As the Trump administration struggles with the economic fallout from the Covid-19 pandemic, the latest proposal just floated by Trump and his munchkin, er, uh make that Mnuchin as in Steve Mnuchin, is a payroll tax holiday. WTF? That is the most ridiculous and misguided idea that I have ever heard of.
Please enlighten me. How will eliminating the payroll tax help the 30 Million people currently unemployed? And here is another news flash. Part of the $1.5 Trillion collected in payroll taxes goes to fund unemployment benefits.
The Lion’s share of the $1.5 Trillion annual payroll taxes collected are earmarked for Social Security and Medicare. There are credible estimates that current tax receipts will be insufficient to cover Social Security outlays by the end of 2021. Just another reason why eliminating the payroll tax is just a stupid idea.
If anything, the payroll tax should be expanded to include all earned income above the current cap of $137,700. As it is, the payroll tax is the most regressive among all taxes collected. For example, a wage earner making $75,000 a year will pay $4,650 in Social Security tax, or 6.2% of his income. His boss, on the other hand with a salary of $200,000 will pay $8239, or 4.1% of his income.
It’s just not right!