposal to cut Social Security taxes, but agreed it has raised a valid point about the true size of the federal budget deficit. Selling the tax and savings provisions of President Bush's day-old fiscal 1991 budget during an interview on the CBS "This Morning" show, Brady suggested that the Social Security tax cut would mark a retreat from earlier work to ensure the long-term solvency of the retirement system.

Q: Can you explain Medicare deduction on my paycheck? I can't figure out what it is.--F. C. A: Many employers are separately itemizing payroll deductions for Social Security and Medicare, rather than lumping them together as a single Social Security deduction. Why? Because beginning this year, Medicare taxes will be assessed on earnings up to $125,000 per year, nearly twice the $53,400 subject to Social Security taxes.

President Bush urged new members of the House and Senate on Monday to work with him to achieve "big things" for the nation. In particular, Bush used his greeting for freshmen lawmakers to press his case for Social Security reform, restrictions on medical liability and an overhaul of the federal tax system. He described the tax code as "a complicated mess." "On big issues it is possible -- and not only possible, important -- for the Congress and the White House to work together.

The U.S. Supreme Court dealt restaurant owners a tax defeat Monday, ruling that the Internal Revenue Service can use an estimate of tips received by servers and bartenders when determining tax bills. The decision could lead to bills for back taxes throughout the restaurant industry. The ruling also could affect other industries in which employees receive tip income, experts said.