Sunday, December 04, 2011

The Light Bulb Goes Off On the Payroll Tax

You Might Think Our Payroll Tax Solution Is Goofy..... But At Least It Is Equitable ..

    One thing you have to say about us: we always try to give solutions to issues that affect America. As negative as it may seem we are, there is always a point to it.  That, and we can focus on the big picture, even in the most stressful of situations.  Wait, that's TWO things.  Anyway, we move onto the topic....

   There we are, no more than ten minutes since being fired from our job, and we're driving home, listening to POTUS, as usual.  The subject was what to do about the payroll tax.  Suddenly - like a thunderbolt - we had an idea that we think is the most fair.  No, we don't think it'll ever happen, and we're sure a lot of you will hate it. But, we live in the real world, not the world of 'principles'...  

    The Payroll Tax refers to the tax paid for Social Security.  When it was enacted, the Dems refused to call it that, fearing that it would be viewed as defunding the Social Security Trust Fund - which it is.  The Payroll Tax cut has sped up the insolvency date of the fund, so you have either of two options: cut benefits, or increase funding.  You can't do nothing....

    Republicans are getting their asses kicked on this issue, because they are demanding that it be paid for.  They are in a very tight spot, because by doing nothing, households will be back to paying more taxes - and these are middle to lower income households.  Right now, high income earners do not give a damn about this, becuase they earn WAAAAYYY past the $110,000 cap on the tax.  We talk a lot about tax fairness.  Well, the Payroll Tax is perhaps the most UNFAIR and slanted tax against lower income people around.  The rate is 6.2%, up to a max of that $110,000, so if you make $500,000 then your effective rate is only 1.24%... If you made a million, it's only .62% - you paid the same dollar amount as a middle class worker.  Doesn't really sound equitable, does it?

    Here is our plan.  Keep the payroll tax at the discounted 4.65% for everyone, but eliminate the cap.  If we thought DC could do anything with Income Taxes, we'd give them a chance with it, but that's not happening.... Plus, an income tax adjustment is a general fund increase, which could give Congress a free ride to spend more overall.  To us, we at least see a benefit to saving Social Security, although raiding the Trust Fund always worries us.  To at least give higher earners some degree of fairness, raise the max payment 10%... If there is overfunding from the CBO, then cut the rate even further. We're fine with that.

    Republicans want it paid for, and this is the only way. The 'Job Creators' argument is flawed, and we think we did an adequate job of debunking it last week. No, there will be no job creation with any of this.  If it needs to be paid for, someone somewhere has to pay.  Hiking taxes on the middle class is the worst move possible... It's simple: the rich and mega-rich don't pay a dime for it, and they need to.  All we are proposing is making the Payroll Tax a flat tax.... What is unfair about that?

    Social Security Payroll Tax is something that we all pay, so simply continuing that tax will result in everyone's check being the same all year. Higher income earners can handle the lack of change.  We'd rather see a fix to income taxes, but today, this is the issue on the table.  We're all ears, so if you have a better plan, we're all ears.  If you want to pay for it, taxes must go up, or benefits cut.  There is no magic bullet..  If you don't like it, then find us a job, and we'll have no time to work on America's problems again!


1 comment:

Bobby said...

I really think you need to find your way in to a local office and work your way up.