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(snip)WASHINGTON (AP) - President Barack Obama isn't talking about it and neither is Mitt Romney. But come January, 163 million workers can expect to feel the pinch of a big tax increase regardless of who wins the election.
A temporary reduction in Social Security payroll taxes is due to expire at the end of the year and hardly anyone in Washington is pushing to extend it. Neither Obama nor Romney has proposed an extension, and it probably wouldn't get through Congress anyway, with lawmakers in both parties down on the idea.
Even Republicans who have sworn off tax increases have little appetite to prevent one that will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.
Why are so many politicians sour on continuing the payroll tax break?
Republicans question whether reducing the tax two years ago has done much to stimulate the sluggish economy. Politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security.
They are backed by powerful advocates for seniors, including AARP, who adamantly oppose any extension.
"The payroll tax holiday was intended to be temporary and there is strong bipartisan support to let that tax provision expire," said Sen. Orrin of Utah, the top Republican on the Senate Finance Committee. "The continued extension of a temporary payroll tax holiday has serious long-term implications for Social Security and, frankly, it's not even clear that it has helped to boost our ailing economy."
The question of renewing the payroll tax cut has been overshadowed by the expiration of a much bigger package of tax cuts first enacted under President George W. Bush. The Bush-era tax cuts also expire at the end of the year, and Congress is expected to try to address them after the election, in a lame-duck session.
The payroll tax cut could become part of the mix in negotiations that could go in many directions. But lawmakers in both political parties say they doubt it.
"I think there's a growing consensus that Congress and the president can't continue to divert such a critical revenue stream from Social Security," said Rep. Kevin Brady of Texas, a senior Republican on the tax-writing House Ways and Means Committee. "I think more and more Americans understand that that payroll tax cut, while politically appealing, is endangering Social Security."(snip)
The major take-away here is that the 2% ( of gross income ) reduction in Social Security tax ( which equalled a 2% reduction in 'self-employment' tax for dancers and camgirls ), which was 'temporarily' approved by the US congress as a 'stimulus' measure for the past couple of years, has dangerously under-funded the Social Security system. In contrast, federal income tax rates, which fund MedicAid, Food Stamps and other US federal social welfare benefits programs, were not reduced beyond the original GWB income tax cuts put in effect some 11 years ago. Thus, with the expiration of the Social Security tax cuts already set to expire on January 1st under existing law, given lobbying efforts by AARP resulting in lack of support for an extension from Washington politicians of either party, at this point it's a 'given' that US dancers and camgirls ... as well as all other US workers ... will have to pay an additional 2% of their gross income toward Social Security tax next year. For an 'average' part time dancer or camgirl earning $50k per year, this will mean an additional $1000 in self-employment tax. And of course this will also mean that 'average' strip club and webcam customers will $1000 fewer dollars left over to spend on 'non-essential' items such as lap dances and/or paid webcam stream.
The second take-away relates to 'Tax-Mageddon' a.k.a. the fact that the federal income tax rate cuts which have been in effect for the past decade are also going to expire on January 1st under existing law. Between increases in the federal income tax brackets, plus a 'reset' in Alternative Minimum Tax rates which could extend all the way down to those earning $45k per year, increases in federal income taxes could be larger than the Social Security tax increase.
However, the US congress is expected to conduct negotiations and pass some sort of 'band-aid' legislation in this area after the election ( in a 'lame duck' congressional session ). Scuttlebut is that some sort of compromise will be reached during that 'lame duck' session which will prevent federal income tax rates and Alternative Minimum Tax rates from returning all the way up to their pre-GWB tax cut levels. However, this is by no means a certainty. And whatever compromise is reached could go in several different directions. For example, preserving the cut in income tax rates would equally affect taxpayers in all US states. However, because it works via disallowing deductions above a certain amount of income, an Alternative Minimum Tax extension would disproportionately benefit residents of states with high state income tax rates, high property tax rates etc. while having little or no effect on residents of states that have low / no state income tax, that have low property tax rates etc.
But no matter the details, it would appear that dancers and camgirls are going to experience a 'double whammy' on January 1st ... fewer after tax dollars left over out of the total pre-tax dollars they earn, plus customers being left with fewer after tax dollars to spend on 'non-essential' items such as lap dances and paid webcam streams.



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