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What is the SSPICE Act?
The Social Security Preservation through Individual Choice Enhancement Act is a bill introduced in the House (H.R. 3551) by Rep. Jeff Landry (R-LA) and in the Senate (S. 2107) by Senators Mike Lee (R-UT) and Jim DeMint (R-SC). The SSPICE Act would allow each worker to annually decide whether he or she wants to reduce his or her payroll taxes by about 30 percent (i.e., lower his or her taxes from the current level of 6.2 percent of wages to just 4.2 percent).
Those who opt for this tax relief will have their Social Security retirement age extended by one month, for each year they opt for the relief. Each worker must choose each year whether to continue receiving the tax relief.
Why should I support the SSPICE Act?
In 2011, Congress enacted a temporary payroll tax holiday, reducing all workers’ obligations by two percentage points. It then extended this relief for an additional year (2012). This temporary tax relief results in an annual $120 billion loss of revenue for the Social Security trust fund. Social Security already has $21 trillion dollars in unfunded future liabilities. As things are, Social Security simply won’t be able to pay out the present level of benefits to future generations.
The SSPICE Act is a simple solution that will simultaneously let people have lower taxes and help to fix Social Security’s revenue shortfall, because individual workers would be able to “pay for” their continued tax relief by voluntarily agreeing to slightly postpone their receipt of Social Security retirement benefits. The Chief Actuary of Social Security estimates that the SSPICE Act would reduce Social Security’s long-term unfunded liabilities by $2.1 trillion. The SSPICE Act is a principled solution to the Social Security funding problem. By giving the option of whether or not to participate in the tax break to the American people, the bill would promote individual choice and increase freedom for Americans.
What did Congress do recently on the payroll tax holiday, and how would the SSPICE Act differ from that?
In February 2012, Congress enacted a one-year extension of the payroll tax holiday. This tax relief will expire at the end of 2012, after which workers’ payroll taxes will automatically go up by about 30 percent. There are three main differences between the recent extension and the SSPICE Act: 1) The extension is a short-term approach; the SSPICE Act is a long-term solution that does not require annual extension and all of the Washington politics that that entails. 2) The extension deal was not “paid for,” meaning it did not include any spending cuts to make up for the lost tax revenue; the SSPICE Act is fully “paid for” through reduced future benefit obligations. 3) The extension bill included numerous unrelated measures such as an extension of jobless benefits. The SSPICE Act is focused on solving one issue: Social Security.
Does FreedomWorks endorse the SSPICE Act?
Yes. Conservatives should embrace this measure as a way to help deal with the Social Security crisis, end the payroll tax cut debate, and restore freedom to Americans over what to do with the money they earn. As Congressman Landry sums it up: “The SSPICE Act is good policy and good politics.”
How can I help?