The Hill poll: Majority says payroll tax holiday hasn’t benefited them

posted at 11:35 am on January 30, 2012 by Ed Morrissey

Congress returned to Washington this month with an urgency to pass a year-long extension to the payroll-tax holiday, a reduction in FICA withholding that began last year as a means to stimulate the economy.  With the annual GDP increase below 2% at best, it’s hard to argue that it had much impact, and yet Barack Obama and leaders in both Congressional chambers act as though its extension is critical to taxpayers relying on the temporary tax relief.  According to a new poll by The Hill, most of them couldn’t care less:

A majority of voters say they have not benefitted from the payroll-tax holiday that lawmakers are working to extend through the rest of this year, according to  this week’s poll conducted for The Hill.

Fifty-four percent said the tax holiday has not helped them financially, while only 25 percent said it had been a help to them. ….

The poll lends some credence to GOP arguments that many taxpayers didn’t notice they were getting more money in their paychecks. Still, that hasn’t stopped generally broad support for extending the tax break through the end of this year.

So let’s get this straight.  A tax “holiday” that is driving the already-troubled Social Security fund deeper into red ink gets broad support even though (a) it didn’t produce the desired effect in its first year, and (b) a majority wouldn’t miss it if it faded away?  Yes, this must be Washington DC.

That doesn’t even begin to take into account that the policy itself was absurd from the beginning.  Besides making the SSA fund’s deficits worse, the payroll tax doesn’t have anything to do with incentivizing growth.  Businesses need long-term tax and regulatory stability in order to price risk and invest capital.  Gimmicky tax “holidays,” especially on costs not greatly associated with risk, don’t help and in fact make matters worse.  The amount of money given back to taxpayers on this temporary “holiday” isn’t enough to stimulate demand, as we saw last year and will surely see this year.  Consumers need a certain amount of tax and regulatory stability before deciding to spend more money, too, and this gimmick has been anything but stable.  It’s also essentially stealing from the forced retirement fund, which means that consumers need to save more rather than spend more.  The entire exercise is counterproductive.

It’s not just Republicans who think so, either.  There isn’t a single demographic category in this poll that has a plurality that says the tax holiday helped them, save two: those unsure about their ideology, and those who “strongly support” Obama.  Democrats go 35/45, and independents go 18/56 against it.  Self described liberals fall 36/44, and moderates 22/57.

Small wonder that Republicans have a narrow edge among this sample of 1,000 likely voters on tax policy, 45/41.  However, if Republicans don’t take the hint and start using this payroll-tax holiday as an example of the gimmicky failures of Obamanomics, that edge might not last.  This is as clear an indictment of this policy as one could find in polling.

 

 


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Small wonder that Republicans have a narrow edge among this sample of 1,000 likely voters on tax policy, 45/41.

Warren Buffett’s six-figure-earning secretary hardest hit! Barry’s goin’ down!!!!

Rational Thought on January 30, 2012 at 11:39 AM

It has helped as much as Cash for Clunkers. We need more short term, feel good, solutions. Plus, taxing the hell out of job creators. It’s the only fair thing to do.

a capella on January 30, 2012 at 11:40 AM

What, you ungrateful 1%’ers didn’t appreciate the $16 per month extra you received in your paycheck? Too busy polishing your Rolls Royce, I suppose.

Bishop on January 30, 2012 at 11:40 AM

With the annual GDP increase below 2% at best, it’s hard to argue that [the Bush tax cuts] had much impact, and yet …

fify

kunegetikos on January 30, 2012 at 11:40 AM

Too many commas,..it’s a way of life with me.

a capella on January 30, 2012 at 11:41 AM

I liked Dr K’s last line in a recent article of his: “If Republicans can’t beat (Obama’s) that record, they should look for different careers”

Mord on January 30, 2012 at 11:41 AM

Good! Can’t wait to see the do nothing house once again fight against the middle class tax cut. Nice work champs

Uppereastside on January 30, 2012 at 11:42 AM

Well what do you know? People are waking up to the scams bho is up to?

BTW, I don’t know if anyone has posted this yet, but the ‘food stamp’ president, NO not Bush, is doing his evil deeds at taxpaysers expanse again?

http://nation.foxnews.com/food-stamps/2012/01/30/obama-administration-offers-75000-grants-sign-more-food-stamp-recipients
L

letget on January 30, 2012 at 11:42 AM

“If Republicans can’t beat (Obama’s) that record, they should look for different careers”

Mord on January 30, 2012 at 11:41 AM

If they don’t beat him, rest assured, they will be looking.

