In response to this op-ed column, I sent a letter to the L.A. Times last week (not published):
Andrew Biggs says, "A policy such as eliminating the $118,500 ceiling on wages subject to payroll taxes, a favorite of progressive advocates, would raise U.S. taxes to Scandinavian levels without fixing the long-term shortfall." He offers no explanation.I strongly support eliminating that ceiling. Would Biggs or someone please explain why that wouldn't alleviate the shortfall?
After the letter didn't appear in the paper, I sent my question directly to Biggs, who did reply, saying
... eliminating the payroll tax ceiling would fix between 40-70% of the 75-year funding imbalance[, but] employers will “pay” the extra payroll tax by reducing wages for their employees [so that] less payroll is subject to federal income taxes, Medicare taxes and state income taxes. There’s also the way in which higher tax rates provide a disincentive to work....
I definitely still think such a simple fix for 40-70% of the 75-year problem is worth it. And if it helps decrease obscene wages and raises for the 1%, all the better!