Lott Says Open to Idea of Cutting Payroll Tax

Reuters ^ | 9/09/01

[kattracks]

WASHINGTON (Reuters) - Senate Minority Leader Trent Lott said on Sunday he would be open to a proposal to reduce the payroll taxes paid by U.S. workers for Social Security (news - web sites) and Medicare.

``I think the payroll tax is too high,'' the senior Republican told CNN's Late Edition. ``I would be interested in entertaining a bipartisan effort to consider (cutting it).''

During negotiations over Bush's $1.35 10-year trillion tax cut, which the president signed into law in June, many Democrats had expressed interest in a reduction in the payroll tax, especially for low income Americans.

But those proposals were not in the final bill, which included reductions in income taxes and inheritance taxes as well as one-time rebates that are now being mailed to households.

Lott has long argued for a cut in the capital gains tax, saying that such a measure would add more liquidity to the economy, enabling businesses to create more jobs.

But he said the payroll tax was also too high and should be lowered. ``For entry-level people, it does hurt,'' he said.

Unlike income taxes, which require wealthier individuals to pay higher rates, the payroll tax is charged as a flat rate to all workers.

Speaking on Fox News Sunday, Senate Budget Committee Chairman Kent Conrad, a Democrat, proposed a tax rebate that could be given even to Americans who do not earn enough to pay income taxes, as an alternative to the capital gains tax cut many congressional Republicans favor.

[Mulder]

Messing with the payroll tax should be done as part of a broad social security reform plan.

The capital gains tax is the one that needs to be reduced. This is the right thing to do in economic terms, and it will help Bush and the Republicans politically.

[Tanniker Smith]

If Lott's serious about payroll taxes, the way to do it is to push for an end to withholding. let everyone keep their money and earn interest on it for the year -- and then pay their taxes in one lump sum.

[savedbygrace]

Maybe Conrad could call it the Un-Earned Income Tax Rebate.

Seriously though, it wouldn't accomplish the same thing as the Capital Gains rate reduction, which would free up investment capital. That, in turn, would spark the economy again.

Hey, one economic theory is as good as any other, right?

[anniegetyourgun]

I'll take it.

[TooBusy]

Trent is awfully eager to cut taxes now that he is not the majority leader.

[Billy_bob_bob]

Then everyone would end up defaulting at the end of the year and the government would go broke.....

What am I complaining about? Great idea! Let's do it!

[Dick Bachert]

Trent, here's an even BETTER IDEA: WHY NOT SCRAP THE ENTIRE INCOME TAX ABOMINATION AND ROLL FUNDING FOR THE WHOLE SHEBANG INTO THE NATIONAL RETAIL SALES TAX?

Or can't you guys stand the thought of relinquishing all the control and social engineering possibilities the current income tax affords you?

[Tanniker Smith]

One step at a time. Get rid of withholding and the public might finally realize that there's a flippin' problem with the current system to begin with.

[ilgipper]

Wait a minute. I thought the democrats were so concerned about having enough money in the 'lockbox' for social security. It's so not like them to have an inconsisent message. /sarcasm

[MarkL]

This is the last step in getting rid of the myth that Social Security is a "pay as you go, insurance system," and changing it to yet another welfare system...

Mark

[Let's Roll]

If Social Security is on the way to running out of money - and it is. Why would cutting the amount of money paid into it without replacing the SS retirement plan with something else be a good thing??

Hello, "payroll taxes" are what we pay into social security. I guess old Trent thinks that those who don't know what payroll taxes are, and sadly I imagine that's more than a few, will only remember that he was "for" cutting their taxes. Or maybe he thinks that the pubs might as well take advantage of the dumbing down that the lib educational establishment has accomplished.

[AntiScumbag]

the myth is that it's a pension system along the lines of what one would find in the private sector, and that people somehow own their contributions

the fact is that it's a pay-as-you-go welfare system that isn't means tested, and has unfunded liabilities of about ten trillion

and that nobody owns even a dime of their contributions, but one's heirs will get a $255 payment if one dies before benefit eligibility

and that every benefit one is "entitled" to can be changed at any time

lott needs to be talking about privatizing the entire mess and perhaps we'll get started on it

probably about the same time the demorats stop lying and the sun starts rising in the west

[T. Jefferson]

The payroll tax increase was another clinton tax hike. Lott should be saying let's repeal the Clinton tax hike. They should have done that with the income tax hike also, which would have been about a $10 trillion dollar tax cut using Dem logic.

