Inequality has taken the political world, especially that inhabited by Democrats, by storm. Here in New York, it is Mayor Bill de Blasio's raison d'etre.
I've been thinking a lot about the concept and have come up with three ideas that would at least help to level the playing field somewhat and would not cost much money. In fact, in one case, it would definitely raise money. I'm no economist but I think these ideas are worth considering.
1. Exempt the first $50,000 of your gross annual salary from the Social Security FICA
Tax. -- A little explanation is in order here. First of all, I don't know how many people realize this but, once your gross salary reaches $117,000 annually, you've met your annual Social Security FICA tax requirement which this year is 6.2 percent annually (if you're self-employed, you can double that number). That means, the top 15 percent of earners in the United States (those who make more than $117,000 per year) stop paying FICA tax after their salaries hit $117,000. Suddenly, their paychecks get fatter every week. This is surely a regressive tax. When you think about it, shouldn't it be the other way around? Fifty-thousand is the median income for Americans, meaning half make more and half make less. To be truly progressive, we should exempt the first $50,000 of annual salary of all Americans from the FICA tax but lift the cap for everyone else. You make more, you pay more into the system. The lowest earners among us should get the break -- not the highest earners. Overnight, this would help a tremendous number of people while, at the same time, make the Social Security system solvent forever.
2. Make rent at least partially tax-deductible. -- Those who own homes in this country -- presumably Americans who can afford it and make more than those who rent -- get a break on their taxes by being able to deduct the interest on their mortgages. I understand the concept of home ownership and getting people to invest in their neighborhoods but, again, this is rewarding the higher earners among us. Why shouldn't renters -- usually lower income earners -- get a break for all the rent they pay? Why can't part of rent be tax deductible at the very least. Gov. Cuomo in New York has at least talked about this.
3. Stop taxing unemployment benefits. -- Once again, this is a regressive concept. Why should we be taxing the meager benefits of those Americans who are out of work? Give them a break. They're down on their luck. Why require them to pay taxes on benefits?
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