Tax Policy Center blogs on Obama tax plan

Howard Gleckman at the Tax Policy Center reacts to increasing ambiguity about what the Obama Social Security tax plan would actually do:

Barack Obama has a plan to fix Social Security. Or does he?

Obama does have a vague proposal to raise payroll taxes for workers making more than $250,000. But there is a lot less to it than meets the eye, and Obama has left some hugely important questions unanswered.

We know that Obama wants to create a donut hole in the system. In his scheme, if you make less than about $100,000 (actually $102,000 this year) you would pay Social Security tax as usual. You'd pay no payroll tax on wages from $102,000 to $250,000, but if you make more than $250,000 you would again be hit by the Social Security levy. But that's all we know. When TPC pressed the Obama staff for details, we were told that none were available. Interestingly, they warned us against assuming that those in this newly taxable group would pay the same 6.2% rate as lower-wage workers, or that the employer share would be what it is today (also 6.2%). They also said they had not decided what compensation would be taxed.

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