[Arthur McGowan]

Since all the money collected for FICA that does not go out for checks is taken and spent on other things, the real "lockbox" should be: The FICA tax should be adjusted so that it exactly pays for the checks currently being written. That way, the money that is now "surplus" and being squandered by the government would stay with the people, where it would be spent and invested productively. Thus, in the future, the country would be wealthier overall, and there would be more REAL wealth with which to pay FICA taxes in order to write future SS checks.

In other words, the REAL "lockbox" should consist of locking the money away in the hands of the people so the government can't spend it now.

Of course, the whole system is unconstitutional, but if it must continue to exist, at least reduce the FICA tax to the point where nothing is collected other than the precise amount needed to write SS checks.

[AntiScumbag]

The payroll tax increase was another clinton tax hike

as much as scumbag would have loved to stick it to us, and as much as i'd love to blame him for it, that's a bad rap, there was NO tax RATE hike at all while the bent one was around

only the automatic increases in the amount of pay the f.i.c.a. tax rates apply to, and, in '93, they popped the lid completely off of the 1.45% (part of the 7.65% total) health insurance portion -- the '93 limit was $135,000 in '94 it went to unlimited

the huge increases in f.i.c.a. taxes since '77 started under out glorious president peanut when he wasn't lusting after whatever in his heart

from the ssa site legislative history for '77 --

increased tax rates slightly in 1979 and 1980, and more significantly in 1981 and later. The ultimate OASDHI tax rate would be 7.65% on employees and employers, each, in 1990. (Formerly, the rate in 1990 was 6.45%, and the ultimate rate 7.45% in 2011.)

Increased the earnings base, on an ad hoc basis, to $22,900 in 1979, $25,900 in 1980, and $29,700 in 1981. After 1981, the base would be adjusted automatically to keep up with average wages as under the prior law.

and then, in '83 under the otherwise great ronald reagan (not one of his finer moments) the ssa site says --

Although the 1977 amendments had been projected to keep Social Security solvent for 50 years

the '83 amendments accomplished --

Acceleration of scheduled tax increases for employees and employers

then, in '90, papa bush signed amendments that --

Raised the maximum amount of earnings subject to HI taxes to $125,000

the ssa site is real handy, they lay out the history of their ponzi scheme in great detail, mash here to read all of the gory details

anyway, since '77, the increases in the taxable f.i.c.a. base has been relentless, from $17,700 to $76,200, while the rate has gone from 5.85% to 7.65% (employee portion only)

and the system still isn't "saved"

Lott should be saying let's repeal the Clinton tax hike. They should have done that with the income tax hike also

gwb's tax cut more or less did repeal scumbag's increase, dropping the top rate back down to about what it was pre-scumbag, but unfortunately taking many years to fully phase it in

what i wish gwb would do (other than cutting cap gain rates) is to say that daddy bush's '90 income tax rate increase should also be repealed

and get his father to publically say it was a mistake and that his son is right to call it a mistake and to try to repeal it

[AntiScumbag]

being squandered

i agree with you, but it's not quite as bad as you state

while federal tax collections are fungible, the $160 billion is actually paying debt, and we know this because were it not there, they would spend the same amount as they're now spending and no debt would be paid down

the lock box fiction isn't good for much, but at least it forces debt to be reduced, even if only temporarily

a $160 billion tax cut would be immeasurably preferable, but debt reduction is better than nothing, at least it gets it out of the hands of the feds and back into the private sector

unfortunately, it does it without the incentive effects of a tax cut

[180grain]

Trent, here's an even BETTER IDEA: WHY NOT SCRAP THE ENTIRE INCOME TAX ABOMINATION AND ROLL FUNDING FOR THE WHOLE SHEBANG INTO THE NATIONAL RETAIL SALES TAX?

I think, these calls for cuts in taxes are due to the fact more and more citizens are questioning the legality of the I.R.S. claim that Income can be taxed or property can be seized for failure to pay said tax.

Since these politicians only show concern for the ills of America during an election year, one must wonder why both parties wanted a tax cut,

[Dick Bachert]

Agree. The Demopublicans don't want the natives TOO restless.

Given the history of the last 30 years or so, the impact of the Government schools and the changing US demographic, most of the "natives" will remain asleep in their huts.

[T. Jefferson]

gwb's tax cut more or less did repeal scumbag's increase, dropping the top rate back down to about what it was pre-scumbag, but unfortunately taking many years to fully phase it in.
Clinton raised in one foul swoop the top rate from 28 to "technically"39. Bush lowered it to 35 over several years. My point was that by using the words "repeal of clinton tax hike" you wouldn't need to bring numbers into play.