Re: On Government Trust Funds

On Tue, 23 Aug 2005 21:44:05 -0400, "tonyp" <tonyp@xxxxxxxxxxxxx>
wrote:
>
>"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote
>
>> However an IOU of the Treasury to a government trust fund is simply a
>> bookkeeping entry unrelated to the financial wealth of the private
>> sector. The private sector cannot sell or cash out trust fund assets
>> because they are actually owned by the government.
>
>I can accept this definition as long as we agree that FICA is a tax, pure
>and simple. But you might have an argument with those Republicans whose
>propaganda in the class war is that the top X% of income earners pay Y% of
>all income taxes. They invariably do _not_ count FICA as an "income tax".
>
Right on! I have always said that FICA is an income tax. Its burden
falls mainly on the middle income class because it consumes a larger
fraction of their total income than it does for the high income class.
Payroll taxes hurt aggregate demand and are therefore a drag on the
economy.

Government trust funds are essentially a fraud because they purport to
be something they are not, a so-called "lock box" where tax money is
stored for future use. That has led to endless confusion, even among
politicians who should know better.

I advocate outlawing government "trust funds" and off-budget
bookkeeping. Further, I would eliminate the FICA tax and pay Social
Security benefits out of the general fund. The loss of revenue should
be made up with a fractional increase in the 1040 tax rates as
required. There should be only one measure of government debt, and
that is the one represented by the Treasury securities held by the
public. Will Congress listen? Not a chance.
.

Relevant Pages

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