I’ve been avoiding TV and radio for many years now, but I catch glimpses of NPR now and then because my wife listens to it in the car. It usually only takes a few minutes to remind me why:
A “human interest” story features an average guy who figured out a “trick to save social security.” This “amateur economist” has a “brilliant” proposal: eliminate social security taxes on middle-class incomes by raising the cap on earnings subject to the Social Security payroll tax. So: steal more from middle-upper families and redistribute their money to middle-lower families. This is hailed as “out of the box economics.”
“Steal from the rich to give to the poor” is not economics, nor is it exactly an original idea. Currently, my total marginal tax rate (what I pay for any additional income earned) is 46%. The cap on social security taxes is one of the few motivations I have to take on additional projects in order to raise my income. A 12% increase in my marginal tax rate would push my rate to 58%.
Why should I work my butt off every day to keep 42% of my income so I can pay for people who haven’t contributed a penny towards their own retirement?