Tax Guru-Ker$tetter Letter
Thursday, December 26, 2002
More Tax Cut Options
As always, everyone wants to come up with their own great ideas for reducing the tax burden, such as these ideas on income taxes.
As much as it pains me to publicly agree with a liberal phony like John F. Kerry, who couldn't care less about real working people, he is correct that many people pay more in payroll taxes than they do in income taxes. An exclusion of the payroll taxes on the first $10,000 of income actually sounds like a good idea. However, it would only be truly fair if the employers were also allowed the same exemption and not required to pay any payroll taxes on the first $10,000 of wages per employee per year. The result of this just may be raises for the existing employees or the hiring of additional workers.
While JFK thinks he will be buying the loyalty of the working poor through what he calls a "tax holiday," he will paint himself into a corner with such a plan. If he tries to call off the "holiday" and force those same people to reduce their take home pay by $765 a year, he and his fellow DemonRats will create a lot of enemies from those same folks.
For those who claim such a break on payroll taxes will exacerbate the financial instability of the Social Security system, you need to acknowledge that, contrary to Al Gore's propaganda, there is no such thing as a lock box for Social Security funds. They have been commingled with the general revenues since Lyndon Johnson's days in the White House. Treating them as two separate tax systems in just plain dishonest. Looking at the overall tax burden of income and payroll taxes is the most realistic way to approach it, which is what I have always done when working with clients. Some of the strategies we use to reduce or eliminate their payroll taxes save them much more in those taxes than in income taxes.