Payroll Taxes Go Up Again

October 21, 1999

For eighty percent of American households, payroll taxes take more out of their paychecks than income taxes do. Therefore, it's bad news that the payroll tax ceiling, the maximum salary upon which Social Security payroll taxes are applied, has once again gone up. Last year, Americans paid 12.4 percent of their first $72,600 in wages or salary to Social Security. Now, it is 12.4 percent of wages and salary up to $76,200. The Social Security Administration scolds American workers for not saving more, saying that Social Security's meager benefits should form only a base upon which workers should add their own personal savings. That was easy to say in 1935, when payroll taxes took a mere 2 percent of the first $3,000 of wages and salary.

But today, when workers are forced to pay Social Security taxes up to 13 times higher in real terms than in 1935, it's next to impossible for lower income workers to save. And when today's young workers retire, Social Security will be capable of paying less than 70 percent of what it has promised.

So, the government raises taxes on workers again and again, runs the Social Security system into bankruptcy, and then tells workers that they're not saving enough? Some people just don't get it.

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