GOP Plans to Make Tax Code Even More Friendly to Billionaires

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

How much did your paychecks total last year? You know the answer, of course. So does the Social Security Administration. The totals for every American’s paycheck income are sitting in Social Security’s computers.

Once every year, Social Security does a serious data dump out of those computers to let us know just how much working Americans are actually making. The latest totals — covering 2016 — have just appeared.

Most of us, the new numbers show, are simply not making all that much.

In fact, nearly half of our nation’s employed — 49.3 percent — earned less than $30,000 in 2016. A good many of these Americans lived in poverty. In 2016, families of four that earned less than $24,339 ranked as officially poor.

We don’t have an “official” figure for middle class status. But the Economic Policy Institute has calculated the costs of maintaining a no-frills middle-class existence in various parts of the United States. In Houston, one of our nation’s cheaper major cities, a family of four needed $62,544 in 2016 to live a bare-bones middle class lifestyle.

Nationally, according to the new Social Security payroll income numbers, over three-quarters of working Americans — 76.4 percent — took home less than $60,000 in 2016.

Some Americans, on the other hand, took home a great deal more. The Social Security Administration counts 133,119 Americans who pocketed over $1 million in paycheck income last year.

Now which of these two groups — the millionaires or the under-$60,000 crowd — do you think paid a greater share of its income in Social Security taxes?

The millionaires could certainly afford to pay the bigger share. But they didn’t.

Individuals who took home $1 million in 2016 had $16,265 deducted from their paychecks for Social Security and Medicare. Those deductions totaled a meager 1.6 percent of their paycheck income. Working Americans making $60,000 last year, by contrast, had 7.65 percent of their take-home deducted for Social Security and Medicare.

In other words, Americans making $60,000 paid over four times more of their income for Social Security and Medicare than Americans who made $1 million. How could that be?

Our tax code currently has a ceiling on earnings subject to the Social Security tax. That ceiling this year rests at $127,200. All paycheck income up to that level faces a 6.2 percent tax for Social Security and a 1.45 percent tax for Medicare.

Income above that ceiling faces no Social Security tax at all.

Until the Obama years, income above the earnings ceiling faced no payroll tax for Medicare, either. But Democratic President Barack Obama succeeded in getting that changed. Individual income over $200,000 now faces an additional 0.9 percent Medicare tax.

If all income over $200,000 faced a Social Security tax as well, we’d have enough new revenue to significantly improve Social Security benefits.

The Trump administration is moving in the opposite direction. Earlier this year, the White House tried and failed to get the Obama Medicare tax on the rich repealed.

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Now the administration is pushing a tax “reform” that totally ignores the unfairness of the current Social Security payroll tax and instead hands America’s wealthiest a stunningly generous assortment of tax giveaways.

If this Trump tax plan passes, Americans making $60,000 will still be paying over four times more of their income in payroll taxes than Americans who make $1 million. And America’s millionaire-packed top 1 percent will get 80 percent of the new Trump tax cuts, the Tax Policy Center calculates.

The Trump tax plan, in other words, makes the U.S. tax code even more millionaire-friendly than the current code. The White House calls that “reform.” The rest of us ought to call it an outrage.                                                 

 

Sam Pizzigati edits Too Much, the online weekly on excess and inequality. He is an associate fellow at the Institute for Policy Studies in Washington, D.C. Last year, he played an active role on the team that generated The Nation magazine special issue on extreme inequality. That issue recently won the 2009 Hillman Prize for magazine journalism. Pizzigati’s latest book, Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives (Apex Press, 2004), won an “outstanding title” of the year ranking from the American Library Association’s Choice book review journal.

Posted In: Allied Approaches

Union Matters

An Invitation to Sunny Miami. What Could Be Bad?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

If a billionaire “invites” you somewhere, you’d better go. Or be prepared to suffer the consequences. This past May, hedge fund kingpin Carl Icahn announced in a letter to his New York-based staff of about 50 that he would be moving his business operations to Florida. But the 83-year-old Icahn assured his staffers they had no reason to worry: “My employees have always been very important to the company, so I’d like to invite you all to join me in Miami.” Those who go south, his letter added, would get a $50,000 relocation benefit “once you have established your permanent residence in Florida.” Those who stay put, the letter continued, can file for state unemployment benefits, a $450 weekly maximum that “you can receive for a total of 26 weeks.” What about severance from Icahn Enterprises? The New York Post reported last week that the two dozen employees who have chosen not to uproot their families and follow Icahn to Florida “will be let go without any severance” when the billionaire shutters his New York offices this coming March. Bloomberg currently puts Carl Icahn’s net worth at $20.5 billion.

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Health Care Should Not Be A Bargaining Weapon

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