New stimulus and Social Security

[VanWinkle]

The company is responsible for the employee portion of the payroll tax, so they have the choice of clawing back from future payments (like a pseudo garnishment) or keep the initial payments aside until its either forgiven or paid. I would imagine given these two choices, they'd do #2.

All these (haphazard?) actions is the reason why our tax system is so fraught and complex, keeping intuit and tax professionals busy.

It is fraught and complex without "All these" actions.

 

[Markola]

Do you think they will ? I was thinking it wouldn’t play well in elections if Democrats take away the $400 from unemployed? I surely don’t know how he plans to effect it nor do I know how to play politics but seems to me the Democrats are in a corner with this.

Not taking a political position just watching from sidelines.

One can’t really say one is “Not taking a political position” after stating an obviously political position. The comment hasn’t been moderated so it seems fair and appropriate to note, Democrats already passed a bill continuing the $600 weekly payments.

 

[MRG]

I'm glad I'm not working, especially as someone who "needs" to.

 

[mckittri2000]

Neither party can afford to let SS lapse. I expect the income cap on SS to be removed in the future to make sure that the program remains solvent.

 

[ShokWaveRider]

I agree that $600pw over the existing UI is a lot of money and needs to be tapered back. I think $200 extra would be a better number. $2400 is a lot and when you include the ~$1000 (Varies by state) is $3,200! That is a lot of money for a minimum/medium wage earner. Who would want to go back to work?

 

[tmm99]

I agree that $600pw over the existing UI is a lot of money and needs to be tapered back.

I agree. I have a friend who said she was getting much more money now than when she was working as she is now getting the unemployment as well as $600pw. She was even making fun of her friend who opted to go back to work and is getting less money than she was.

 

[cathy63]

The company is responsible for the employee portion of the payroll tax, so they have the choice of clawing back from future payments (like a pseudo garnishment) or keep the initial payments aside until its either forgiven or paid. I would imagine given these two choices, they'd do #2.

All these (haphazard?) actions is the reason why our tax system is so fraught and complex, keeping intuit and tax professionals busy.

Spokespersons from both ADP and Paychex have also suggested that it is not in employers' best interests to pass along the deferral to employees, and if most of their clients take their advice, a lot of workers are not going to see this money. A couple of problems they mentioned were that the employer would still be liable for the funds if the employee doesn't work there any more when the tax is due; and for seasonal employees who work a lot during the holidays, taking the deferred tax in Q1 could mean taking most of their paycheck.

 

[Global Wizzo]

Tax suspension

To me, it is just stupid. If you are working, then paying it doesn’t change anything, stopping the with holding and deferring the bill will hurt poor money managers more. The powers to be have raided the SS funds over the years. At some point, I expect there will be a reckoning. At that point, if the government defaults on SS, Medicare and Government pensions and they crash the markets, guess the preppers win
Be interesting on others perspectives.

 

[Retired Expat]

Do you think they will ? I was thinking it wouldn’t play well in elections if Democrats take away the $400 from unemployed? I surely don’t know how he plans to effect it nor do I know how to play politics but seems to me the Democrats are in a corner with this.
Not taking a political position just watching from sidelines.

To be clear it is $300 from the Fed and $100 from each state. Many Governors have said they can’t cover the $100 since the economy is so bad and they don’t have the ability to borrow or print money like the Fed.

 

[2cheap2eat]

I think it is a dumb and bad idea. What gain will come from tax deferral? Taxpayers and employers will will still be on the hook for that payment, only Congress can change that.

I guess on the positive side it might force a meaningful conversation on our social safety net which is SS and also once again on our healthcare system but other than that it just sounds like beer-joint talk to me.

I actually like the idea, as a working person, I would prefer defer 6.5% now. Many Companies, including mine, have slashed employee salaries due to Covid. So, having that cash in hand now would be useful. I bet many blue collar and service industries workers would be ecstatic for any relief right now!

 

[Old Microbiologist]

As mentioned only Congress has the power to allocate funds. The trick here is to fund the $400 and I can't see any source of money that can be tapped by EO to do this so it must only be a political ploy for the re-election and looking at the polls it is working. Like many of his ideas they are unconstitutional such as barring US citizens from entering the country if they are sick which violates the 5th Amendment on free movement. A President can write EO's that can do anything whether legal or not but if it costs money their hands are tied. The legality of particular EO's can and will be challenged in court or Congress can pass an ACT making the EO illegal assuming a 2/3 majority. The Court question usually runs afoul of the complainant's legal standing to bring suite. I am unsure if regular citizens have standing so it probably must come from Congress and can be expedited to the SCOTUS. The question is whether Congress is willing to do that in lieu of an alternative palliative for the people which apparently is impossible to get through both Houses.

