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[quote=Anonymous][quote=Anonymous][quote=Anonymous]I think that the previous poster does not believe there is a meaningful difference between payroll tax and income tax.  It still affects your disposable income, regardless of what it is called.  I think she adequately acknowledged the technical distinction when she called these taxes "de facto" income taxes.  She just does not believe it is meaningful.

You might argue that it does not matter whether Mitt Romney paid tax on earned income vs. capital gains, as long as he pays taxes.  Same logic.[/quote]

Everyone who is an employee pays payroll taxes. Most people, additionally, pay income taxes, while some don't. [b]And funding for many public goods depends on income, not payroll, taxes[/b]. So, the distinction is pretty important. If we're talking income taxes, that's what we are talking about, and mixing that with payroll taxes is not that fruitful.

Btw, I do agree that there's more important fish to fry, but we can not ignore significant parts of reality.[/quote]

And that's where you are wrong. That's the way it is SUPPOSED to work, but it's not the way it ACTUALLY works.

The U.S. spends more than $3 trillion a year.

It collects $1.16 trillion from INCOME taxes
It collects $824 billion from PAYROLL taxes.

The deficit is a bit north of $1 trillion. Without the payroll taxes it would be more like $2 trillion.

Stats: http://www.irs.gov/taxstats/article/0,,id=102886,00.html

Those $824 billion in payroll taxes are currently being used to pay for public goods. They are not locked up in some Social Security account. The distinction is NOT very important.

In any case, harping on the fact that 46% of Americans don't pay income taxes is the wrong issue. Those 46% don't pay [i]because they are too poor[/i] not because they're somehow using sophisticated accounting techniques to dodge an obligation. The fact that such a large proportion of our country [i]is too poor[/i] to pay income taxes is a bigger policy issue than who's paying what type of tax.

Furthermore, it's not true to suggest that the payroll tax burden is an equal burden for higher earners. The SS cap makes it a diminishing concern for people who earn, say $500,000 a year in salary. They stop paying the SS portion of FICA by around March or April.[/quote]

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