Los Angeles Times
Trump's proposal to eliminate the Social Security payroll tax may be his worst idea yet
Michael Hiltzik
Wednesday, April 12, 2017
Michael Hiltzik — Trump's proposal to eliminate the Social Security payroll tax may be his worst idea yet
Los Angeles Times
Trump's proposal to eliminate the Social Security payroll tax may be his worst idea yet
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8 comments:
He's correct, though, in how elimination of FICA would be used politically. The right will begin calling Social Security a handout and a welfare program for the lazy and Democrats will help them squeeze the beneficiaries into penury.
The one thing DJT gets right. Payroll tax is stupid and unnecessary if you know the fed gov can never run out of its own dollars. Plus i notice how much of my own paycheck has a FICA tax and it can be quite a bit of income that could have gone back into my pocket so I can either spend or save as a consumer. So seemingly simple but a point often lost.
Unfortunately I see how the GOP could use this as bait and switch like Ben describes.
Why not just make participation in Social Security optional for young people? Condition is... If they opt out, they must agree to forgo receiving Social Security benefits when they are senior citizens. Beyond that, Social Security benefits received by senior citizens should not be subject to taxation.
A guaranteed basic income would eliminate social security. Of course it would have to be substantial enough to keep one out of poverty - which social security does not.
The one thing that is clear is that whatever Washington does it will not be for the benefit of the vast majority.
Noah - Would a guaranteed basic income cover everyone or just senior citizens?
Everyone.
It would be a big improvement on FICA, especially since FICA is a regressive wage-only VAT with a cap on taxable income. As I see it, the benefits of change over are:
1. Employer side wage eliminated, tax would only be levied on employer's payroll, a de facto raise for employee (economists say it'd be a wash because employer would just reduce wages. This isn't necesssarily so, cost could also pass through to customer or, God forbid, reduce capital income share). 2. Profits and interest costs would be added to tax base (which means capital share is also taxed instead of FICA only hitting labor share of value added).
3. Labor income above $127,200 Social Security FICA cap would now become taxable.
4. Between addition of capital income and income above FICA cap to the tax base, the broader VAT tax base means lower tax rates than the current wage-only FICA tax base.
If they opt out, they must agree to forgo receiving Social Security benefits when they are senior citizens. Why so punitive?Agree with the taxation issue with seniors.
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