Most Americans will wind up paying more taxes to the federal government in 2013 than they did last year because the payroll tax to support Social Security and Medicare returns to 6.2 percent from 4.2 percent of wages. The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent of American households will face higher federal taxes as a result.
The Center calculates that households earning between $40,000 and $50,000 a year will face a tax increase of $579 in 2013 and those earning between $50,000 and $75,000 will pay $822 more.
What these numbers show is that the payroll tax takes more from low- and middle-income families than the income tax. The median household income in the U.S. is around $54,000. (The median income in Kansas in 2009 was about $38,000, the last year for which figures were immediately available.)
The fact is that most low-to-middle-income families pay no income tax. Their primary contribution to the federal budget is the payroll tax. Members of Congress who rail against the income tax and fight for lower rates don’t have a majority of their constituents in mind. It is the well-to-do who pay income taxes — and should, according to the precept that taxes should be progressive, that those with the most should pay the most.
Our senators and representatives should take more care to see that the people who put them in office understand the nation’s tax structure and income basics.
ALLOWING THE payroll tax to increase by half will amount to a tax increase to everyone who earns a salary. It also will bring in a significant amount of money, reducing the need to borrow. It was a good decision for that reason.
The decision also demonstrates that raising taxes on all working Americans will be necessary to balance the federal budget and begin to reduce the national debt. While the rich and the very rich will pay more, they won’t pay nearly enough to put the nation in the black. The country can get back to sound financing only by broad tax increases that touch all Americans, along with large reductions in spending.
Those common-sense decisions can only be implemented if Democrats and Republicans work together to accomplish them. Both parties, after all, agree the nation should spend no more each year than it raises from taxes; both should be able to agree upon the best path to reach that destination, through debate and compromise.
This focus on the payroll tax should also remind members of Congress and the rest of us that 99 percent of the U.S. population have incomes under the $400,000 level where the fiscal cliff bill kicks in with a rate increase.
We are a rich nation; we are not a nation made up of rich people.
All but a very few of us live — and live happily — on modest incomes. The progressive income tax makes moral sense. It is good public policy to require the rich to pay more to support the nation that gives them the opportunity to become wealthy. It is wise public policy to use taxes to prevent, or at least forestall, development of an economic royalty, which would subvert our democracy.
But it is equally apparent that our tax structure must be very broad and inclusive to raise enough money to pay for the services we demand of our government and to retire the debt we have accumulated.
That’s where we are as 2013 gets under way.
— Emerson Lynn, jr.