This proposal would achieve several worthwhile goals; simplify the tax code, stimulate the economy
by lowering business and government administrative costs and provide immediate tax relief to the people who needs it most, low and middle income workers and retirees.
Shifting the funding of Social Security and Medicare to the existing tax rate schedule will provide the
fuel to energize our economy, keep more money in the pockets of all American workers, reduce the
cost to businesses and eliminate the advantage of hiring undocumented workers.
The $700 billion (2008) these two taxes provide would be generated with a slight increase in income
tax rates that would be at a minimum "revenue neutral", much less then the combined tax rate of 7.5%
(Note: The amount received could be much higher...see below.....undocumented workers)
Additionally, with the elimination of the payroll tax, the Earned Income Credit, created to offset this tax on low income wage earners, and cost $40 billion (2004) could be reduced or even eliminated.
I also suggest the elimination of all income taxes on Social Security benefits which equaled approx. $20 billion (2007). As a "trade off" seniors will no longer receive the extra exemptions but would still be a net gain for them (cannot find the cost for this exemption)
These simple changes would be well-received by all citizens and businesses and show the American the "bait and switch" tax policies of credits and exemptions, based on behavior is one step closer to
being a thing of the past and on there way out.
The party and all of Congress should embrace these suggestions of this type, as the tax code should stop being a partisan issue, not used to drive the American people's behavior based on the desires of those elected to represent them.
Proposed list of tax code changes:
Eliminate Payroll (FICA), 6% and Medicare, 1.5%, taxes on individual income and businesses.
Increase tax rate code by 1% or amount which would bring in needed revenue to pay benefits.