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 The Chronicle welcomes you online! Please feel free to respond to these editorials or letters to the editor by sending your letters to the editor.

We condense letters; most, as published, won't exceed 300 words. A letter must include the writer's name and city, which will be published, and an address and telephone number for verification, which will not be published. Writers may be limited to one letter every 30 days. Open letters, letters to third parties and poetry are not considered. Letters from people living outside the Chronicle's circulation area usually are not considered.

A payroll tax hike?

Web posted March 1, 1999

Augusta Chronicle Editorial Staff

In their quest to stave off Social Security bankruptcy, some policy makers are calling for raising payroll taxes yet again. The plan being discussed, points out a new Heritage Foundation study, would amount to the largest tax increase in U.S. history.

Currently, Social Security is funded by a payroll tax of 12.4 percent on the first $72,000 of a person's income. Tax-boosters would make the tax apply to all earned income.

This would result in a tax increase of $425.2 billion over five years. The study by Heritage's Center for Data Analysis also shows that eliminating the earnings cap would:

-- Increase top federal marginal tax rate to 54.9 percent, highest level since the 1970s.

-- Cut family income of 23.4 million Americans by an average of $9,147 the first year after the cap is removed.

-- Weaken the economy by reducing personal savings by $34.4 billion in 2004 alone.

Yet all this still won't save Social Security. ``Completely removing the maximum taxable amount beginning in 1999 only extends Social Security's financial lifetime from 2014 to 2019,'' write analysts Gareth Davis and Mark Wilson.

Social Security would also continue to run a deficit -- $240 billion in 2046. Nor would the proposal enable Social Security to pay full benefits. A 19-year-old who retires at age 67 in 2046 can expect 73 cents for every dollar of promised benefits under the current cap.

If the cap is eliminated, the analysts say, that worker can expect just 79 cents for every dollar of promised benefits.

Moreover, if raising taxes were the answer to Social Security woes, it would have worked before. Congress has raised payroll taxes 24 times -- an average of once very two years -- since the program was established in 1937.

Saving Social Security may require raising the retirement age, over an extended period of time, to 70 or 72. It could also mean letting workers invest their own Social Security savings into higher return equities, such as the stock market. But what it most assuredly does not require is another payroll tax increase, be it large or small.