Senate Pushing for Social Security Holiday
Democrats have indicated they are open to negotiations on the Social Security tax holiday, as long as Republicans consider adding a $15 billion homeland security package to the bill.
President Bush is urging the two sides to come together and finalize a stimulus package before Christmas.
The tax holiday, first suggested by Sen. Pete Domenici, R-NM, would provide a one-month break from the 6.2% Social Security tax for all workers and employers, with self-employed workers entitled to keep the entire 12.4% tax that they pay. To avoid a shortfall in the Social Security Trust Fund, the tax would be replenished from general tax revenues. It is estimated that the value of this tax benefit would be approximately $43 billion.
Under the proposed legislation, an employee earning $40,000 per year would save $207, as would his employer. A self-employed individual earning the same amount would save $413.