Payroll Tax Cut

There was a lot of debate regarding the “payroll tax cut”.

The “payroll tax” is an income tax on salaries.  The payroll tax funds the Ponzi scams of Social Security, Medicare, and Medicaid.

The payroll tax is approximately 15%, with half paid by employees and half paid by employers.  That is a clever trick.  A stupid person would say “FSK, you’re wrong.  You only pay a 7.5% payroll tax and not 15%.”  That is false.  Because employers must pay the 7.5% payroll tax, salaries are 7.5% lower to compensate.  Even though the employer pays the tax, it still comes out of the pool of money otherwise available to employees.

The proposal is a 2% cut in the employee portion but not the employer portion.  That makes the cut seem larger than it actually is.

It’s a temporary cut and not a permanent cut.  This enables Congress to have another debate in a few months.  “Tax cuts” are always temporary.  This enables Congress to periodically have tax cut debates and seem like heroes.  With progressive tax rates and inflation, there’s a tax hike every year, even if Congress does nothing, because inflation pushes people into higher tax brackets.

When Congress passes a law, they don’t pass a law with just one thing.  They bundle a whole bunch of stuff together.  There’s one high-profile thing and some dirty tricks.  Then, if a Congressman votes against the other stuff, he’s blamed for voting against the popular part of the law.  Both Republicans and Democrats added other things to the “payroll tax cut extension” bill.  The Republicans were complaining about the other stuff, and not the payroll tax cut.  The Republicans in the House caved and voted for the Senate/Democrat version of the law.

There are two huge fallacies in the debate.

Arguing over a 2% tax cut ignores the real issue.  All taxation is theft.  This issue is obfuscated, because politicians and the mainstream media argue about tax hikes and tax cuts.  They never discuss the possibility that all taxes are illegitimate and that all taxation is theft.

Also, the “payroll tax cut” isn’t a tax cut.  To preserve the illusion of solvency in the Social Security Ponzi scam, the general fund will reimburse the Social Security Trust Fund for the 2% loss.

It is pointless to cut income taxes without also cutting spending.  The payroll tax is cut by 2%, but the inflation tax increases by an equal amount.

By raising the inflation rate, that’s a stealth bank bailout.  Suppose a bank owns a $500k foreclosed mortgage on a house currently worth $300k.  If there’s 10% inflation, the value of the house is now $330k, and the bank’s loss was cut from $200k to $170k.  Notice how 10% inflation cut the bank’s loss by 15%.  If you add the power of leverage and a 0% Fed Funds Rate, inflation is a huge boon for the banksters.

The “payroll tax cut” debate is one big fnord.  It’s pointless to cut taxes without cutting spending.  That’s the brilliant evil design of paper money.  One tax is cut, while the inflation tax increases.  A tax cut debate ignores the most important issue, which is “All taxation is theft!”

One Response to Payroll Tax Cut

  1. The most evil forms of tax are taxes that are not proportional to income.

    Say you work hard for 20 years. In your area there might be a recession and employers just aren’t hiring anymore. You are out of luck.

    But for the past twenty years you have been a good worker. You have paid lots of taxes. But just for the next year or two, you will have a very much lower income. Maybe you are doing the best you can and try working for yourself. But for a year or so you will be on low income while things sort themselves out.

    Then you get hit hard by taxes that aren’t proportional to your lower income.

    Council (property) tax is not proportional to your income. It is a sizable amount every year even if you are economically inactive or on low wages.

    Inheritance tax again is not proportional to income. At 40% of a threshold it is eyewatering painful if you aren’t rich. Houses are overvalued in London and the south-east of England. 40% tax will throw you out of the home you have lived in for years on to the streets. Government is the worst thing you can fear. A mugger will steal your wallet from you, but government will steal your house.

    Do you live with your sister, brother, cousin or parent? Then the government will steal your house in the UK when one of your family members die. This has been discussed for the past decade in the mainstream newspapers in the UK. David Cameron has even said leaving things to your children is the most natural thing in the world. But when he became the Prime Minister he forgot his words to do a deal with the LibDems. All the horrible cases of old ladies living with their sisters being thrown out of their houses are mentioned BUT NOTHING GETS DONE. DECADES GO BY AND GOVERNMENT NEVER FIXES THE PROBLEM. THE PROBLEM CAN BE FIXED IN 5 MINUTES. JUST PASS A LAW SAYING THE HOUSE YOU LIVE IN IS EXEMPT FROM INHERITANCE TAX BUT MONEY AN INVESTMENTS ARE NOT.

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