Closing loopholes, cutting entitlement spending a start
Published 7:53 am Wednesday, January 16, 2013
Workers will soon be noticing a leaner pay stub, one carrying a little less weight.
That’s because the so-called “tax holiday,” a widely popular stimulus measure, expired with barely a whimper in the hoopla surrounding the recent national fiscal cliff.
Originally enacted two years ago, the measure cut Social Security taxes from 6.2 percent to 4.2 percent. Effective this month that extra 2 percent will be extracted from your paycheck, meaning you are working the same number of hours for less take-home pay, thanks to your Congressmen.
An estimated three-quarters of workers are likely to be affected, which is consequential considering many families, especially in some economically challenged areas of southeast Louisiana, survive check to check. Consider that restoring the tax will cost a family with an annual income of $50,000 approximately $1,000, or about $83 per month.
For some that may not sound significant, but for many it means less money for baby formula, or, food, or new clothing. More likely, the reduced pay will mean less discretionary spending, resulting in fewer movies, keeping the aging television, or holding off on ordering takeout.
Economics dictate that any reduction in consumer spending will at some point adversely affect commercial establishments, whether it is a clothing store or the corner diner.
Republicans and Democrats proffer their own solutions and although ideologically dichotomous, they are fiscally sensible.
Democrats say tax loopholes, one of the most sacred of planks of the conservative platform, must be closed.
Republicans counter that spending entitlement programs must be reduced.
Each is correct. Tax loopholes are nothing more than legalized tax evasion for corporations and many of the country’s wealthiest individuals.
This practice is economically unsound and fundamentally unfair to the working class, which makes up the majority of taxpayers.
Conversely, the proliferation of entitlement programs is creating generations of young people who have figured out they can skip the 9 to 5 rigor and spend a lifetime sponging off of the government.
Although some entitlements are necessary and even humane, many of these programs are cost prohibitive and must be corralled before plunging the country into another recession and eventual bankruptcy.
Congress erred by allowing the Social Security tax to expire only because it will financially handicap the middle class, who can ill-afford any reduced income.
But lawmakers can avoid additional economic hemorrhaging by closing tax loopholes and cutting entitlement spending. At least that would be a start.