Posted on 01/08/2007 7:19:10 AM PST by Def Conservative
Will Bush back lifting payroll tax cap?
January 8, 2007 BY ROBERT NOVAK Sun-Times Columnist More than the ascension of Nancy Pelosi & Co. was disturbing congressional Republicans last week. They ask this question: Will President Bush embrace a tax increase that would produce potential economic disaster and guaranteed political catastrophe?
Henry M. Paulson Jr. is a shark on Wall Street but a rookie on Pennsylvania Avenue. As Bush's third secretary of the Treasury, he has engaged in secret bipartisan talks discussing an increase in the current $97,500 limit on personal income subject to the Social Security payroll tax. That would spike up the top marginal tax rate, demolishing supply-side tax principles that Republican administrations have purportedly followed for 26 years.
Paulson certainly has given the impression in those discussions that he is amenable to raising the payroll tax, but a senior White House aide cautions this decision has not yet been made. Presidential adviser Karl Rove attended conservative activist Grover Norquist's weekly meeting Wednesday and offered to bet anyone $5 that there would be no increase in the payroll tax base. But Bush himself has not unequivocally ruled out such a move.
White House spokesman Tony Snow, an ardent supply-sider as a columnist and commentator, dances around the question in public briefings. Congressional Republicans are running into a stone wall from usually cooperative Treasury and Social Security Administration officials when they request economic data that would demonstrate the folly of lifting the payroll cap. But Paulson is the source of the most apprehension. He has engaged in private talks with GOP Sen. Lindsey Graham of South Carolina and Sen. Joseph Lieberman of Connecticut, who now calls himself an "Independent Democrat." Graham for more than two years has sought Lieberman's participation in a bipartisan Social Security reform that includes a higher payroll tax base.
When Graham began crafting his compromise in November 2004, the premise was that each party would accept something painful. In return for Republicans agreeing to payroll taxes on higher income, Democrats would have to swallow Bush's proposed personal retirement accounts, which would be financed by cutting into payroll taxes that now all go into Social Security. But no Democrat, not even Lieberman, is willing to accept that. Democrats refuse to talk with Republicans about personal accounts "carved out" of the present system.
Indeed, a "carve out" is now a dead letter. New personal retirement accounts could be passed only as an "add on" -- financed voluntarily by individuals whose contributions to Social Security would remain unchanged. Higher payroll taxes would be imposed only to save the present system as part of a broader entitlement reform.
Republican concern over such an outcome stems in no small part from the belief multi-millionaire Paulson has entered a realm foreign to him. One well-placed House Republican, asking that his name not be used, expressed alarm that a financier who sold $485 million worth of Goldman Sachs stock in order to be confirmed at the Treasury cannot appreciate how the payroll tax ravages self-employed businessmen and farmers.
Eliminating the cap on payroll taxes would constitute the largest tax increase in U.S. history, estimated by the Heritage Foundation during the last Congress at $1.4 trillion over 10 years. This analysis predicted that such a step would cost nearly a million jobs and more than $55 billion in projected personal savings.
The economic woe that would result from higher payroll taxes would be matched by political damage to the president if this outcome were adopted by the Democratic-controlled Congress with his approval but support from only a few Republican legislators. That political calamity can be averted if Bush takes any payroll tax increase off the negotiating table, just as Democrats refuse to talk about a partially privatized Social Security system.
Aides to new Democratic Sen. Jon Tester of Montana say this column last week incorrectly referred to him as pro-life when in fact he is pro-choice.
My take is they (Bush, et al) will do it to try and bail out the disaster they have turned SS into -- again, another rape of the U.S. taxpayer to fund the politics of Washington.
This concerns me because I think if Bush folds on this issue, it will be decades (if ever) before we can get this cap back. Probably never.
I hate to say it but I think you're on to something.
How else can they backdate for an illegals work history. Nothing like spending other peoples money.
Anyone who thinks he even has a prayer of ever earning $95,000/an needs to understand that he would be better off accepting the reduction in growth of benefits at the high end of social security recipients. Ideally, they would be means tested, because that could lead to a tax cut. But cutting the growth in exchange for having ones own money to invest would work out much better for them. Think of it as a voluntary private accounts proposition.
It would bring new meaning to the phrase "Bush's fault".
"Anyone who thinks he even has a prayer of ever earning $95,000/an needs to understand that he would be better off accepting the reduction in growth of benefits at the high end of social security recipients."