What all of this does is manifestly make it clear that the US can and will print money for anything which is a scary policy by either party. There are only a few tools available in an economic crisis of this magnitude. The first is to lower interest rates to zero...done! The second is to prop up the banks and equity markets with free and easy money...done! The next is to print sufficient money to float the people...insufficiently done The last is austerity and this hasn't even been discussed. The elephant in the room is the military budget which is so bloated it is shocking. Cutting the military back to post-Vietnam levels and budgets is not only necessary it is existential to the survival of this country past this emergency which will end eventually. But, apparently cutting the military is taboo and we are embarking vigorously towards 2 new war fronts in Lebanon and Belarus. Someone has to pay for all of this.

The next huge trick is to keep inflation low and I just don't see any tools left in the bag to do this. If you flood markets with newly minted dollars it must result in inflation.To get back to normal everything must re-open but in ways that keep people safe enough. Getting people back to work is imperative and it is going to require creating new jobs. If the military gets whacked it will put back into the job pool roughly half a million more. Not a huge number considering the population of 330 million.

If you look at Sweden as an example of doing absolutely nothing about COVID-19, it has returned already to very low numbers. Yes they had a high death rate but they are more or less over and done with the virus and things have returned to normal. What most people fail to understand is that eventually everyone is going to get exposed to this virus. It is only a question of when. Only a vaccine will be effective in stopping this pandemic and personally, as a vaccinologist myself I will take any vaccine that is safe enough even if it is only 35% efficacious which is enough to stop a pandemic. Having worked at USAMRIID for a long time I received 21 unlicensed vaccines to work there and many had side effects that were almost as bad as the diseases themselves. I am alive and well so it didn't hurt me long term and I am probably a good example of normal. Also, roughly 65% of infected with COVID-19 don't get sick and the remaining 35% are the at-risk population usually with comorbidity diseases, so eventually this virus is going to burn itself out and I predict it will be roughly next Spring after large segments of many countries receive a vaccine which is imminent (January for the Russian vaccine should it pass the Phase III safety trials) whether it be Russian, Chinese, British or American. IMHO the Oxford vaccine holds the most promise but I will get the Russian one as soon as it is available here in Hungary which is already signed up to get the vaccine and to possibly produce it here. On a side note I worked over 10 years in former Soviet Republics and spent some considerable time analyzing the vaccines produced in the Soviet Union and most were fine. Many were not very good with efficacies in the 30% range but for those disease (plague is an example) these are the only vaccines anywhere on the planet. The Pharmaceutical industry of capitalist countries is not geared to design, test, or produce vaccines that are not profitable. Only countries that are willing to invest state funds and resources are able to develop these kinds of vaccines. The US military has a requirement to develop these orphan vaccines for soldiers deploying to high risk areas but Congress has never funded the military enough to do this work. Hence the minimal levels of vaccines since WWII. Most, like myself, have retired and left the industry entirely. None of us were replaced.

 

[timo2]

CNBC Article on the SS

A permanent payroll tax cut could deplete Social Security trust funds by 2023

"KEY POINTS:

• 
  [*]President Donald Trump signed an executive order earlier this month that would give workers a temporary break from paying payroll taxes.
  [*]Many worry that a tax holiday could become permanent and that would hurt Social Security, which relies on those levies for its funding.
  [*]Now, one estimate from the Social Security Administration finds that if a permanent change were put in place, it could deplete the program’s funds by mid-2023.

"

https://www.cnbc.com/2020/08/25/how...vxnSU9FpV23WWQNBtFEbAm4Km6YDsBVUo5NMDujxe9W1U
--------------
{EDIT: here is the actual information direct from SSA: https://www.ssa.gov/OACT/solvency/VanHollenSandersWydenSchumer_20200824.pdf

 

[VanWinkle]

CNBC Article on the SS

A permanent payroll tax cut could deplete Social Security trust funds by 2023

"KEY POINTS:

• 
  [*]President Donald Trump signed an executive order earlier this month that would give workers a temporary break from paying payroll taxes.
  [*]Many worry that a tax holiday could become permanent and that would hurt Social Security, which relies on those levies for its funding.
  [*]Now, one estimate from the Social Security Administration finds that if a permanent change were put in place, it could deplete the program’s funds by mid-2023.

"


https://www.cnbc.com/2020/08/25/how...vxnSU9FpV23WWQNBtFEbAm4Km6YDsBVUo5NMDujxe9W1U
--------------
{EDIT: here is the actual information direct from SSA: https://www.ssa.gov/OACT/solvency/VanHollenSandersWydenSchumer_20200824.pdf

Who said anything about a permanent cut- that is just click bait.

 

[ransil]

Could

 

[CardsFan]

Who said anything about a permanent cut- that is just click bait.

Maybe Timo2 meant to start with the disclaimer: "Not to bring politics into the discussion,..."

Quoted from the pet peeve thread.

 

[timo2]

Maybe Timo2 meant to start with the disclaimer: "Not to bring politics into the discussion,..."

Quoted from the pet peeve thread.

Apologies then. I don't see anything political at all about numbers. And these were financial issues. Regardless, sorry about that.

 

[RunningBum]

It looks like this study shows the impact of both employees and employers getting a permanent break on SS & Medicare. My understanding is that for this year, the president is giving just employees that break, and only those under $100,000. I have heard noise about that becoming permanent, but haven't heard that it would be extended to employers as well.