CurtZHP on January 30, 2012 at 11:43 AM

Uppereastside on January 30, 2012 at 11:42 AM

Oh, look! We caught another one!

CurtZHP on January 30, 2012 at 11:43 AM

Come on stupid party… let’s start hitting Obama on making cuts to Social Security. Hello? Is anyone out there?

rhombus on January 30, 2012 at 11:44 AM

My SS taxes not confiscated are going directly to my 401k so I get the benefit of increased private savings and reduced taxable income.

Charlemagne on January 30, 2012 at 11:44 AM

GOP should crush on taxes. But, I suppose it is a minor victory to still be above water when our standard bearers for taxes are the likes of McConnell and Romney.

besser tot als rot on January 30, 2012 at 11:44 AM

If the GOP is going to give the Dems $3-trillion-plus in new deficit spending in a deal whereby the GOP gets the Bush tax cuts extended, then why not give the little people a pizza while we run this POS into the ground?

kunegetikos on January 30, 2012 at 11:47 AM


The Hill poll: Majority says payroll tax holiday hasn’t benefited them

Well, I won’t speak for the majority, but I willsay that it hasn’t benefited me.

rogaineguy on January 30, 2012 at 11:47 AM

I guess this means some folks won’t be able to afford to keep their homes heated the remainder of the season after all. At least it will help with the Social Security collapse. Nice to know my $14,000.00 a year investment in SS wasn’t wasted./

Bmore on January 30, 2012 at 11:48 AM

La la la I can’t hear you
-DC

cmsinaz on January 30, 2012 at 11:49 AM

This all probably makes perfect sense if you live in the Washington echo chamber.

CorporatePiggy on January 30, 2012 at 11:49 AM

CurtZHP on January 30, 2012 at 11:43 AM

The westside has nicer neighborhoods.

Bishop on January 30, 2012 at 11:49 AM

This is as clear an indictment of this policy as one could find in polling.

The problem is that no Congressman is going to stop this gimmick during an election year. The policy was bad from the beginning but opening up the opportunity for opponents to talk about an incumbent “raising taxes on working Americans” is more of a threat to the political class than the ramifications of a stupid policy.

Happy Nomad on January 30, 2012 at 11:51 AM

I tipped a Starbucks barrista with my cut, they buy a candy bar and pretty soon the economy BOOMS.

NoDonkey on January 30, 2012 at 11:52 AM

DUH!

KOOLAID2 on January 30, 2012 at 11:52 AM

However, if Republicans don’t take the hint and start using this payroll-tax holiday as an example of the gimmicky failures of Obamanomics, that edge might not last.

Establishment Republican “Leadership” seize the opportunity? In what alternate universe do you reside?

The phrase “Republican Leadership” is most clearly an Oxymoron.

CrazyGene on January 30, 2012 at 11:54 AM

Obviously it helps anyone who pays the tax, but it is such a tiny amount of money compared to what Uncle Sammy is stripping from their paychecks, that it is not enough to really effect their life.

I want to see the value of the deduction quintupled or sextupled and made permanent.

astonerii on January 30, 2012 at 11:54 AM

I tipped a Starbucks barrista with my cut, they buy a candy bar and pretty soon the economy BOOMS.

NoDonkey on January 30, 2012 at 11:52 AM

Do you actually drink the horrid Starbucks coffee or use it to scour greasy bicycle chains?

Bishop on January 30, 2012 at 11:55 AM

CurtZHP on January 30, 2012 at 11:43 AM

Just a small one. Under the minimums. Probably high school. Throw it back.

a capella on January 30, 2012 at 11:56 AM

Do you actually drink the horrid Starbucks coffee or use it to scour greasy bicycle chains?

Bishop on January 30, 2012 at 11:55 AM

We don’t have Caribou here in San Antonio, unfortunately.

It’s either that or Bill Miller’s.

NoDonkey on January 30, 2012 at 11:59 AM

Ross Douthat had a good post on this in the New York Times. Said that the GOP demanding offsetting spending cuts for the pay roll tax cut extension was illogical because
a) it was a tax cut which conservatives are supposed to like
b) everyone knows social security is broke and defunding it will bring reform even closer which conservatives also like
c) they could be accused of not caring about the deficit when they extended the Bush tax cuts for the rich
Instead they pushed for spending cuts, Democrats stalled them out and won the message
The GOP might still win if they accuse Obama of raiding the people’s retirement fund to boost his re-election hopes
But it’s good to see that the people aren’t fooled by Obama’s trickery

breffnian on January 30, 2012 at 11:59 AM

The poll lends some credence to GOP arguments that many taxpayers didn’t notice they were getting more money in their paychecks.

