Payroll Tax: The Burden Untouched
President Bush has pitched his tax plan, which he unveiled yesterday, as a matter of fairness for overburdened American families, emphasizing how much he would deliver for middle-income Americans.</br></br>But, no matter how the data is sliced in the upcoming debate in Congress and the country, most of the tax cut dollars go to wealthier Americans who in fact pay the majority of income taxes.</br></br>The bigger problem for middle-income Americans since the Reagan tax cuts in the 1980s has been the payroll tax for Social Security and Medicare, which actually eats up much more of a worker's paycheck. Payroll taxes are not addressed by Bush's 10-year $1.6 trillion tax cut.</br></br>Because 80 percent of federal income taxes are paid by the wealthiest 20 percent of Americans, they would receive the biggest tax cuts under any plan that cut overall rates.</br></br>Administration officials argue that giving Americans a tax credit against payroll taxes is a troublesome concept because it effectively means someone is not paying for benefits they will later receive. "We have concerns about that," said Lawrence B. Lindsey, Bush's chief economic adviser. "That's not paying the Social Security tax."