Payroll Tax Holiday: Misguided Reform to Social Security Financing
John Ligon /
Despite efforts by Senator Baucus (D-MT) and Senator Grassley (R-IA) to draft a broad and bi-partisan federal legislation as part of another round of federal “stimulus” Senator Reid (D-NV) has now derailed the endeavor. After eliminating most of the tax cuts in the bi-partisan effort put forward by Senators Baucus and Grassley, one of the few “tax cuts” Senator Reid has retained is the payroll tax holiday plan.
What is the Payroll Tax Holiday? Sec. 101 of the Hiring Incentives to Restore Employment (HIRE) Act outlines a suspension during 2010 on the employer share of the Social Security OASDI (Old-Age, Survivors, and Disability Insurance) payroll tax. The OASDI payroll tax is normally divided into an employer and an employee share, where each is responsible for 6.2 percent on total payroll (or wages earned for employees). Sec. 101 only applies to qualified employers hiring a qualified individual from February 3, 2010 to December 31, 2010. It largely excludes public sector organizations hiring workers, except for “post-secondary educational institutions”. (more…)