AMEN!
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Uh-oh. The Kool-Aid drinking NRSTers are going to be all over this in no time. The over/under for this tread is 200 by the end of the day.
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Replacing the payroll tax with some other broad-based tax that is unconnected to a specific worker's wages breaks the link between contributions and benefits.
Wasn't aware that a tax is a "contribution" to anything other than the coffers of government as a politician's slush fund to redistribute in accord with political expediancy.
What Social Security Trust Fund
"The U.S. Supreme Court ruled in Fleming v. Nestor (1960), 363 US 603; that there is no Constitutional right to Social Security benefits. Social Security benefits can legally be cut or eliminated at any time, and beneficiaries have no recourse. The Court held that, "To engraft upon the Social Security System a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustments to ever changing conditions which it demands."
If we are going to replace some tax with a progressive consumption tax, it should be the income tax, not the payroll tax.
Hmmmm! Last I looked, the Social Security/Medicare payroll tax on wages is an income tax.
Title 26 US Code Subtitle C Sec. 3101. Rate of tax
- (a) Old-age, survivors, and disability insurance
In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section (a)) received by him with respect to employment (as defined in section (b)) - ***
- (b) Hospital insurance
In addition to the tax imposed by the preceding subsection, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section (a)) received by him with respect to employment (as defined in section (b)) - ***
And goes into general revenues just like any other income tax:
Title 26 US Code Subtitle C Sec. 3501. Collection and payment of taxes
- (a) General rule
The taxes imposed by this subtitle shall be collected by the Secretary and shall be paid into the Treasury of the United States as internal-revenue collections.
To be redistributed at political whim.
If done [convert to a consumption tax] properly, this would increase incentives for work, saving and investment that would boost real economic growth.
Certainly would so why do a half job on it?
I guess some folks just seem to want to keep the 16th amendment and income taxes around and live forever under the income/payroll tax system.
A pile of excretement called by any other name still smells and sticks to the bottom of shoes.
| "a free people that pays slave taxes to its government is willingly training itself for bondage." |
A Taxreform bump for you all.
If you would like to be added to this ping list let me know.
This sounds more like NYTimes then Town Hall. Total strawman.
It is a welfare program. The Social Security tax (or "contribution") takes money from people who earned it and gives it to someone else.
There is no lockbox. It is not a pension. You have no vested interest in your account, because there is no account. Social Security is a transfer payment like any other form of welfare.
"If we are going to replace some tax with a progressive consumption tax, it should be the income tax, not the payroll tax. If done properly, this would increase incentives for work, saving and investment that would boost real economic growth."
Isn't that the proposal? Replace all fed gov deductions with the consumption tax?
Stupid workers, perhaps.
Indeed, because of the highly progressive nature of the Social Security benefit system, low-income workers get a very high return on their payroll taxes.
If they live long enough.
Replacing the payroll tax with some other broad-based tax ... will convert Social Security into a pure welfare program
It already is one!
The effect would be to reduce political support for the program.
Good!
I wrote the following email to Bruce Bartlett regarding his commentary on consumption taxes:
Dear Mr. Bartlett,
Regarding your commentary "More Bad Tax Ideas", there are a few points I disagree with. While I 100% agree with you regarding gasoline taxes, I do not agree on payroll taxes. In Fleming v. Nestor (1960), The Supreme Court ruled that there is no Constitutional right to Social Security benefits. Social Security benefits can legally be cut or eliminated at any time, and beneficiaries have no recourse. The Court held that, "To engraft upon the Social Security System a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustments to ever changing conditions which it demands."
To read the complete court ruling, go here: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=363&invol=603
My take: The SCOTUS ruling stated that the Social Security System is in fact a welfare system. And if we were to implement a consumption tax to replace the Payroll Tax, what would prevent us from indexing benefits to income the same way we do now? What's more, most Americans, especially low-income americans, have no idea that employers pay an attitional 7.65% in payroll taxes that doesn't even show up on their check. And as you, I, and most economist concede, the employer share comes out of the employees check.
But I am totally on the same page with you regarding replacing the income tax with a consumption tax. But, why don't we replace both with a consumption tax, as called for in HR 25 and S 1493, also known as the FairTax Act. I have read some of your commentaries regarding the unfeasability of encorcing such a large sales tax. However, such enforcement problems may not be as bad as you think. After all, those enforcement problems arose in areas where there were other taxes already in place. Under the FairTax, a large sales tax would be the only tax. Furthermore, more than 90% of retail sales are through large businesses, where evasion wouldn't be an issue. The issue would only be with small retailers, who "do their own books". But, this would no be more than 10%, wher eevasion under the income tax system may be as high as 25%. More can be lerned at http://www.fairtax.org.
I enjoy reading your insughtful commentary at National Review and Townhall, and I believe the endorsement by a man of your stature would help bring the debate over fundamental tax reform back into the public and bolster the National Retail Sales Tax (NRST) "Movement". Over 50 congressmen have "signed on" and recently Tom DeLay came on board, which was a big win.
Sincerely,
What's wrong with that? Who ever said the gov should be in the retirement racket anyway?
"If we are going to replace some tax with a progressive consumption tax..."
Progressive tax (in the sense of contibuting to social progress versus a tax on progressively increasing scale) is a bad pun, not even an oxymoron.
Taxes are (ideally) payment for social services received. Social engineering supported by taxes (transfer payments) is a social misservice. Most social progress happened without governmental (tax supported) interference, when the user of social services, (or of anything else) paid, and the non-user did not have to. Hence a progressive tax is socially regressive, and vice versa. (Actually, can be used as a tagline)
As we all know, its the politicians who are compulsive spenders that make any tax plan a disaster of growing proportions.
Maybe if the money wasn't already spent, and only then for the lowest incomes. Bartlett tied himself into a knot with this one, though he's usually pretty good.