Social Security taxes rising in January

WASHINGTON -- President Barack Obama isn't talking about it and neither is Mitt Romney, but come January, 163 million workers can expect to feel the pinch of a big tax increase, regardless who wins the election.

A temporary reduction in Social Security payroll taxes is due to expire at the end of the year and hardly anyone in Washington is pushing to extend it. Neither Obama nor Romney has proposed an extension, and it probably wouldn't get through Congress anyway, with lawmakers in both parties down on the idea.

Even Republicans who have sworn off tax increases have little appetite to prevent one that will cost a typical worker about $1,000 a year, and a two-earner family with six-figure incomes as much as $4,500.

Why are so many politicians sour on continuing the payroll tax break? Republicans question whether reducing the tax two years ago has done much to stimulate the sluggish economy. Politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security. They are backed by powerful advocates for seniors, including AARP, who adamantly oppose any extension.

"The payroll tax holiday was intended to be temporary and there is strong bipartisan support to let that tax provision expire," said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. "The continued extension of a temporary payroll tax holiday has serious long-term implications for Social Security and, frankly, it's not even clear that it has helped to boost our ailing economy."

The question of renewing the payroll tax cut has been overshadowed by the expiration of a much bigger package of tax cuts first enacted under President George W. Bush. Those tax cuts also expire at year end, and Congress is expected to try to address them after the election, in a lame-duck session.

Rep. Paul Ryan (R-Wis.), before he was named Romney's running mate, disparaged the payroll tax cut, calling it "sugar-high economics" that wouldn't promote long-term growth.

Romney's campaign hammers Obama almost daily for proposing to let Bush-era tax cuts expire for individuals making more than $200,000 and married couples making more than $250,000. But Romney's tax plan would let the payroll tax cut expire, an issue he doesn't mention on the stump.

Romney's campaign declined to discuss the issue. Social Security is funded by a 12.4 percent tax on wages up to $110,100, rising to $113,700 in 2013. Half is paid by employers and the other half by workers. For 2011 and 2012, Congress and Obama cut the share paid by workers from 6.2 percent to 4.2 percent.

A worker making $50,000 saved $1,000 a year, or a little more than $19 a week. A worker making $100,000 saved $2,000 a year.

Congress is reimbursing Social Security for the lost revenue, estimated at $103 billion in 2011 and $112 billion in 2012. But it financed it with borrowed money, adding to the national debt.