Congress has slowly raised the payroll tax over the years to help make up for the shortfall. Unlike federal income taxes, which almost half of Americans don't pay at all, all workers must pay payroll taxes. Congress has increased payroll taxes in two ways over the years: by increasing the Federal Insurance Contributions Act (FICA) tax rate and by raising the cap on income subject to the tax. Currently, the first $110,100 of income is subject to FICA taxes, an amount that has been raised several times as the need arose to insure the system's solvency.
If the administration and Congress continue to play politics with Social Security -- as they are surely doing now by extending the temporary payroll tax cut -- the system will eventually implode. It's understandable that Republicans don't want to be accused of giving all working Americans a 2 percent tax hike in an election year, but keeping payroll taxes low in order to avoid making other changes to the Social Security system is certainly not going to solve the problem. It will make things worse.
Unfortunately, politicians know that real solutions will entail difficult decisions: Raise the retirement age once again. Increase the FICA tax rate or raise the cap on how much income is subject to the tax. Or reduce benefits. It's pretty simple, but painful, especially for politicians addicted to handing out goodies without figuring out a real way to pay for them.
Linda Chavez is the author of "An Unlikely Conservative: The Transformation of an Ex-Liberal." To find out more about Linda Chavez, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2012 CREATORS.COM
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
Be the first to read Linda Chavez's column. Sign up today and receive Townhall.com delivered each morning to your inbox.
White House: There Is No Justification For Terrorism Over Expression, Including Muhammed Cartoons | Katie Pavlich