The Worst Tax

Few subjects inspire more tub-thumping in Congress than the virtues of honest toil. We must eliminate welfare because people must work. We can’t curb our gluttonous use of energy because — they say — it would jeopardize jobs and work. NAFTA and GATT and even capital gains tax breaks aren’t boons for the very rich; no, their main purpose is to help people who work.

Yet when it comes to taxes, what’s the thing Congress singles out to tax the most? That’s right — work. Today work bears over 75 percent of the federal tax load; and the worst part of the work-tax system is the payroll tax, which is deducted from a worker’s paycheck to provide the funds for Social Security. Unlike the income tax, which applies to all income, the payroll tax falls primarily on the wages and salaries of the working and middle class. It takes a big slice off the top of the entry-level paycheck, with no exemptions or deductions. Earnings above $65,000 a year are exempt, as is income from the stock market, real estate speculation, antiques — everything that isn’t work.