A Modest Proposal to make the "Payroll Tax Holiday" even BETTER!

[muriel_volestrangler]

4. You just knew that someone had to propose this seriously too, don't you?

The 'Reason' libertarians:

Why Not Abolish Payroll Taxes Altogether Instead of Screwing Around With a Short-Term, Low-Percentage Cut?

Here's an idea: Let's stop the fiction of "payroll taxes" altogether. FICA taxes are sucked out of every dollar of earned income from dollar one through around $110, 100 (starting in 2012); they are split between employer and employee and the total comes to a touch over 15 percent. Ostensibly, these funds go to cover Social Security and Medicare. But that's not really true in either case. Social Security's "trust fund" has been raided for a very long time to pay for general government outlays and, more recently, doesn't provide enough cash to cover day-to-day expenses anyway. The funds collected for Medicare were never intended to cover the full costs of that program and they just keep falling far shorter every day.

Let's be adult and admit that "payroll taxes" are just another form of income tax; it's a mental dodge to pretend call them by a different name. If they were named accurately, perhaps it would allow us to discuss spending more accurately too. If we want a payroll tax "holiday," then why not actually kill the taxes altogether? What sort of vacation from reality are we getting by trimming 2 percentage points anyway? What a strange time for a government that borrows more than 40 percent of every dollar it spends to miser out!

And let's be even more adult and try not to spend more than we're willing to pay for. I'm not even being brave or super-principled in suggesting that. The bill's going to come due some day and it's not going to be any easier when we're older. As we've shown here at Reason, it actually wouldn't be that tough over the next decade or so to bring revenues and expenses in line with one another. Indeed, if we kept spending to 19 percent of GDP (more than it was at the end of the Clinton presidency), outlays and revenue would match up. It requires small (3.6 percent) year-over-year cuts from a federal tab that has basically doubled over the past decade-plus.

http://reason.com/blog/2011/12/21/why-not-abolish-payroll-taxes-altogether