The better way to let people keep more of their own money. Tom Giovanetti writes:
To stir up excitement before the midterms, President Trump last week said he plans to cut middle-class taxes again in the coming year. The trouble is that Republicans have been so successful in cutting taxes in recent years that 44% of Americans no longer pay any federal income tax at all, and many more pay very little. After last year’s tax reform, a family of four earning $80,000 a year could pay as little as $2,300 in income tax: an effective 3% rate. A further 10% cut wouldn’t amount to much.
On the other hand, low- and middle-income workers do send the government a large share of their earnings in the form of payroll taxes. That same family of four pays $12,240 at the 15.3% combined rate for Social Security and Medicare. If you want to cut taxes for middle-class and low-income workers, that’s where you have to do it.
But instead of an impotent income-tax cut or, say, a payroll-tax cut of 4% of income, why not redirect that same 4% into personal retirement accounts for every worker? Call them “Trump Retirement Accounts.” With no decline in disposable income, American workers would suddenly be investing for retirement at market rates in accounts they own and control, instead of relying on Congress to keep Social Security solvent.
[Tom Giovanetti, “Why Not ‘Trump Retirement Accounts’?” Wall Street Journal, October 31]