A Taxing Dilemma

September 27, 1999

Friday's USA Today reports that 80 percent of Americans pay more in Social Security payroll taxes than in income taxes. Social Security will this year run a payroll tax surplus of roughly $70 billion, which is siphoned off for other projects, yet neither President Clinton nor Congressional Republicans have made any concrete steps to either reduce payroll taxes or ensure that current surpluses are dedicated to Social Security.

As USA Today notes, future retirees face a negative rate of return on their payroll tax "contributions" to Social Security. The best way to save Social Security is not to raise payroll taxes even higher, it is to dedicate today's "extra" payroll taxes to establishing personal retirement accounts. This is a tax cut that will benefit the poorest Americans most, putting real money in a real account that neither Democrats nor Republicans can touch.

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