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Fiscal cliff: Payroll tax cut may not survive

For all the uncertainty over how lawmakers will handle the expiring tax cuts under the fiscal cliff, there seems to be growing clarity surrounding at least one measure: the temporary 2% payroll tax cut.– Bottom line: It’s likely toast.

The payroll tax cut — worth 2% of one’s wages up to $110,100 — was intended to be a temporary way to boost the economy. It was put in place for one year in 2011 but was then extended for this year.  During that time, the measure has saved most of the country’s 160 million workers anywhere from $700 to $1,800 a year.

The payroll tax funds Social Security – The tax cut costs roughly $120 billion a year, but rather than let Social Security funding suffer, the Treasury Department has made the program whole with money from general funds. – Translation: It’s adding to the country’s deficit.

At the same time, letting it expire will take money out of workers’ paychecks while the economic recovery is still tempered. – NEW YORK (CNNMoney) –

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