The Trump administration is kicking around the idea of a payroll tax cut, though it’s hard to know how seriously the idea is on the scale of building a border wall to buying Greenland.
“Yeah, we’re looking at various tax reductions. But I’m looking at that all the time, anyway,” President Trump told reporters earlier this week. “Payroll tax is something that we think about, and a lot of people would like to see that.”
A White House press release said a payroll tax cut is “not something under consideration at this time.”
It shouldn’t be under consideration. At least not without some significant reforms to the Social Security and Medicare programs which are funded by the payroll tax.
The tax is 15.3 percent up to $132,900 in earnings per year. Supposedly half is paid by employees and have is paid by employers, but that’s a bit of a shell game. Employers see the tax as a payroll cost not all that distinct from a give employee’s wages and benefits. It’s really employees who pay that tax because it comes out of the cost of employing them.