Why is the Payroll Tax Cut Tied to Social Security Anyway?

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Written by CEPR   
Tuesday, 20 December 2011 13:00
Dean Baker has a column in The Guardian asking this very question. Under the law, Social Security is financed from its designated tax and therefore cannot contribute to the deficit unless Congress changes the law. However, the payroll tax credit in 2011, which was replaced with general revenue, is an exception to this rule. Dean asks that instead of linking the payroll tax credit to Social Security, "why not just give everyone a tax cut equal to 2 percent of their wages up to $110,000?" Dean concludes, "The only reason to tie the tax cut to Social Security is if the intention is to raise issues about the Social Security tax at some future point."