Just like most of them don’t even know that less went into their own share of Social Security–if any of them ever see SS. Bottom line is that the government spending must stop right along with the over-taxing. The government is not entitled to our money and Obigspender needs to stop rubbing his hands together in anticipation of the millions or billions he fantasizes flowing into the tax coffers for him to spend, spend, and spend again, i.e., flushed down the drainhole of cronyism.

Unfortunately, they don’t teach in school the grievances about taxation that are in the Declaration of Independence and are the fundamental reason why we fought a revolution.

stukinIL4now on January 30, 2012 at 12:00 PM

Bishop on January 30, 2012 at 11:55 AM

Should have used that mute button a few more times yesterday.

Bmore on January 30, 2012 at 12:00 PM

Liberals do not care if policies have the intended effect or not they only wish to feel morally superior while enacting them.

Grunt on January 30, 2012 at 12:07 PM

I would have rather kept the Making work pay tax credit than money taken from my social security…

Wagthatdog on January 30, 2012 at 12:13 PM

CurtZHP on January 30, 2012 at 11:43 AM
The westside has nicer neighborhoods.

Bishop on January 30, 2012 at 11:49 AM

The eastside is where the action is at though. There is nothing to see in the UWS except for out of touch conservative elitist.

Uppereastside on January 30, 2012 at 12:18 PM

We saw our with holdings go up, anyone else?

Fleuries on January 30, 2012 at 12:21 PM

With the annual GDP increase below 2% at best, it’s hard to argue that [the Obama administration] had much positive impact, and yet …
fify

kunegetikos on January 30, 2012 at 11:40 AM

fify x2

landowner on January 30, 2012 at 12:28 PM

Does anyone think this “holiday” will work at all? If you have to repay it back in 2012, would you spend it or use it to help pay down your new assessment? That’s what this bill does and no media establishment has addressed it. I again refer to the IRS publication that addresses this event:

http://www.irs.gov/newsroom/article/0,,id=251650,00.html

As it clearly states in paragraphs 4&5:

Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision.

The very people who will spend the additional money (the upper middle class) will have to decide on either spurring the economy or watching their personal budgets. This could amount to a $2,000 “assessment” if enacted for the full year.

djaymick on January 30, 2012 at 12:31 PM

Just a small one. Under the minimums. Probably high school. Throw it back.

a capella on January 30, 2012 at 11:56 AM

They’ve all been scrawny lately. You wanna use it for chum?

CurtZHP on January 30, 2012 at 12:35 PM

A strong position on income tax reform, both corporate and individual, is the counter-argument to O’s class warfare scheme, and is a potential game-changer.

FerdtheMoonCat on January 30, 2012 at 12:36 PM

What is this recapture tax? I didn’t vote for any new taxes!

Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision. – DJAYMICK.

Fleuries on January 30, 2012 at 12:42 PM

And we should be surprised? Many free marketer economists have said this, from conservatives to libertarians. They have also warned against the “tax cut” the president keeps touting. And some, Dr. John Taylor and Dr. Veronique de Rugy, have shown through research that these kinds of “tax cuts” which are basically tax rebates, do not increase aggregate demand or consumption. So we should NOT be surprised. The tax proposals from Republicans have always been better than the Democrats’. That will not change.

ojfltx on January 30, 2012 at 12:50 PM

Throw ‘em all out on their asses!

GarandFan on January 30, 2012 at 1:02 PM

You have to understand why they put this tax relief in place to start with. 50% of Americans pay no income tax, so giving them an income tax break has no effect at all. So how can they buy votes if they cannot give anything. The answer a payroll tax cut. What better solution is there, pay off their base and destroy social security. Now they can put a means test in place so they can cut those of us who planned for our retirement out of the system while we will still be required to pay for those who did nothing “Democratic base”

jangle on January 30, 2012 at 1:03 PM

Come on stupid party… let’s start hitting Obama on making cuts to Social Security. Hello? Is anyone out there?

rhombus on January 30, 2012 at 11:44 AM

… except that he didn’t do that. The policy replaces the payroll tax revenue foregone with transfers of general revenues (i.e., income taxes) into the Social Security Trust Fund. From my vantage point, this is even worse, as it commits income taxpayers to prop up Social Security.

I’d actually have a bit more respect for this policy if the president said forthrightly, “I want to give Social Security payroll tax relief, so our benefit promises will need to come down a bit as well.” But he didn’t do that — they instead committeed your income tax dollars and mine to bail out the Social Security Trust Fund.

