Obama Tax Cut Payroll

About Obama Tax Cut Payroll

The payroll tax cut of 2011 temporarily reduced the employee portion of the Social Security tax from 6.2 percent to 4.2 percent. The cut was extended through 2012. For a worker earning 50,000, the cut saved approximately 1,000 per year. The tax cut was part of the compromise to extend the Bush tax cuts for two years. The lost Social Security revenue was replaced by general fund transfers. The payroll tax cut expired on January 1, 2013 as part of the fiscal cliff resolution. The expiration caused paychecks to shrink for virtually every American worker. The payroll tax cut was the most broadly felt tax change in decades, affecting approximately 160 million workers. Critics worried it undermined Social Security financing by blurring the link between contributions and benefits.