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Thursday, January 26, 2012

Is It a Tax or Not?

In his State of the Union speech the other night President Obama said:

Right now, our most immediate priority is stopping a tax hike on 160 million working Americans while the recovery is still fragile. People cannot afford losing $40 out of each paycheck this year. There are plenty of ways to get this done. So let’s agree right here, right now: No side issues. No drama. Pass the payroll tax cut without delay.

I’m old enough to remember when politicians denied that the FICA deduction from our paychecks is a tax. “It’s a contribution to your future retirement income and medical care,” they’d say. Today they forthrightly call it a tax.

I’m beginning to suspect that politicians will say whatever they think will get them reelected.

As for the idea that cutting the payroll tax is costless, see my earlier post.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.