This, and Democrats are pushing the biggest tax increase - you've ever heard of called the Posted: Mar 18th, 2019 - 1:51 pm In Reply to: Control of the money supply means that this is not a free - market economy. The gov had the
Social Security 2100 Act
The legislation would raise the effective payroll tax rate by 2.4 percentage points, split between employer and employee, to 14.8 percent. And this tax increase would apply to all earned income.
At a Capitol Hill hearing this week, I testified about how this tax increase would hurt workers, entrepreneurship, and small businesses like mine.
Larson’s plan would increase small businesses’ annual payroll tax burden per employee earning $50,000 per year by $600, to $3,700. While the plan calls for a donut hole exemption between the current payroll tax cap of $132,900 and $400,000 of earnings, this ceiling is not indexed to inflation, meaning that within a couple of decades all employees, no matter their income, would be subject to it. Eventually, for an employee earning $200,000 a year, a business like mine would have to pay $2,400 more in payroll tax than we do today.
Consider the impact on a business employing 50 people at an average annual salary of $50,000. This tax increase would raise the business portion of payroll tax costs by $30,000, to $185,000. That increase amounts to the cost of hiring one new entry-level employee or giving significant wage increases to existing employees.
Businesses would fund such a tax increases by holding off on hiring or reducing employee wages. It would undo the benefits of the tax cuts that took effect last year and are allowing small businesses like mine to hire, raise wages, and expand.
This payroll tax increase would also directly tax wage increases. This is a peculiar public policy strategy, given the bipartisan push to increase the wages of ordinary Americans. Every time I consider raising an employee’s wages, I would have to factor in the increased costs of this associated payroll tax hike to see if the potential pay raise still makes financial sense.
For some small business owners who operate on tiny profit margins, this tax increase will put them out of business. Consider the restaurant industry, where profit margins pivot around 3 percent. Labor makes up about one-third of their total expenses. To raise restaurants' labor costs by 1.2 percentage points is enough to put some of them out of business altogether.
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