Payroll Taxes and Other Matters

After hearing about Trump's proposal to cut or eliminate payroll taxes, I wanted to know exactly a payroll tax is. I discovered that, most simply put, it's a tax on one's salary, related to how much you earn. You pay part of it and your employer pays part of it.

When you pay the tax, you are funding social security contributions, unemployment insurance, and disability insurance.

When your employer pays the tax, the employer is funding social security, medicare, and other forms of insurance.

"Cutting your taxes" is one of the GOP's favorite old saws. It always sounds like a good idea. However, the poor, the working poor and the middle class don't tend to benefit in a GOP tax cut because for thirty years the GOP has hung onto Ronald Reagan's theory of taxing: if you cut the taxes paid by the rich, the super rich, and the corporations, the result will be a largesse that ultimately passes on to the middle class and the working poor. Adherents called it "trickle down economics" while George H.W. Bush (while running against Reagan in the primary) called it "voodoo economics." It did not turn out as a benefit to the poor, blue collar workers, or much of the middle class. It did benefit the rich, the super rich, and the corporations.

With this new proposed tax cut--the payroll tax cut--the people most affected in the long run will be retired individuals receiving social security pay, people filing for unemployment, people injured on the job and unable to work, people unable to work due to an existing condition, and individuals on Medicare. This is the case because there will be no money coming in to fund the aforementioned entitlements.

Aside from this, the hidden cost to anyone currently working is that employers will ultimately have to repay the government for this tax cut, and the payment will--of necessity--come from the paychecks of employees.

By calling it a "payroll tax cut", however, Trump is able to shield what its effect would be.

I hope you find this helpful. Feel free to delete it or to pass it on.


Elizabeth George