In 1980, 95% of wages paid payroll taxes.

In 2020, only 81% of wages paid payroll taxes.

Why? Wages at the top grew faster than the COLA for inflation… inequality grew faster than inflation.

Fact: If we tax 95% of wages again, there is NO problem with social security.

Fact: If we just get rid of the threshold, then we can actually lower payroll taxes.

If the US tax revenue to GDP matched the average developed world ratio, the US would have a surplus not a deficit.

Cutting taxes on the bottom 80% has a 2-3 times multiplier effect on economic growth.

Cutting taxes OR raising taxes on the top 1% has a 0.5 multiplier effect on the economy.

Hence a small payroll tax cut will make up for a large tax increase on the top 1%.

We’ve been going the other direction for 40 years. Funny that each time they lower taxes on the rich the real GDP growth slows. What is not talked about or considered…

High taxes on the investor class forced investments in business to avoid taxes. It helped offset pension plan funding to avoid taxes. It grew the economy faster.

The low taxes on the investor class diverts funds from business investment to avoid taxes to owners pockets where they invest in speculative financial assets. The financial asset bubble is one part low taxes and one part monetary largeness.

We need to flip today’s script. Much higher taxes on the filthy rich and slightly lower payroll taxes.

Cutting social security payouts = austerity = economic slowdown and doom loop

It’s not the boomers so much as the boomer top 1% that are hurting the younger generations. Don’t let the 1%ers pit you against anyone else except them.

Cheers,

Michael Bond’s public service announcement

Categories: Perspectives