PORTSMOUTH, N.H. (AP) – President Bush is not ruling out raising taxes on people who earn more than $90,000 as a way to help fix Social Security’s finances.
At the same time, he renewed his pitch Wednesday for Congress to approve an overhaul that would include Social Security private accounts for many workers. He told 2,000 people in an airport terminal that rich and poor alike should have a chance to invest in the stock market.
“Investors aren’t just Wall Street people, as far as I’m concerned,” Bush told the crowd invited by the state’s all-GOP congressional delegation. “I think every citizen, every citizen has got the capacity to manage his or her own money.”
He gave only passing mention to options for fixing the program’s long-term financial woes, but told reporters for regional newspapers on Tuesday that he isn’t ruling out making more wages subject to Social Security taxes.
Asked directly, Bush said he would not bar raising the $90,000 cap, although he does not want to see the payroll tax rate go up.
“The one thing I’m not open-minded about is raising the payroll tax rate. And all the other issues go on the table,” Bush said in the interview, according to an account in Wednesday’s New Haven (Conn.) Register.
White House spokesman Trent Duffy said raising the cap on Social Security taxes is just one option among many being advocated.
“Just because he said it was an option doesn’t mean he embraced it,” Duffy added.
Under the current system, payroll taxes are paid only on the first $90,000 in wages. That ceiling rises each year with inflation – last year it was $87,100. The Social Security tax rate is now 12.4 percent of pay, split between workers and employers.
Sen. Lindsey Graham, R-S.C., and other lawmakers have argued that Bush’s plan for personal accounts, which will cost more than $1 trillion up front, would be more attractive to Democrats if it is financed by raising taxes on the wealthy.
If Congress did nothing but lift the cap entirely and therefore subjected all wages to the tax, Social Security would be financially balanced for 75 years, though the system would again face trouble after that, according to one economic analysis.
I do not have much of a problem with raising the ceiling on the amount of income that is subject to the payroll tax. Keep in mind, this proposal will not raise the rates, but will still vastly increase government revenues.
The only problem I have is that half of that tax is provided by businesses. So, this is sort of a stealth tax on businesses. And, as anyone who knows anything about economics can tell you, raising taxes on business ultimately leads to those businesses that are affected raising their prices accordingly.
So, this proposal is somewhat inflationary. (Of course, so is the federal budget deficit…)
But, if this is what it takes to get Dems and wavering Republicans to pass serious and needed Social Security reforms, then so be it.
IMO, of course…Powered by Sidelines