Op-ed in today's Wall Street Journal: Tax Withholding Is Bad for Democracy; So Is the Payroll Tax. End Them Both and Voters Will Have a Healthier Understanding of the Government Burden:
Fold payroll taxes into the personal tax code, adjusting the rules so that everyone still pays the same total, but the tax bill shows up on the 1040. Doing so will tell everyone the truth: Their payroll taxes are being used to pay whatever bills the federal government brings upon itself, among which are the costs of Social Security and Medicare.
The finishing touch is to make sure that people understand how much they are paying, which is presently obscured by withholding at the workplace. End withholding, and require everybody to do what millions of Americans already do: write checks for estimated taxes four times a year.
Both of those simple changes scare politicians. … But the politicians' fear of being honest about taxes doesn't change the urgent need to be honest. The average taxpayer is wrong if he believes the affluent aren't paying their fair share—the top income earners carry an extraordinary proportion of the tax burden. High-income earners are wrong, too, about being exploited: Take account of payroll taxes, and low-income people also bear a heavy tax load.
End the payroll tax, end withholding, and these corrosive misapprehensions go away. We will once again be a democracy in which we're all in it together, we all know that we're all paying a share, and we are all aware how much that share is.
