Tag: Payroll Taxes

A Tale of Two Taxes

I just tweeted this thought but wanted to elaborate here. I’ve noticed a dichotomy in how the Left talks about tax cuts.

With the Bush tax cuts, allowing them to end is simply “ending tax cuts for the wealthy”. It’s portrayed as the government ceasing to give something away. However, with the Obama payroll tax cut, allowing it to expire constitutes “raising taxes on the middle class” — i.e., taking something away. The policy is identical — a temporary tax cut is allowed to end. However, the rhetoric changes dramatically. Raising taxes on the wealthy is taking back what’s ours; raising them on the middle class is stealing what’s theirs.

This is a big reason why I think the payroll tax cut should simply be allowed to expire. Otherwise, we will hear this shit every damned year until the taxes are permanently fixed below sustainability. The more people get used to payroll taxes that are too low to support Medicare and Social Security, the harder it will be to put them back at the level they need to be.

Moreover, keeping the payroll tax low will hamstring efforts to cut entitlement spending. I have long argued that the “starve the beast” tactic exploded in our faces. The idea of Starve the Beast was that Congress should cut taxes first. Spending cuts would then magically appear because Congress wouldn’t allow the debt to explode. What we discovered, instead, was that Congress would allow the debt to explode, no problem. And spending cuts don’t just happen. They have to be implemented by … Congress. Starve the Beast was Congress trying to punt the ball to itself.

But the more insidious effect of Starve the Beast is that it has sapped the public’s will to cut spending. Because we are only paying $0.60 or every dollar of government (and most of us are paying far less than that), government seems like a good deal. Huge oceans of spending cause us no pain whatsoever because taxes are never raised to cover them.

If we keep the cut in payroll taxes, the public will feel less pressure to cut the entitlements those taxes supposedly pay for. End them.