Wednesday, July 11, 2012

WSJ: Payroll tax cut helps SocSec?

Chicago PM Wednesday 25 April 2012 

Editors, The Wall Street Journal


The Wall Street Journal article “Payroll Tax Cut Could Help Social Security” (Wednesday 25 April) refers to “payroll tax” eight times. This tax got the name because it is a tax on payrolls, the responsibility of employers, who must remit the tax monthly to the federal government or go to jail. The 2012 Statistical Abstract of the United states shows 73% of all federal taxes received in 2010 came from employers' bank accounts. But the employee must be informed in writing that if the employer was not required to pay this tax, they would have given the money to the employee. So employees have fistfulls of statements saying “You earned, and your employer paid...”  After 20 years of this they start thinking:  “Hey!  I deserve medicare, I deserve Social Security, I paid in!” 

If the employer doesn't send in the tax, their only resort is to add it to their product cost. Thus the tax credited to employees is effectively a silent, painless, national sales tax.

Is there a way to fix this scam? Sure: Get a majority of the House of reps, 60 Senators, and a President with backbone enough to change the US Tax code from "every employer making payment of wages shall deduct and withhold upon such wages a tax..." to "every employer making payment of wages shall pay all of those wages to the employee...." The employer would still calculate the tax, including a note to the employee: "Here is what the feds are expecting you personally to remit in 30 days"

Returning to voters the responsibility of writing checks to fund the government would force them to face how much all these entitlements cost, encouraging voting for legislators less likely to support federal vote-buying giveaways. What would employers do with all that money they are sending in now? Hire more workers? Goodbye recession!

Arnold H Nelson

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