We will not raise payroll taxes to solve this problem.
—President Bush, answering a question about Social Security reform, Dec. 9, 2004.
Mr. Bush has ruled out raising payroll taxes. But many Republicans in Congress say that while Mr. Bush is dead-set against raising the 12.4% payroll-tax rate, the administration has left the door open to raising the cap on the amount of wages taxed, now set at $90,000. Repealing the cap altogether—as with Medicare’s smaller payroll tax—would close Social Security’s projected 75-year funding gap.
—Jackie Calmes, “Top Social Security Question Unanswered: How?” in the Feb. 3 Wall Street Journal.
Administration aides yesterday also didn’t rule out expanding the amount of wages subject to the payroll tax. Mr. Bush intends to make decisions on such difficult topics in coming negotiations with Congress, they said.
—John D. McKinnon and Christopher Cooper, “President Provides New Detail of Plan For Private Accounts,” in the Feb. 3 Wall Street Journal.
Discussion. There are two ways to raise the payroll tax. You can raise the tax rate, or you can expand the pool of money that gets taxed. Bush probably tells himself that he’s keeping his promise not to raise payroll taxes because he still refuses to consider increasing the payroll tax rate above its present level of 12.4 percent. But the Bush White House is clearly sending out signals that it is willing to expand the pool of payroll-taxable income by raising the current cap above $90,000. If that happens, people will pay more money in payroll taxes. I don’t see how you avoid calling that a payroll-tax increase.
I’m all for lifting the payroll-tax cap, if only to make payroll taxes a little less regressive. (Even better would be to create a sliding payroll-tax scale in which people at low incomes would pay a smaller percentage than people at moderate incomes, who in turn would pay a smaller percentage than people at high incomes. That’s how the income tax works.) But antitax conservatives should feel betrayed. As I’ve noted before, President Bush isn’t just a president who lies routinely. He’s a president who lies routinely to his friends.
Oct. 7, 2004: Dick Cheney
Sept. 3, 2004: Arnold Schwarzenegger
Sept. 2, 2004: Zell Miller
June 17, 2004: George W. Bush
June 4, 2004: George W. Bush
April 11, 2004: Condoleezza Rice
March 15, 2004: John Kerry
Feb. 7, 2004: George Soros
Jan. 30, 2004: Howard Dean
Jan. 10, 2004: President Bush
Jan. 5, 2004: Laura Bush