Taxing the Millionaires
Do you want to keep $600, $800, $1,000, $1,500 in your pocket rather than hand it over to the U.S. government? Of course you do. It’s a no-brainer. So, there’s huge support for a continuation of a “temporary” social security payroll tax (employe only) reduction of two percent that might get expanded to 3.1 per cent.
The original tax cut was an economic stimulus - put money back in the hands of taxpayers - program. Because it was temporary, it’s not certain it did much to stimulate the general “let’s start hiring” environment. Nonetheless, it’s here and is popular. Few want to take it away. That puts Republicans in a bind. They like tax cuts, but they don’t like deficit spending. Democrats see a distinct political advantage because they like spending and have proposed making up lost revenue by hitting $1,000,000, earners with a 3.5 per cent surcharge.
According to some reports that would bring in an average of $110,000 per millionaire, plus those same people face an additional 3.8 per cent capital income tax surcharge in 2013 tied to ObamaCare. All in all it would take ten years to make up the social security short fall. Republicans don’t like the latter, saying it will kill jobs in the long run. They’re in a weak political position and politics rules. Taxing millionaires (originally defined as a single person making $200,000 or a couple making $250,000), is extremely popular.
The mind fogs over at all these numbers and statistics and I haven’t even started. However, what it comes down to is how we fund our spending habits which, by whatever measure, are excessive and potentially destructive. Everything being talked about now is temporary, impermanent, of-the-moment, political, except that tapping the Social Security Trust Fund is a temporary move that could easily become permanent. And, is that good?
The Fund has already been tapped, of course. It’s full of IOUs from the fed and is now paying out what it taxes in. By 2036 ( probably much sooner) the so-called Fund will be negative. Some say it doesn’t make any difference. It’s already tapped and general revenues are what is going to pay the government pension bills in the future. The Fund now becomes a political play thing to be tapped indefinitely. It wasn’t supposed to be that way.
At the moment the pay roll tax for Social Security is 12.4 per cent on the first $106,800, slated to go to $110,000 plus next year. Half is paid by the employer and half by the employe, but for the last year, employes paid two per cent less. That will probably be extended to this next year. What happens when the economy recovers and these stimulating programs aren’t needed? What politician is going to vote for taxing $1,000 out of the average taxpayer’s pocket? Kiss the Fund concept good bye. And welcome more complications in the already complicated tax code.
But, hey. It’s all temporary. We’re in a job crisis. Whatever it takes to get job growth back. Right? Besides, its presidential politics time. Anything goes. Like the national debt. I don’t mean it goes away. It goes up, heading toward the 100 per cent of all the goods and services we produce. And, that’s with interest rates at nearly zero. Sound like Europe?
The talk is about spending more and taxing more and as long as we talk about taxing someone else and we get ours from the spending it is O.K. At one point, it looked like the general public was really concerned about the national debt. I’m not sure that concern exists anymore. The steam behind spending less diminishes proportionately to the prospect of taxing someone else increases.