Tracy Potter: A Remarkably Useful Idea

To the Editor:
There are seldom simple answers to the most complex problems in government and politics. But sometimes a simple and good solution does appear, and it finds opposition only because of stubborn adherence to the way things have been done in the past.

June 30, I proposed one simple solution to two multi-faceted problems, one current and one more long-range. The more immediate problem is unemployment and the long-term problem is the health of Social Security. Both problems would be addressed by having millionaire wage earners pay the same rate in FICA payroll tax as the rest of us.

Unemployment would be addressed by lowering the costs of hiring for every business whose payroll averages less than $106,000 per employee. That is virtually every business in North Dakota and most of the job-producing employers in America. The revenue generated by having every dollar of income taxed at the same rate would lower that FICA rate considerably, a tax break for 94% of people and their employers.

Social Security would be fixed forever by the infusion of more revenue from those most able to pay and 94% of Americans would see a payroll tax cut, putting more money into their hands and helping the consumer economy recover as they spend it.

In America today, approximately 94% of wage earners make less than $106,000 per year, but of course they don’t come close to earning that share of total wages. Every dollar of income up to $106,000 is taxed at 6.2% to pay for Social Security. Above that, the percentage falls to zero. So, every low or middle income person pays 6.2% payroll tax, which is matched by their employer, while people making $1 million per year pay 0.62%, and people making $100 million pay at one-thousandth the regular rate.

This looks tremendously unfair, but the justification is that there are no additional retirement benefits paid to the highest wage earners. That is the way the system was built and the way things have been done in the past.
In order for this plan to be effective, it is true that it needs to collect the additional revenue without increasing benefits for those who earn more than the current maximum, adjusted for inflation in coming years. This is a change and where the opposition surfaces.

The counter argument is a philosophical one that Social Security is an insurance program, or a forced retirement savings plan, and that it would be unfair to tax the richest 6% of Americans for benefits they won’t receive, at least not directly. I would argue that they will receive the benefits of a healthier economy and a more secure nation. I would also argue that they are the people least in need of Social Security benefits.

But the more important argument is that philosophy is a wonderful thing to debate, but when the practical benefits on one side of the debate are strong enough, debatable philosophy takes a back seat. The practical effect of my plan is to put more money into the hands of those who spend it and those who employ people in the middle class, and provide the revenue to Social Security to avoid dramatic increases in retirement age or cuts in benefits.

Doing a useful, practical thing is the definition of pragmatic. We need more of that in politics and government.
-Sen. Tracy Potter
Bismarck