Payroll taxes should be fair for everyone.
Why are you paying a higher payroll tax rate than New England Quarterback Tom Brady? Why are you paying a higher payroll tax rate than members of Congress? More to the point, why are they paying so little to support Social Security at a time when everyone is worried about the future of this vital program?
Payroll taxes that fund Social Security take away 6.2 percent of the income of workers making $127,200 per year or less. That includes the vast majority of us here in the 11th District. However, that tax is not collected on income above $127,200. So, a member of the US House or Senate, currently making $174,000 or higher (certain positions in the chambers earn higher salaries), pays a rate of just 4.5 percent. (The maximum tax under the $127,200 cap is $7,886.40, which is just 4.532 percent of $174,000.) Tom Brady, whose salary for last season was $14 million, pays a payroll tax rate of 0.056 percent. If you made $50,000 last year, Brady’s rate would take just $28 out of your pay. Instead, current law demands that you give up $3,100. How is that fair to you?
I will introduce a bill for the removal of the payroll tax cap, making all income subject to payroll taxes. Tom Brady’s taxes will jump to $868,000. Believe me, he can handle it. Your Congressman (me, if you will have me), will pay $10,788. This will save Social Security. In fact, the increase in revenue will be so large, that we likely can cut the payroll tax rate for everyone. A drop from 6.2 percent to 5 percent, for example, would mean a $600 decrease in taxes for someone making $50,000. While your tax rate drops from 6.2 percent to 5 percent, your Representative’s and your Senators’ rates will go from 4.5 percent to 5. Both of those changes are appropriate.
The fact that income from investments is taxed at a lower rate than income from labor is an insult to every worker in America. At the very least, all investment income should be taxed at the same rate as income. When this change is made, we can reduce the income tax rate for lower- and middle-income workers. We need tax justice and tax breaks for the middle class, not for the ultra-rich.
Since 1981, standard Republican fare has been tax cuts for the rich and pain and suffering for the rest of us. The proposed (July 2017) “tax reform” from the Republicans provides a tax cut of just $40 for a person making $25,000. Some wealthy earners will see a cut of $940,000. That is 23,500 times larger. No wealthy person needs a tax cut that is 23,500 times or even 10 times larger than the cut you get.
The last federal tax bracket applies a 39.6-percent tax on income above $ 418,400. There are not further increases. I feel that income over $2 million and income over $5 million should be subject to additional increases: 42 percent on income over $2 million and 45 percent on income over $5 million. These modest increases can allow us to cut taxes for working families in lower tax brackets. (See the current brackets here.)