Another day, another attempt to raid Social Security.
President Trump’s tax overhaul efforts made headlines when the Associated Press reported officials are considering significant cuts to — or eliminating — the payoll tax that funds Social Security.
According to the AP, plans to reform the tax code are being modeled after the Value Added Tax (VAT) system used by many European countries. The VAT system, similar to a consumption tax, would generate higher revenue than current corporate taxes, allowing the payroll tax to be eliminated so more money stays in workers’ pockets.
As Alex Larson, Executive Director of Social Security Works, explains in this interview with Ring of Fire’s Farron Cousins, this strikes at the heart of Social Security, a program that has always had a dedicated income source coming directly from workers. This source of income, the FICA payroll tax, allows Social Security to remain off budget and gives every worker a sense of ownership over their benefits — two factors largely contributing to the popularity of this program decades after its inception.
Without a dedicated source of funding, Social Security becomes one more item competing for funds on the Congressional appropriations list instead of the earned benefit program it was designed to be — and more importantly, the earned benefit program that most Americans want it to remain.