Posts tagged with Payroll Tax
Congress has been having trouble coming up with a debt limit measure because members want something they like. It's difficult to pass such a measure because the wants of the different Senators and Representatives conflict too much.
Members of Congress need to recognize that the"tooth ache" they are dealing with isn't likely to have a pleasant solution. Instead of looking for a measure they like they should concentrate on passing a temporary measure that includes provisions they know their opponents will dislike. This approach would allow members of each party to console their supporters by pointing out what the opposition had to give up. It would also provide an incentive to negotiate a solution to the current deficit situation.
I realize Congress is unlikely to consider any measure from outside, but I feel I should at least take a chance. If you think this proposal is worth considering you might email it to your Representative and Senators.
The provisions involving spending or taxes would be temporary based on certain budget deficit "triggers". Each provision would have a different trigger. When the deficit falls below a trigger, that provision would no long apply. Spending on a certain program could be resumed or a tax would be reduced on eliminated.
Congress would not necessarily eliminate any spending programs (tax credits would be considered as spending programs). Instead spending would be suspended until sufficient money was available for the program. Prior to the next deadline, Congress would determine the triggers for individual provisions.
I suggest the following unpopular provisions. The unpopular provision for Republicans would be extension of the payroll (FICA) tax to all income received from an employer including all the income received by athletes and entertainers. Business owners would not pay a higher tax on their incomes. Employers would not pay the matching tax on the higher employee income. This tax might be phased out as the deficit declines or another tax might be reduced.
An unpopular provision with Democrats would be to delay spending on new programs including Obamacare. Spending wouldn't begin until spending on the program wouldn't adversely affect the deficit. The deficit wouldn't need to be eliminated, only reduced. Elitist Democrats still don't understand that many Republican House members were able to defeat Democrats in 2010 because their constituents strongly opposed Obamacare.
Spending for grant programs to non-profit groups along with state and local governments would be suspended beginning January 1, 2014. The amount of spending involved could reduce the deficit sufficiently that many of those programs with a higher priority (as determined by Congress) could be continued. Others programs would be resumed as funds became available.
All tax credit programs would be suspended. Those credits already approved might be claimable at some future date. An exception would be for programs that benefit individuals making less than $50,000 per year. Tax credit programs in general would be the last of the "spending programs" to be resumed. Energy related credits might be the first to be reauthorized.
President Barack Obama's approach to the spending cut issue is like a child who suggests that if his family needs to reduce expenses it should stop buying fruits and vegetables while continuing to purchase cookies and potato chips. Obama and his playmates in Congress have responded to the issue of cutting spending by proposing elimination of essential spending such as meat inspectors instead of nonessential spending such as grants to local governments for purely local matters.
Instead of trying to work with Congress to arrange some type of compromise, Obama is running around like a chicken with its head cut off squawking for somebody to do something. Obama needs to be taking care of business in Washington instead of outside of Washington giving speeches.
Both Obama and Congressional Republicans are ignoring the nature of the budget problem. They remind me of a beer commercial except instead of crying "great taste" or "less filling" they are crying "more spending" and "less taxes".
The solution to the budget deficit will require a combination of spending cuts and tax increases. At the very least congress should suspend all tax credit programs and all non-education or highway construction grants to state and local governments. Tax credit programs are of dubious constitutionality because they allow individuals to spend what is essential federal tax revenue without congressional approval of specific spending decisions.
Most grants to state and local programs are of limited economic value. Intercity highway construction provides significant economic benefits as does education spending.
Layoffs in agencies such as meat inspectors and air security would hurt the economy and reduce federal tax revenue which would make the deficit worse. However, layoffs in regulatory agencies such as the EPA wouldn't hurt the economy. Layoffs at EPA might benefit the economy considering the EPA's continuing efforts to eliminate jobs in the coal industry.
Congress should eliminate funding for climate research. The people claim that carbon dioxide causes global warming insist that climate science is settled. If that is so then there is no need to spend money on further research. Congress should only fund research to learn new things. The only justifiable reason to fund climate research is to find
Congress cannot cut enough money from the budget to eliminate the deficit without adversely affecting the economy. Tax increases will also be needed. The easiest way to increase taxes would be to have the payroll tax apply to all income received from an employer up to and including the million plus salaries of corporate CEO's and professional athletes and entertainers.
Republicans claim that the rich would use excess income to create jobs. However, only business owners would use their money in that way. Increasing taxes on corporate employees won't affect job creation because employees don't use their incomes to create jobs.
Our system of government depends upon the President to provide leadership. Unfortunately, President Dunseld seems incapable of providing the leadership necessary to deal with the budget crisis. To use and expression from the sixties: "Obama is part of the problem rather than part of the solution. [NOTE: "Dunseld" is a term used at Starfleet Academy to describe a part with no useful function.]