1989: Moynihan Urges Social Security Tax Cut, Return to Pay-as-You-Go Benefits System

[dkf]

A key senator Friday advocated cuts in the Social Security payroll tax that would save 130 million workers and employers a total of $62 billion during the next two years.

The proposal by Sen. Daniel Patrick Moynihan (Y.) would cancel a 0.14% increase in the levy scheduled to take effect on Jan. 1 and would lower the rate by an additional 0.96% for workers and employers in 1991.

"We can no longer tolerate the use of Social Security surpluses to finance, say, B-2 bombers or a capital gains tax cut," he added.

Snip

Moynihan contends that it is unfair tax policy to rely so heavily on a payroll tax that allows no deductions and takes the same percentage from everyone regardless of their ability to pay.

"The United States almost certainly now has the most regressive tax structure of any Western nation," he said. "This is so because the Social Security payroll tax--which is decidely regressive--has come to make up an increasingly larger share of total federal tax levies."

About three-fourths of all wage-earners, he said, will pay more in Social Security taxes in 1990 than they will pay in federal income taxes, which are more geared to the ability to pay.

http://articles.latimes.com/1989-12-30/news/mn-974_1_social-security

[Kaleva]

1. Or they should have invested the surplus in state, municipal and school bonds.

[dkf]

2. Yes...Moynihan only tried to reduce the SS tax after he realized they were spending it.

He was part of the group who raised it thinking it would be set aside.

It depresses me to no end realizing how duped he must have felt. Unbelievable.

[BeFree]

3. I see where you are going with this

You think the SS tax should be abolished and that the SS payments should come from general revenue. That would mean the trust fund is dissolved (is it already?) and any future payments should be treated as any other debt.

Moynihan did some 20 years ago. And he was a smart fella.

[dkf]

4. The first point is that the working class got duped into providing more taxes than they should

To fund the general expenses of the United States.

The second point is that the overfunding in the past does not mean the General Funds will be able to raise enough revenue.

But in the end, you can instantly allow funding for SS from the general funds which would make the point of the trust fund moot.

[BeFree]

5. In the end

The general funds WILL pay SS benefits.

They will have to raise revenue to pay the SS benefits.

[Wilms]

6. ^