Aug. 14 (Bloomberg) -- Democrat Barack Obama would wait at least a decade to impose the Social Security payroll taxes on Americans who earn more than $250,000 a year, a main component of his proposal to keep the retirement insurance system solvent.
The delay is designed to create an influx of cash to the government's Social Security fund at a time when it is projected to be paying out more in benefits than it takes in from taxes, Obama's top economic adviser, Jason Furman, said.
``Historically, many tax changes in Social Security have been phased in gradually and usually not effective immediately,'' Furman, Obama's chief economic adviser, said in an e-mailed response to questions. ``You have virtually the same impact on solvency as an immediate change.''
Deferring a new levy on higher income taxpayers also would allow Obama, the presumptive Democratic presidential nominee, to largely dodge immediate political and economic repercussions of the proposal. During the campaign, Obama has advocated making incomes above $250,000 annually subject to the payroll tax, though he hasn't provided specifics of how that plan would be implemented.
The Republican presidential candidate, Senator John McCain of Arizona, has criticized Obama for proposing to raise the payroll tax on higher-income earners. Yet, he has repeatedly said he wouldn't close off any options to fix the Social Security system, which pays benefits to almost 50 million Americans. |
