Thursday, May 19, 2005

Silent Times

Donald Luskin notes that the New York Times has yet to mention Rep. Robert Wexler's plan to save Social Security: a 6% tax on wages above $90,000. Actually Wexler is mentioned on, at least once -- but an AP article and exceptionally brief. A mere 250 words!

Much as the Times would like to champion a plan to raise taxes, it can't champion Wexler's. Not only would it admit the liberals' agenda to raise taxes, but it would go against the Times' own Paul Krugman. Krugman, you may recall, argued in his March 1st column against raising the earnings cap on payroll taxes:
But if the revenue from a rise in the payroll tax maximum was used to subsidize private accounts rather than to bolster the trust fund, it wouldn't address any urgent priorities: it wouldn't help the long-run finances of Social Security, it wouldn't reduce the budget deficit, and it wouldn't support crucial programs like Medicaid

What it would do, instead, would be to get in the way of any return to fiscal sanity. After all, raising the maximum taxable income would be a fairly stiff tax increase for some taxpayers. For example, someone making $140,000 a year might owe an extra $6,000. And the taxpayers who would be hit hardest by this tax increase would, in many cases, be the same people who will face a growing burden from the alternative minimum tax.
What I did not realize until tonight is that Krugman's March 1 column spoke out against one form of taxing income, but he advocated another at the March 15 Social Security debate in Manhattan. Krugman said at the debate, "Basically, if you reverse half the Bush tax cuts you have enough to pay these [Social Security] benefits forever." Either way, it's still raising taxes on income -- and Krugman advocated the one that affects "non-rich" people. Rolling back Bush's tax cuts would affect anyone who makes under $90,000 a year and got tax cuts (there are many who did). However, they wouldn't be affected by removing the earnings cap on payroll taxes.

As for me, I choose neither. As I recently explained to a co-worker who's roughly my age, we'd do so much better with private accounts.


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