Beware the gift horse!

The president has put forward the idea of waiving payroll taxes to boost the economy. Is there more to the idea than boosting the economy in response to the COVID-19 virus?

Cutting payroll taxes affects two general areas. If by payroll taxes he means that the income taxes we all pay from our income, we are looking at a significant jump in the federal deficit.

The second area that is affected is payroll taxes for Social Security and Medicare. The president recently suggested that he would look to cut what Fox News anchor Martha MacCallum called “entitlements.” What Trump really meant was Social Security and Medicare. These programs are funded from the payroll taxes.

These are FICA (Federal Insurance Contributions Act) taxes. Currently, that consists of 6.2 percent for Social Security. The interesting thing is that it is assessed on the first $137,700 of your income. If you make $1 million, you pay the same amount each year as the person making $137,700.

The second part of FICA taxes is Medicare, 1.45 percent. Medicare is the health insurance portion that covers the elderly. Our health care system is the most expensive system in the world. Medicare is our “safety net” program for seniors.

So, is the president’s proposal a good idea? Let’s think this through. If we cut funds going into the Social Security and Medicare buckets, what happens? We are going to push both programs (those damned entitlements) toward insolvency.

Seems like a way to cut entitlements, as the president has said he wanted.

Steve Lovejoy

Portland

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