The payroll tax holiday for Social Security, which is scheduled to end in December 2012, needs to have an exit strategy that will improve the program in the coming years, according to a report by the National Academy of Social Insurance.
The tax holiday was enacted under the Tax Relief and Job Creation Act of 2010 and was extended in December 2011 and February 2012. It came about as a way to help bring the country out of recession. Contributions that workers make to Social Security insurance protection were temporarily reduced from 6.2 percent of earnings to 4.2 percent of earnings in 2011 and 2012. Employers continue to pay the 6.2 percent rate.