Let’s Get Rid of the Payroll Tax!

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


The Associated Press reports today on various rumors making the rounds about President Trump’s tax plan, including this one:

One circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security….This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay, a possible win that lawmakers could highlight back in their districts….Although some billed this as a bipartisan solution, and President Barack Obama did temporarily cut the payroll tax after the Great Recession, others note it probably would run into firm opposition from Democrats who loathe to be seen as undermining Social Security.

Just to be clear: this is pie in the sky, not something that has any real chance of happening. Still, let’s go along with the gag. If you wanted my vote for this in return for whatever horrible thing Republicans wanted to do with the rest of the tax code, the easiest way to get it would be to not create a new dedicated funding source for Social Security. Just put the trust fund bonds in a big ol’ bonfire and pay for Social Security out of the general fund. This is how we pay for nearly everything else, after all.

If we did this, we could do away with the annual idiocy about Social Security “going bankrupt,” which makes about as much sense as the Pentagon going bankrupt. The only reason we say this about Social Security is because it’s possible to compare Social Security costs with a specific funding stream. But who cares? Money is money, and if we spend too much it turns into a deficit, regardless of where the money is coming from.

Neither Social Security nor the Pentagon will go bankrupt unless Congress allows it, and Congress will never allow it. So why maintain the charade? Get rid of the regressive dedicated funding stream, fund Social Security from general revenues, and then adjust taxes and/or deficits as necessary to pay for it. This seems to work tolerably well for every other function of government, so why not Social Security?

Now, about Medicare….

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate