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Jewish World Review Feb. 12, 2001 / 19 Shevat, 5761

Michelle Malkin

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The FICA tax fakeout

http://www.jewishworldreview.com -- I ONCE ASKED U.S. Sen. Patty Murray – the nation’s most famous Mom in Tennis Shoes – whether she thought FICA taxes should be cut. "Ummmm," she said. "Uhhhh," she pondered. "F-F-F-FICA?" she stumbled aloud.

Sen. Murray isn’t exactly the brightest bulb in the senatorial closet, but her ignorance is characteristic of faux populists inside the Beltway. Since most politicians enjoy the regal luxury of never bothering to examine their fat paychecks, they have remained largely indifferent to FICA’s burden on working people.

Until now. Yes, now that President Bush has launched his campaign to cut federal income taxes, liberal opponents are falling all over themselves to divert public attention to FICA (Federal Incomes Contribution Act) taxes. Note to Sen. Murray: They’re the payroll taxes automatically deducted from our paychecks to fund your favorite government entitlement programs, Social Security and Medicare. The current statutory FICA tax rate is 7.65 percent for both employees and employers – 6.2 percent for the Social Security benefits portion (on wages up to $80,400) and 1.45 percent for the Medicare fund (on all wages). Self-employed people and independent contractors like me pay the full 15.3 percent.

Alarmed that Bush might actually keep a campaign promise and get some measure of federal income tax relief passed, the Left is once again engaging in classic class warfare. The rich will get most of the benefits, they grouse. (Never mind that 80 percent of federal income taxes are paid by the wealthiest 20 percent of Americans.) Don’t cut income taxes, they plead. Oh, no, anything but that. Cut, ummm, uhhh, F-F-F-FICA payroll taxes instead. (Why both shouldn’t be done, they don’t say.)

Left-leaning writers E.J. Dionne, David Corn, and Michael Kinsley are all doing the FICA tax fakeout:

Dionne writes that "replacing the income tax reductions with a temporary cut in the Social Security tax, aka FICA, could put a lot of money in the hands of the taxpayers who need it most, at a moment when they could use it."

Corn asks: "If you want to have a tax cut that's going to stimulate the economy, why not give the money back to the middle-income and low-income Americans in terms of cutting the payroll taxes and let them put the money in?"

Kinsley argues that "the tax to cut is FICA, the payroll tax for Social Security and Medicare. Unlike the income tax, which lower-income workers don't pay, and therefore get nothing if it is reduced, every working American pays FICA starting from dollar one. Taxpayers well into the middle class typically pay more FICA than they pay in ordinary income taxes."

I’d bet my FICA taxes that if Bush actually did what these gentlemen proposed, they’d be the first to whinny about how cutting payroll taxes threatens the health and welfare of America’s elderly and undermines Social Security and Medicare. Indeed, Bush has already proposed allowing workers to shift a portion of their FICA taxes into private personal retirement accounts – effectively reducing FICA tax rates. The plan has met with nothing but generational warfare rhetoric from leftist chieftains.

Another convoluted proposal, promoted by the Democratic Leadership Council, is is to replace the Bush income tax-cutting plan with a federal income tax credit to offset a percentage of what people pay in FICA taxes. This approach was blessed by the New York Times editorial page and offered up in legislation introduced by Rep. John LaFalce of New York in the form of a refundable tax credit equal to 6.2 percent of wages, up to a maximum of $350 per earner.

Low-income wage earners can already take advantage of such a tax credit – the Earned Income Tax Credit. And in any case, this new tax credit idea is woefully inefficient. Why not just cut FICA taxes instead of paying one government agency to collect them and another to partially refund them under the guise of helping beleaguered workers?

Cut taxes? Return more money directly back to people who’ve earned it? Oh, no. Heavens, no. Anything but that.


JWR contributor Michelle Malkin can be reached by clicking here.

Up

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05/22/00: Have Simon & Schuster execs lost their minds!?
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05/03/00: Phony pooh-bahs of journalism
05/01/00: Zoo tragedy triggers dumb reaction
04/24/00: Ecoterrorists on the loose
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04/13/00: In defense of an armed citizenry
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04/04/00: The liberal media-in-training
03/31/00: Sticking it to the children
03/28/00: Declaring war on HOV lanes
03/22/00: Clinton and the Echo Boomers
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03/13/00: Katie and the politics of disease
03/10/00: Maria H, Granny D, and the media Z's
03/07/00: Bubba Van Winkle wakes up
03/03/00: Double standard for day traders?
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02/24/00: Zoning out religious freedom
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02/08/00: CDC: Caught Devouring Cash
02/04/00: Hillary's poisoned poster child
02/01/00: Corporate welfare on ice
01/28/00: The silly sound of silence
01/26/00: The Old Media meltdown
01/20/00: The pied pipers of KidCare
01/18/00: Our imperious judiciary
01/14/00: Tune out Columbine chorus
01/12/00: Dying to be an American
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12/30/99: Reading, writing, PlayStation?
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12/13/99: EPA vs. the American Dream
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12/06/99: Amateur hour in Seattle
11/30/99: Stop the Ritalin racketeers
11/23/99: Welfare for a sports fatcat
11/19/99: Jeb Bush's political ploy of the week
11/16/99: Ben & Jerry serve up junk science
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11/10/99: Tax-and-spend schizophrenia
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11/02/99: Mourning the loss of the last Liberty Tree
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10/20/99: Don't doctor the law
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09/27/99: Personal freedom going up in smoke
09/15/99: Farewell, "Miss" America
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09/03/99: Feminization of gun debate drowns out sober analysis
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08/10/99: Protect the next generation from diversity do-goodism
08/04/99: Sweepstakes vs. state lottery: double standards on gambling
07/21/99: "True-life tales from the Thin Red Line" (or "Honor those who sacrificed their lives for peace")
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07/14/99: Journalists' group-think is not unity
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06/25/99: Speechless in Seattle
06/15/99: Making a biblical argument against federal death taxes

© 2001, Creators Syndicate