Fuzzy Math: Paying for the Payroll Tax Cut

In a just published piece, AEI economist and tax expert Alan Viard warns that the 2011 payroll tax holiday, which shaves 2 % points off workers’ Social Security tax rates, undermines historical practices and distorts federal budget priorities as it diverts $130 billion from the general treasury into the Social Security trust fund.

"The tax holiday is the latest, and largest, of Social Security's raids on the general treasury. For example, the 2009 stimulus package provided an extra $250 benefit payment to Social Security recipients and billed the cost to the general treasury. And, the jobs bills adopted in March 2010 and November 2011 trimmed Social Security taxes for some employers and tapped the general treasury to make up the loss. Numerous small transfers from the general treasury have occurred over the years.

If we keep using general revenue to pay for Social Security, we should turn the program into just another line item in the budget and force it to compete with other programs for its share of budget resources. The best approach, though, is to halt the use of general revenue and return Social Security to its historical role as a self-supporting program."


Alan D. Viard previously served as a senior economist at the Dallas Fed. He has also worked for the White House's Council of Economic Advisors, the Joint Committee on Taxation in Congress, and the Treasury Department's Office of Tax Analysis. Viard can be reached at [email protected]

For help reaching any AEI scholars and for all other media requests, please contact Jesse Blumenthal at [email protected]

AEI's in-house ReadyCam TV studio may be booked by calling VideoLink at 617.340.4300. For radio interviews, please e-mail [email protected]

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Alan D.
Viard

What's new on AEI

Making Ryan's tax plan smarter
image The teacher evaluation confronts the future
image How to reform the US immigration system
image Inversion hysteria
AEI on Facebook
Events Calendar
  • 01
    MON
  • 02
    TUE
  • 03
    WED
  • 04
    THU
  • 05
    FRI
Wednesday, September 03, 2014 | 9:00 a.m. – 10:30 a.m.
From anarchy to Augustus: Lessons on dealing with disorder, from Rome’s first emperor

We invite you to join us for two panel discussions on how Augustus created order from chaos 2,000 years ago, and what makes for durable domestic and international political systems in the 21st century.

Wednesday, September 03, 2014 | 12:00 p.m. – 1:30 p.m.
Multiple choice: Expanding opportunity through innovation in K–12 education

Please join us for a book launch event and panel discussion about how a marketplace of education options can help today's students succeed in tomorrow's economy. Attendees will receive a complimentary copy of the featured book.

Thursday, September 04, 2014 | 12:00 p.m. – 1:30 p.m.
How conservatives can save the safety net

Please join us for a luncheon event in which our panel will discuss what conservatives can learn from how liberals talk and think about the safety net and where free-market economics, federalism, and social responsibility intersect to lift people out of poverty.

No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.