Raise the Payroll Tax
Yesterday, Congress agreed to extend the payroll tax reductions for another period of time. I have been thinking about this for a while, and I am slowly coming to the conclusion these taxes should be raised. I am still thinking this through so I welcome feedback.
I don't think I have to convince regular readers of this site that I am against government-run and mandated-for-all retirement funds (income via Social Security, medical via Medicare). But if we are going to have such programs, and maintain the pretense that they are insurance programs and not welfare/transfer programs, then the "premiums" we are forced to pay should reflect true costs.
I don't think Medicare premiums are covering anywhere near the actuarial-expected costs of one's future medical care. And while Social Security rates may be set correctly if trust funds were truly held securely, the fact of the matter is that past Social Security premiums that were paid to support future benefits have all been spent by a corrupt Congress. Rates are going to have to be raised to replace this theft.
I don't like raising taxes. I wish these two programs would go away or else be restructured drastically. If they exist, though, there is nothing more dangerous than an incorrect price. Prices help consumers make price-value tradeoffs -- the Keanu Reeves lifetime DVD collection may be a deal at $6.99 but not at $99.99. So charging the wrong prices for these programs not only royally screws up the government's finances, but it also misleads Americans about the value of these programs in comparison to what they pay for them.
