Monday, February 21, 2005

Taxing the Wealthy

Well, as many of you know, President Bush has pledged not to raise new taxes. But apparently he is considering raising the cap. Right now most Americans pay 6% of their income to Social Security (while the employer kicks in another 6%). The first $90,000 people make is taxable. So people making $30,000 or $50,000 have their entire salary taxed. People making $150,000, on the other hand pay only 3.6%. People making $250,000 only pay 2.16%.

So President Bush wants to raise the cap. This is a bad move, according to Larry Kudlow.
Just this week he undercut that position when he said an increase in the payroll-tax cap -- now $90,000 -- would be ?on the table? in forthcoming negotiations with Congress. White House spokespeople have tried to suggest that an increase in the payroll-tax cap is not a new tax, and that only a rise in the payroll-tax rate would constitute a tax hike. This is nothing but doublespeak. The American public will see it for what it is.

A front-page editorial in the New York Sun referred to this episode as ?sins of the father.? Papa Bush, you may recall, pledged no new taxes. He then broke that pledge with a huge tax hike in his second year in office. That broken promise, along with the added tax burden on working Americans, proved politically catastrophic as Bush 41 was defeated by Bill Clinton.
Well, yeah, but President Bush doesn't actually have to run for reelection. So it's unlikely there is a Bill Clinton like defeat in his future. Oh and you know your argument's strong when you are lifting quotes from the New York Sun.

It's also unclear why the majority of Americans would be opposed to evening out the playing field a little bit. Kudlow points out, correctly I guess, that people making $90,000 a year are going to have to pay more taxes. Well, their fair share of taxes, anyway. But maybe we could all live with that, after all.

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