Well it’s been nearly two years now since I started whining and complaining about our national debt on this blog. It all started back in April, 2009 when the tab was $11 Trillion give or take a billion or two. Now its over $14 Trillion, a despicable 27% increase with no signs of abating any time soon.
So what are we to do? Lots of things, but we can’t tackle them all now. So for starters lets just take a look at the payroll tax. The payroll tax, aka FICA or social security witholding is currently around 7.5%. By now we all know that this money, originally intended to be set aside to help fund our old age retirements, actually goes into the general fund to help pay for all government expenditures. The surplus in that fund that our leaders delight in referring to is no such thing. It is simply an accounting entry collateralized by IOU’s, aka government notes. So lets face it. It is just a tax – period. And it is the most regressive tax of all. Why? The witholding is only subject to the first $95,000 of your income. If you make under $95,000 your tax rate is 7.5%. If you make $200,000, your tax rate is 3.5%. Get the picture?
Now that we have determined that your Social Security contributions are indeed just another income tax, what about Social Security payments? Social Security payments are just government welfare. Really! Nothing wrong with that – Pretty soon I will need them, my Mother needs them and millions of other Americans need Social Security benefits to survive. Problem is, that by 2025, entitlement spending (Social Security, Medicare, et al.) and interest on our debt will exceed projected federal revenue. Can you see how that sucks?
No, I’m not one of those bleeding heart liberal democrats that want to tax the bejesus out of rich people. The fact of the matter is that I bounce around between Republican and Libertarian values on a pretty regular basis, but on this topic I’m going out on a new limb. If Social Security contributions are a tax and Social Security payments are welfare, then everyone ought to pay the same tax as a percentage of their income. Something on the order of 15% of wage earners make over $100,000 a year. 3% make over $200,000 a year. If the 7.5% Social Security tax were applied to all earned income, it would easily generate an extra $80 to $100 Billion annually. Maybe more.