Suddenly "every" taxpayer faces an increase of the same amount
I don't think that the point of the article is to advocate this particular solution; it is merely illustrative of how much more tax needs to be raised.
Someone whose salary is $10 million a year pays exactly the same dollar amount in payroll taxes as someone who makes $110,000. Not the same rate, the same dollar amount.
That is only true if you define "payroll tax" to exclude federal income tax. The cap on social security tax should definitely be lifted, but that only gets you part way there.
This "crisis" could be solved by abolishing the payroll tax ceiling and and instituting new income tax brackets for the obscenely high levels of income
I don't believe this solves the problem; a higher top marginal rate would be an improvement, but I don't think you can raise it enough to close this gap. Feel free to prove me wrong on this, I'm very amenable to any calculations that would show otherwise.
While I tend to favor progressive tax rates, it also creates problems because the income of the top earners has become extremely volatile, and excessive reliance on them makes it hard to set budgets at all. In this particular case, the additional revenue needed is so large that taxing high earners is not a reliable way to raise the money; those high incomes might well "vanish" with no consequences to their earners. It is better for taxes to be flat, with cash subsidies for low earners (i.e. a "negative income tax"), than to pursue the fiscally equivalent progressive plan. Unfortunately such tax structures are politically difficult to achieve and probably impossible under the American system.
no subject
I don't think that the point of the article is to advocate this particular solution; it is merely illustrative of how much more tax needs to be raised.
Someone whose salary is $10 million a year pays exactly the same dollar amount in payroll taxes as someone who makes $110,000. Not the same rate, the same dollar amount.
That is only true if you define "payroll tax" to exclude federal income tax. The cap on social security tax should definitely be lifted, but that only gets you part way there.
This "crisis" could be solved by abolishing the payroll tax ceiling and and instituting new income tax brackets for the obscenely high levels of income
I don't believe this solves the problem; a higher top marginal rate would be an improvement, but I don't think you can raise it enough to close this gap. Feel free to prove me wrong on this, I'm very amenable to any calculations that would show otherwise.
While I tend to favor progressive tax rates, it also creates problems because the income of the top earners has become extremely volatile, and excessive reliance on them makes it hard to set budgets at all. In this particular case, the additional revenue needed is so large that taxing high earners is not a reliable way to raise the money; those high incomes might well "vanish" with no consequences to their earners. It is better for taxes to be flat, with cash subsidies for low earners (i.e. a "negative income tax"), than to pursue the fiscally equivalent progressive plan. Unfortunately such tax structures are politically difficult to achieve and probably impossible under the American system.