Abolish the Payroll Tax Altogether

It is a riot seeing Obama call on an extended payroll tax holiday and the celebrated fiscal conservative Paul Ryan reject it as an economic “sugar high.” Liberals have never been consistent in opposing regressive taxes, of course, but conservatives have likewise been weak on the question of payroll taxes. I recall Rush Limbaugh once telling a caller that it would be a mistake to cut the tax. And we should remember that it was raised under Ronald Reagan.

Some will argue that cutting the tax while keeping spending up will lead to even greater deficits, which is a valid enough point, but it never before stopped Republicans from advocating tax cuts while failing to have the guts to cut spending enough to make up for them. Another supposed problem, articulated by liberals, is that it will weaken the solvency of Social Security and thus undermine their beloved program’s credibility. Hear, hear!

Indeed, there is a strong argument for eliminating the payroll tax altogether, regardless of what else transpires: It is more fiscally honest. See, Social Security is not truly an investment or insurance plan of any sort. Rather, the federal government forcibly extorts workers of a percentage of their income, squanders it on current retirees as well as other programs, and then papers over the scam by promising to do the same to the next generation of workers. It is in fact a welfare program, and a most insidious one at that. Those currently receiving benefits have doubtless been ripped off (although perhaps not as much as they are receiving in benefits), but the loot for which they were fleeced was spent long ago. The only way to continue paying them, short of selling off federal assets (which I think may be a legitimate enough compromise, although it is certainly not completely clean), is to continue stealing from younger workers. Furthermore, while retirees are certainly victims of decades of confiscation, Uncle Sam has many other victims who could justifiably stand in line, demanding reparations: Those unjustly imprisoned for years and those robbed of large percentages of their rightful wealth through income taxes, to say nothing of the millions of people maimed, injured, or forced to see their loved ones die overseas in U.S. wars of aggression. The property destruction unleashed upon Iraq and Afghanistan is but a recent stark example of where the U.S. government has victimized people who have at least as much claim to federal assets as do retirees.

But no one can legitimately have a claim to continue taxing workers for their retirement. Two wrongs don’t make a right. It is time that Social Security be recognized as a welfare program and phased out, the quicker the better, perhaps with means testing and tax immunity for the elderly to make it more equitable and smooth. There is not, however, any excuse to continue seizing money from workers under the guise that it is going to their own retirement, when it is fact not. Abolish the payroll tax entirely, institute honest accounting for the Social Security and Medicare welfare programs, and nip these terrible Bismarck-FDR-LBJ programs in the bud. Allow young Americans the dignity of knowing Social Security will not be there for them when they retire, end the intergenerational cycle of plunder, and watch the economy truly improve in a way we haven’t seen in generations. This would be no “sugar high,” Mr. Ryan. It would be good nourishment for the future of America.

Anthony Gregory is a former Research Fellow at the Independent Institute and author of the Independent books American Surveillance and The Power of Habeas Corpus in America.
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