Obama Clarifies Social Security Tax Stance

By Arnab Datta

Oct 9, 2008 4:44pm

ABC News’ Teddy Davis and Arnab Datta report: Barack Obama’s top economic adviser clarified the Illinois senator’s Social Security tax stance Thursday, one day after the Democratic presidential nominee made ambiguous comments on the subject to ABC News’ Charlie Gibson.

During his Wednesday interview, Obama said the best approach on Social Security is "raising the cap on the payroll tax, keeping the tax rate the same, but saying, you know, somebody like myself or Warren Buffet can afford to pay a little more in payroll tax to make sure the system is solvent."

The comment left anti-tax advocates scratching their heads, wondering if Obama wanted to apply the current 12.4 percent tax rate to all income.

"No way that’s what he meant," Obama adviser Jason Furman told ABC News. "I would interpret that as referring to most people."

"For most people, the rate would be the same," he added.

At present, the 12.4 percent Social Security payroll tax is only applied to the first $102,000 of income.

Back in 2007, Obama wrote an op-ed for an Iowa newspaper in which he floated the possibility of applying the 12.4 percent tax rate to all income.

He did not, however, formally endorse that concept.

Obama’s plan, as confirmed by Furman, remains to impose a new 2-4 percent Social Security payroll tax on income above $250,000 per year starting 10 years from now.  Furman joined Obama adviser Austan Goolsbee to outline the plan in an Aug. 14 op-ed in the Wall Street Journal

Obama has not yet decided if upper income beneficiaries paying the new tax would see a corresponding rise in benefits.

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