A few quibbles-
First, because social security benefits are tied to payroll taxes, at least to some degree, taxpayers have a perception that their taxes are an investment- the "trust fund" augments the perception, reducing the Laffer curve effect of their marginal tax rate.
Second, what's wrong with punishing employment? Culturally, I think we live in a time when most people over-prioritize their careers, neglecting both family and "mediating institutions" to their own and society's detriment.
Employment may be one of those things some people have too much of, and others not enough. So you have an argument for punitive marginal rates in higher income brackets, but not so much for payroll taxes.
re "1. We have a tax, the payroll tax, that is (a) regressive and (b) punishes employment."
"In a perfect world, the US Government would get the additional revenue..."
- Are you living in the United States, then? Because in my perfect world, the US govt wouldn't get one red cent of of my taxable income. Oh, wait - it already doesn't. Perfect!
Re "We have a benefit, the social security benefit....which reduces saving."
- Well, maybe, if you're filthy rich or an incurable optimist.
Same is true, more or less, for CPP, although that's complicated by the CPP's investment of its surplus.
Commenting by HaloScan
