Mary: This is Mary Walden with economist MW welcoming you to the economic perspective. Today’s program asks if there is a Social Security overhaul brewing. Mike, there’s a lot of talk about taxes going on in Washington. One thing I’ve heard is that there may be some proposals made that would dramatically change how Social Security is financed. Give us a preview.
Mike: Summary Answer
- Realize this is just talk
- But some ideas floated that would eliminate the SS payroll tax and replace it with some other kind of tax – maybe a version of a national sales tax or a carbon tax
- SS payroll tax is big – 12% of worker earnings when include what employer and employee pays – for many, a bigger bite than income taxes
- Eliminating it – some economists say – would decrease the cost of labor and give a big boost to jobs
- Both a national sales tax (actually a value-added tax) and a tax on CO2 emitting products are consumption taxes – and proponents say – would motivate more money being put in investments
- Critics of idea say the SS payroll tax gives a dedicated funding source for SS
- Also say consumption taxes could reduce consumer spending – which drives the economy
- Stay tuned!
Mary: And I’m Mary Walden for the North Carolina Cooperative Extension Service