The payroll tax in the United States is one of the most debilitating and crippling taxes “We the People” experience. Both the employee and the employer pay approximately a tax of 7.65% each on the employee’s wages. These taxes are supposed to fund Social Security and Medicare – two systems that are currently in the process of going belly up. They are so bloated and unsustainable that they both will be insolvent by around 2035, experts say.
Politicians have also ransacked these trust funds and stolen the money to fund other functions of government.
Wouldn’t It Be Nice?
Gee, wouldn’t it be nice to have 7.65% more of the money you earn?
“Government! Three fourths parasitic and the other fourth Stupid fumbling.”
? Robert A. Heinlein
I particularly enjoy this quote. For what is more parasitic and stupid than taxing Americans to the tune of just over 1 trillion dollars for two entitlements that are bleeding cash left and right? We literally have young Americans today paying payroll tax for a Social Security that they will never see. At what point does this change from parasitic to robbery?
Payroll taxes make up about 34% of the total tax revenues that flood into the government every single year.
Harming Employment And Business:
- Lower wages for employees – if a business cannot afford the 7.65% taxes on a wage of let’s say $15/hr, then that employer will only pay that employee $10/hr.
- Perhaps a business elects to not create a job after all. Employees are expensive!
- Combine payroll tax with added mandates on 50 full time employees and 30 hours or more a week and you end up with a business environment that is suboptimal for employees.
- A business will raise prices and margin in order to pay the payroll tax.
The Path Forward
Obviously, you cannot repeal the payroll tax tomorrow because it deals with funding Social Security and Medicare. We have individuals that are now entering the age of retirement that have paid into these programs their entire lives and deserve their contributions to be paid back.
However, as previously mentioned both Social Security and Medicare are unsustainable. Both are paying out more money than they are taking in.
There needs to be a system in place in which the youth are able opt-out of social security. Most of us young conservatives do not want a forced retirement plan anyways! The theme of personal responsibility rings true here. I want to plan my own retirement the way I want it. I certainly do not need politicians or government to do it for me. Millennials would be served better by being able to keep 7.65% of the income they make now. Businesses would save 7.65% on every job they create. This is a win scenario for our economy! Higher paying jobs, higher profit margins for business, and potentially lower prices for goods and services.
One thing is clear: The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government. – Ron Paul
By the way, when I say cut taxes, I don’t mean fiddle with the code. I mean abolish the income tax and the IRS, and replace them with nothing. – Ron Paul
I don’t agree with Ron Paul very much. But in this, he is correct.
Do you agree with this post on Payroll Tax? Let us know in the comment section below.