Obama Clarifies Social Security 'Donut' Plan
By Glenn Kessler
Washington Post
COLUMBUS, Ohio -- Sen. Barack Obama today plans to make a firm commitment to a Social Security tax hike on people making more than $250,000 a year, stepping away from an earlier plan he floated last year to boost the 12.4 percent payroll tax on all workers as a way of extending the program's solvency.
Taxes to fund Social Security end once a worker makes more than $102,000 this year, a ceiling that is indexed to inflation. Workers and employees share the cost, with each contributing 6.2 percent. Under Obama's plan, which the presumptive Democratic nominee will discuss this afternoon at a retirement community here, there would be a "donut" between $102,000 and $250,000 when no taxes are paid, according to a campaign adviser who asked not to be identified. But then new taxes would be imposed on people making more than $250,000.
While Obama has discussed the donut concept before, the adviser said there has been some confusion about his position and the campaign wanted to make it clear that he was embracing this option and setting aside the idea of boosting the payroll tax on everyone. The ceiling on the Medicare tax was lifted as part of former President Clinton's budget bill in 1993, but the Social Security tax has been much more politically sensitive.
(Continued here.)
Washington Post
COLUMBUS, Ohio -- Sen. Barack Obama today plans to make a firm commitment to a Social Security tax hike on people making more than $250,000 a year, stepping away from an earlier plan he floated last year to boost the 12.4 percent payroll tax on all workers as a way of extending the program's solvency.
Taxes to fund Social Security end once a worker makes more than $102,000 this year, a ceiling that is indexed to inflation. Workers and employees share the cost, with each contributing 6.2 percent. Under Obama's plan, which the presumptive Democratic nominee will discuss this afternoon at a retirement community here, there would be a "donut" between $102,000 and $250,000 when no taxes are paid, according to a campaign adviser who asked not to be identified. But then new taxes would be imposed on people making more than $250,000.
While Obama has discussed the donut concept before, the adviser said there has been some confusion about his position and the campaign wanted to make it clear that he was embracing this option and setting aside the idea of boosting the payroll tax on everyone. The ceiling on the Medicare tax was lifted as part of former President Clinton's budget bill in 1993, but the Social Security tax has been much more politically sensitive.
(Continued here.)
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