I love when politics and tax come crashing into each other. Here’s a few recent ones:
A while back the IRS was facing a $2 billion dollar cut to their budget. The IRS commissioner, testifying before congress, pointed out that for every dollar of the IRS budget they collect roughly $200 in revenue.
But we don’t like tax revenues anyway right? Not only do we hate taxes in general, but we also love the recent “Payroll” tax cut that just got a little two months extension.
Here’s the thing… the “payroll” tax cut is a Social Security (SS) tax cut. Social Security was traditionally funded by a 12.4% tax on the first $100,000 or so of wages, paid 50% by the employer and 50% by the employee. Now it’s funded by a 10.4% tax because they reduced the employee-paid portion by 2%. Oh, that’s coupled with a 3.6% increase in SS benefits paid to recipients for 2012, the first increase since 2009 (before the payroll tax cut). So they’re funding it less, paying out more, and I guess the market makes up the difference? That part is beyond me.
The tax cut means more money in the pockets of everyone who gets a W-2 including myself, that’s all well and good. I’ve got nothing against that. I’m just excited to see what happens when SS rears it’s ugly head into politics again because it’s a “broken and bankrupt system” that needs to be reformed or privatized or something. Will any politician get asked “Didn’t you vote for the payroll tax cut in 2011 and 2012 that further cut funding to SS and perpetuated it’s problems?” Think it’ll happen?
The last fun fact, and this is my favorite, The IRS is more popular than congress.
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