A Social Security Solution?
Several Democratic senators have come up with a radical idea for preserving Social Security without reducing anyone’s benefits. The solution: cracking down on businesses that evade taxes. The government loses billions of dollars every year because of businesses who avoid paying the employment taxes which fund Social Security and Medicare.
Closing these loopholes would provide at least some, if not all, of the funding necessary to keep Social Security afloat. Senator Max Baucus, D-MT, said “We should not cut the benefits of any law-abiding retiree by one dime or raise the taxes of any law-abiding worker by one dime until we have done our best to ensure that all taxpayers are complying with the current tax laws.”
Businesses organized as sole proprietorships pay employment taxes on all reported profits. A business which is organized as an S corporation only pays taxes on the amount described as salary. These S corporations have become a multibillion-dollar employment tax shelter for single-owner businesses.
In the year 2000, $5.7 billion was not collected which would have been collected if S corporations were organized differently and had to pay the employment tax.
Senator Ron Wyden, D-OR, said “I'm very troubled about the fact that a substantial number of extremely wealthy people aren't contributing their share. They are what I call the Social Security scofflaws.”
According to the chief of staff for the Joint Committee on Taxation, eliminating the $90,000 cap for taxable wages would raise $1.2 trillion over a 10-year period.
So, we have a solution; at least a partial one. Isn’t this great? Add a little fairness to the tax code, and we can save Social Security without reducing anyone’s benefits. Yeah! This is the answer. Let’s do it. What are we waiting for?
Bzzzzzzzzttt!!!! The alarm clock just went off. Reality check!! Of course the above scenario could never happen, but it was a nice dream. Making corporations pay their share of taxes instead of reducing the benefits of wage-earners and retirees — sheesh! Riiiight. That’ll happen.
With most of the U.S. Congress being the personal harem of corporations and lobbyists, what chance is there for these common sense ideas? But it was a nice idea.