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Older Americans Against Payroll Tax Cut Extension

by Mike Godfrey,

23 October 2012

Barry Rand, chief executive officer of AARP, the non-profit, non-partisan organization for the over-fifties, with over 37m members, has sent a letter opposing any further extension of the Social Security payroll tax holiday when it expires at the end of this year, to both the United States Congress and the White House.

The 2% payroll tax cut, reducing it to 4.2% from 6.2%, was introduced in 2011, and was extended in February this year to the end of 2012. In his letter, Rand said that, “when Congress and the President originally enacted and then extended the temporary payroll tax holiday, AARP recognized and appreciated that economic conditions had been devastating for millions of Americans and that there was a need for short-term action.”

However, he confirmed that AARP’s position on the temporary payroll tax holiday “was contingent on several conditions" in order to protect Social Security and its beneficiaries in both the short and long-term, and the AARP urged that any loss to the Social Security Trust Funds be fully repaid.

While, he added that the 2012 Social Security Trustees report earlier this year confirms that this condition has been met, he urged Congress not to extend the payroll tax holiday beyond the current year, as a “further extension of the payroll tax holiday would undermine confidence in Social Security and put at risk the programme’s dedicated funding stream and the hard-earned benefits of millions of Americans and their families”.

If, he concluded, a political consensus should emerge that continued assistance should be given to workers, the AARP “strongly urges that goal be achieved through means other than a reduction in Social Security’s dedicated funding stream, the payroll rate”.

TAGS: individuals | tax | business | payroll | social security | United States | tax breaks

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