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.

***

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

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work