Extra taxes possible for high earners

A campaign mailer from the Republican Party of Florida attacked Barack Obama on the issue of the economy. We received the mailer on Oct. 22, 2008.

“How do Barack Obama’s plans impact your budget?” reads the mailer.

“Will you count on Social Securty? Obama plan: Raise Social Security taxes.”

Obama has floated proposals to raise Social Security taxes, but only on those who have incomes of about $250,000 a year and above.

To be clear, when we talk about Social Security taxes, we’re talking about payroll taxes paid by workers who have not yet retired ( not taxes on the benefits of retirees). Most workers currently pay 6.2 percent of their earnings in Social Security taxes, on earnings up to a limit of about $102,000 in 2008.

If you want to look at your own pay stub, the line that represents Social Security taxes is usually labeled FICA OASDI, which stands for Federal Insurance Contributions Act Old-Age, Survivors, and Disability Insurance. Now you know.

The Social Security system is expected to need more money after the baby boomers retire. One of Obama’s proposals to address problems with the program is to begin taxing benefits on higher incomes that are now exempt. He proposes to start taxing income of $250,000 and higher at a rate somewhere between 2 and 4 percent, and this includes an employer contribution, so the cost to the worker would likely be between 1 and 2 percent. By the way, people who make $250,000 or more make up roughly 3 percent of everyone who files taxes.

So Obama does propose raising Social Security taxes. But the raise would hit only a small portion of the population. We find the Republican Party of Florida’s statement to be overly broad and rate it Half True.

By

Angie Drobnic Holan

Former Editor-in-Chief

October 23, 2008

Truth-o-meter Ruling

Half-True

Statement

Barack Obama will "raise Social Security taxes."

Context

campaign direct mail

Speaker/Target

Speaker: Republican Party of Florida

Statement Date

October 22, 2008