Chuckles3 on January 30, 2012 at 1:11 PM

It may drain SS. It may or may not drive the economy. It does add $200 billion to the annual deficit.

BUT

One thing can’t be argued. My personal bank account benefits from the extra $1,000+. Anyone that says different is a moron, with regards to their personal finances. Which in 2012 America, isn’t really a surprise.

The argument is whether my personal benefitting outweighs the negatives. It probably doesn’t, with no other changes to everything.

MNHawk on January 30, 2012 at 1:19 PM

MNHawk on January 30, 2012 at 1:19 PM

Agreed. ust because most people are too stupid to realize the effect of this on their checks doesn’t mean the effect is not there and people do not get an immediate benefit.

RW Wacko on January 30, 2012 at 1:39 PM

Easy fix.

Anyone who turns 65 without an Ivy League degree gets the death panel.

Medicare fix + Social Security fix in one fell swoop.

NoDonkey on January 30, 2012 at 1:45 PM

Too many commas,..it’s a way of life with me.

a capella on January 30, 2012 at 11:41 AM

Au contaire, you were well punctuated, AC. You had a teacher who cared about punctuation!

herm2416 on January 30, 2012 at 1:49 PM

One thing can’t be argued. My personal bank account benefits from the extra $1,000+. Anyone that says different is a moron, with regards to their personal finances.

MNHawk on January 30, 2012 at 1:19 PM

Apparently you haven’t noticed that your total Federal tax bill has probably gone UP…because there is no longer a $800 “Making Work Pay” credit, and because you have lost several valuable deductions. And you only get an “extra $1000″ if your Income is $50,000. People who earn less than $40,000 are DEFINITELY LOSERS because their SS reduction is less than the “Making Work Pay” credit…PLUS they have probably lost some other valuable deductions.

This whole STUPID “payroll tax holiday” measure is a leftist trick to permanently destroy the “Social Security lockbox.” Then, when Social Security becomes just another part of the general budget, Democrats will be in a position to scream about an “attack on Social Security” when ANY budget cuts are proposed, since everything will be funded from one big pile of money.

This is the same tactic local politicians use when they scream about “defunding police and fire fighters” every time a local budget must be cut, or when they cry about “firing teachers” every time a school budget must be reduced. The big spenders always construct a phony “straw man” budget reduction proposal in order to claim that the most popular/vital government services are the ones most “in danger” from any cutbacks.

BOTTOM LINE: NOBODY benefits from the “Payroll Tax Holiday” in the long term, and the short-term “benefit” is an illusion: any benefit is wiped out by increases in other taxes.

landlines on January 30, 2012 at 1:56 PM

One thing can’t be argued. My personal bank account benefits from the extra $1,000+. Anyone that says different is a moron, with regards to their personal finances.

Not to include myself in such a disreputable group, but I don’t think it’s quite that simple.

Your personal bank account benefits by about $1,000. Ths doesn’t necessarily mean, however, that your personal financial position has improved by $1,000.

The language of the payroll tax cut legislation stipulated that bonds would be issued from the general fund to the Social Security Trust Fund to make up for the payroll tax cut. So in the first year payroll tax payers got $120 B in tax relief, while providers of general revenues (mostly income taxpayers) were obligated to make up that $120 B.

If you are in the subset of the population who pay income taxes, you just picked up an increased share of the tax burden of supporting Social Security (and especially so if you are younger, and servicing the national debt with your future taxes).

Basically this policy was a straight income transfer — from young income taxpayers to older Soc Sec beneficiaries and payroll tax payers. It’s not a pure $1,000 windfall for everyone.

Chuckles3 on January 30, 2012 at 2:03 PM

With the annual GDP increase below 2% at best, it’s hard to argue that [the Obama administration] had much positive impact, and yet …
fify

kunegetikos on January 30, 2012 at 11:40 AM

fify x2

landowner on January 30, 2012 at 12:28 PM

I agree with that!

kunegetikos on January 30, 2012 at 2:27 PM

It’s of no surprise that such low numbers have seen any meaningful benefit from the payroll tax cut, thanks to the changes that President Obama’s IRS implemented in withholding tax rates and also thanks to higher fuel prices. [To see how it affects your take home pay, see this tool!]

ironman on January 30, 2012 at 3:30 PM

P.S. The poll’s percentages are pretty much in line with this analysis of withholding tax rate changes, since 47% of all taxpayers would have seen no difference on their paychecks, at all!

ironman on January 30, 2012 at 3:32 PM