Tuesday, December 27, 2011


I don't know if you've noticed this or not, but something rather important changed in the most recent skirmish in Washington concerning the 60-day extension of the payroll tax. It's hiding in plain sight -- did you notice that we're now calling FICA a tax? And not an "investment?"

Two things worth noting here:

  • First, it's more honest, because FICA has never been anything other than a tax, considering that the federal government has always spent the revenues that it has received from FICA, pretty much on the spot. There's no lockbox or big vault that the feds keep your money in. They will (or might, depending on how old you are) pay you Social Security from whatever is available at the time you are allowed to collect it. And if the dollar happens to have the same valuation as a Turkish lira, tough luck, pally.
  • There's a larger purpose afoot in identifying FICA as a tax, though. In recent years Republicans have argued, often successfully, that nearly half of Americans don't pay income taxes. Because of the large income deductions that are in place, that has been true, but I've always thought that it was misleading, because nearly every American who files a W-4 form gets nicked for FICA, which does take essentially 13% of your income off the top. That's why the temporary rollback of FICA rates for this year can be called a "middle class tax cut." And in doing so, it allows those who love government to challenge the notion that nearly half of all Americans don't pay income taxes. 


W.B. Picklesworth said...

Not too long ago I would have been peeved by how the GOP got rolled on this. At this point, however, I find myself curiously apathetic about the tactical nipping and biting. The big picture is coming into focus so nicely that it would take a fool to miss it. We spend too much money and the folks asking for your vote are largely unwilling to be serious about the problem.

Maybe we're just going to need to full meltdown with a special side of suffering? Maybe widespread and unavoidable pain is the only way to remember that reality demands more than a tip of the hat.

Bike Bubba said...

You know, if anyone speaks of any kind of "lockbox" for any kind of wealth, they really don't understand prosperity. When I bake bread or cook something, I am (with the exception of certain vinegars, wines, and Scotch) eating the crop of the last few years. Didn't Scripture say something about not laying up treasures where moth and rust destroy?

So really the key argument against Socialist Insecurity isn't that it's a Ponzi scheme, but rather that we're sacrificing the present to presume upon the future. And we know how that tends to end up.