On a US worker's paycheck, Social Security taxes are collected as a separate line item from Federal taxes. Theoretically the money gets accounted for/held/spent separately.
Federal income taxes are different from Social Security taxes. They're supposed to find differen things. With me so far?
As you may or may not know, Social Security benefits are paid out of the contributions of CURRENT workers. The government may keep records of what you paid in, so they can compute your benefits, but there is no "personal account" building; if I and the program last that long, my benefits will depend on what the next generation or two down the line looks like.
In light of this, you don't mess with the contribution system lightly. There is very, very little you can do to limit your payroll tax liability, as well. Most tax deductions apply to federal and state, but you can't really "escape" Social Security taxes.
Federal taxes have the myriad loopholes and weird deductions/allowances contingent on marital status, dependents, tax deductions, etc. While Social Security is deducted from the first dollar you earn, the first few thousand a worker earns is generally exempt from federal taxes.
Add to this the Earned Income Tax Credit already available to poor workers, child tax credits, and other things, and many US workers actually pay little to no actual income taxes. At those income levels, don't grudge it.
But Social Security tax is still out there, taxed from dollar one. However, that money does NOT go to fund the military or highway system, nor pay Congresscritter salaries. The poor collect benefits from Social Security disproportionate to what they put in! They already get a sweet deal.
Now Obama wants to re-distribute *income taxes* to refund the poor's *Social Security taxes.* Doing this amounts to granting the poor a benefit that they haven't paid for- a pretty simple definition of "welfare."
And, the way I understand it, these "tax credits" would disappear after you hit a certain income- so they wouldn't apply to everybody.
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