Obama Proposes Payroll Tax on Those Making Over $250K
Social Security is personal to Democratic presidential nominee Barack Obama. The Illinois Senator is quick to tell people that his grandparents played a large part in his upbringing and that they depended on their Social Security paychecks to survive.
On his Web site, Obama has laid out a plan that discusses how he will make life easier for Americas senior citizens. In this plan, he states his opposition to privatizing Social Security, adding that he is unwilling to subject a secure retirement to the whims of the market.
[IMGCAP(1)] Obama proposes keeping the cap on Social Security taxes at its current $102,000 (which is adjusted each year for inflation), but then resuming the payroll tax on people making more than $250,000.
Obama also wants to force firms to put more money into retirement funds for their employees while also being more transparent about where the money is invested.
The lack of transparency can make it easier for fund managers to make imprudent or even fraudulent investment decisions, the plan states. Obama will ensure that all employees who have company pensions receive annual disclosures about their pension funds investments, including full details about which projects have been invested in.
In 1993, taxes on Social Security benefits were raised from 50 percent to 85 percent, causing many seniors incomes to shrink. In light of this and the rising cost of living, Obama wants to eliminate income taxes for seniors who are earning less than $50,000 a year.
Since the New Deal weve had a basic understanding in America: If you work hard and pay into the system youve earned the right to a secure retirement, Obama says on his Web site. But too many seniors arent getting that security, even though theyve held up their end of the bargain.
Lifting income taxes on this group will create a tax cut averaging $1,400 for 7 million Americans. It will also save seniors the cost of having to pay to have their taxes prepared.
Obama also wants the U.S. government to negotiate lower prescription prices in the Medicare program, while also closing the doughnut hole in the Medicare Part D prescription drug program. Under the current program, benefits are limited for seniors with drug costs that exceed $2,250, but are still less than $5,100.
In a May speech, Obama said, Under my plan, we will make generic drugs more available to consumers and we will tell the drug companies that their days of forcing affordable prescription drugs out of the market are over.
The presidential hopeful has a history of supporting seniors rights. In 2007, he co-sponsored the Social Security Fairness Act, which repealed the windfall elimination provision and the government pension offset. Those measures reduce Social Security benefits by a certain percentage for pensions from work not covered by the Social Security system.