Congressional Democrats have taken a courageous move and have dared conservatives on both sides of the aisle to blink. The Democrats, eager to prevent our tax bills from increasing during time of economic crisis, have proposed to continue the payroll tax holiday and to pay for it with a surtax of 3.25% on all income above $1,000,000 per year. This tax would affect only the higher end of the 1%- only .2% of American taxpayers reach the million dollar threshold. And, of course, the rich and the Republicans shall soon commence their collective moaning.
Join me under the Great Orange Satanic Squiggle.
As I eased my way into politics at a young age, I noticed one fact that really scandalized me. Poorer members of our population are constantly told "they pay no taxes", spawning that absurd Erick Erickson project "We are the 53%". However, the poor indeed do pay into the system, and in no way greater than through the Federal Insurance Contributions Act tax, usually shortened to "the payroll tax" or "FICA". FICA taxes all Americans at a flat rate of 1.45% of income for Medicare, and usually taxes Americans at 6.2% of their income for Social Security-this year the holiday brought it down to 4.2%. However, the larger Social Security deduction is a trifle for the richest in this nation, as the tax stops affecting income north of the Social Security Wage Base, $106,800, making the tax that effects the bottom 75% the hardest, FICA, a nonfactor for the oligarchs- no wonder they seem unaware of its existance.
FICA is a regressive tax, a sad fact I pointed out to my Congressman, Frank Guinta, and my Senator, Kelly Ayotte of New Hampshire. Both seemed flustered- half because they didn't expect a question on economic injustice and tax policy from a then-14 year old and half because as Republicans they seemed insufficient to conceptualize that the rich and entitled should pay more taxes for the sake of their poorer brothers. However, the point stands that when it comes to entitlements, the entitled pay less as a share of income than do the workers.
Now, in order to pay for Social Security by offsetting the payroll tax holiday, we're asking the rich to pay a surtax on their income after the first million dollars. It really is an inoffensive tax- less costly than even the reduced FICA tax, and on an often small share of their income. The 99%, who usually have all of their income under the $106,800 threshold, pay this surtax every day. They pay the actual Social Security tax. If I could have my way, the FICA tax would be drastically reformed- a progressive tax would be best, but at least for now I'd settle for 4.2% across the board to all income, whether from paychecks or investment. We're just asking for three and a quarter percent tax on income after a million. It is not as if you will go without anything as a result of this surtax, unlike the losses the 99% will take if they have to take that 2% tax increase.
Please, don't complain. If we can pay that tax, SO CAN YOU, 1%.
Crossposted to my blog, Tomorrow's Progressives