Some Thoughts on the Recent 'Payroll Tax' Increase

The two-percent increase in the Social Security tax rate that went into effect on January 1, 2013 has generated a great deal of discussion in the media.  Much of it, not surprisingly, is inaccurate, uninformed, and disingenuous. The reporting and analysis of this issue has totally ignored the distinction between federal income taxes (taxes used to fund the federal government) and "payroll taxes" (Social Security and Medicare taxes used to fund these specific entitlement programs).  Certainly much of this misreporting by the media is due to a basic ignorance of basic taxation concepts, but I suspect that more than a little bit of it is an intentional blurring of the two tax structures in order to accelerate the effort to bring "payroll taxes" in line with the progressive nature of our current federal income taxation system.   By way of background, the Social Security tax rate was 6.2% from 1990 through 2010, and, as has always been the case, taxes were assessed only...(Read Full Article)