The dims and the gop both seem to think that people who earn over $95k aren't smart enough to think for themselves.
Don't be surprised if it ends up people keep more of their income if they are paid $94.999 rather than $100k.
what's theirs is theirs, and what's mine is theirs. this is disgusting.
"Will President Bush embrace a tax increase that would produce potential economic disaster and guaranteed political catastrophe?"
Seeing as Bush has basically spat on every segment of conservatism from education, medicare, foreign policy (billions for AIDS in Africa anyone?) to govt spending, why should ANYONE at this late a date be surprised that he is considering idiotically raising taxes??
Atlas may start shrugging, if the payroll tax cap is eliminated. A lot of small businessmen and self-employed folks will get creamed.
George W. Bush, unfortunately, has not used his veto powers at all. No checks, no balances. For years, nothing.
Overall, the Bush presidency can best be described as being primarily run using the philosophy of Rodney King -- Can't we all just get along. American politics does not work like that, it was not designed to work like that and when you turn the other cheek again and again the Democrats will slap you silly. Watching movies with Ted Kennedy in the White house? Gads!
Bush, Rove and the Republicans would not have lost during the last election cycle of they would simply have listened to the people that got them elected. Us. But they didn't, In fact they rubbed our noses in their idiotic border and immigration policies. They told us that this is not our country but instead theirs to do with what they choose. Today, unlike in past years, I no longer defend Bush. He's not the fellow I supported for so many years in Texas and certainly not the guy I thought I voted for. He's turned out to be someone that I'm not motivated to follow because I really can't tell where he wants to go.
Former Bushbot...
No matter HOW hard you work to break through the cap now, it will be futile in the future, and the Democrats will have their all-time-anticipated goal: true wealth redistribution with support from anyone who doesn't earn enough to be concerned about the successful folks who don't include THEM.
This would be the single most damaging, largest tax increase in history, and if it happens on Bush's watch, Republicans will NEVER regain majority status for decades.
It would be worthwhile to look into incorporating and seeing if taxes on corporate profits + taxes on dividends are less than paying on personal income tax + both halves of SS. Kind of like how John Edwards took his law firm pay as dividends to avoid the uncapped Medicare tax he would have paid if his income had been salary instead.
Why would I put any extra money into a government retirement account instead of keeping it in my own non-government account? There is no way you could guarantee that the government account would have better returns, be safer from confiscation or be able to avoid political choices in investments.
Higher payroll taxes would be imposed only to save the present system as part of a broader entitlement reform.
SS is running a surplus which is squandered by the rest of the government leaving a stack of IOUs in its place. How will increasing taxes to have a bigger stack of IOUs "available" to pay for future benefits save the program?
Our current system is like saving for your kids' college education by tossing a $20 bill once a week into the college fund jar. Then you immediately take out the cash, put in a note saying "IOU $20" and spending the money for beer and pizza. After 18 years you'll have over $18,000 of IOUs which won't do you a bit of good unless you can budget to pay for it then. And if you actually could budget to pay for it then, you don't need to pretend to save money in the IOU jar.
"A lot of small businessmen and self-employed folks will get creamed."
Yup, a lot of people on the bottom rungs will be canned. Unemployment rate will double, easily.
He has done more to destroy what was left of the sovereign United States of America than any one man I can recall.
He's taken what should have been a six month campaign and turned it into a four year no end goal in sight war, to make the rich richer.
Then he's ignored our Constitution and fed their a lust and their pipe dream for cheap slave labor and world run by and for the rich global blue blood crowd, as a chance to destroy our borders and our national identity and to spend and flood us with aliens into mediocracy or oblivion as a free independent people.
All of these plans of greed driven rich dreamers always end in the same living nightmare ,with a madman in charge, a world in ashes and millions of corpses.
This Global Dream is going to be the worst of the lot.
The democrat plan would work for you too.
When it is time to go to college, and you have all the IOUs and need to pay them back, you simply require your employer to pay you double your pay, so you can honor the IOUs you wrote to yourself.
Simple, effective, and painless for you.
What, you can't just order your employer to pay you more money?
Oh well.
I agree the John Edwards law firm dividend solution will work and will be embraced by many. But it's a hassle and a headache to go down that road. And what's to prevent the feds from regulating "fair market" salaries and to prevent gaming the system? I predict a cluster eff.
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