Reagan Was Evil
There is a delusion common among Republicans that the late President Ronald Reagan is a God who lowered taxes without consequences. In fact, that is a lie.
Reagan shifted the tax burden from the wealthy to the poor.
When Reagan came into office, he dropped the income tax rate from 70% of income to 28% of income. Not surprisingly, that left massive federal deficits. So, Reagan turned to the other way that money is taken from paychecks — FICA, which goes to pay for Social Security. Reagan doubled the Social Security withholding from 6% to 12% (employee + employer) and instead of putting that extra money into the Social Security Trust Fund — as he should have — Reagan diverted much of that Social Security money to pay for the huge deficits his income tax cut left behind. What difference does that make?
Well, Income Tax withholding affects every dollar a person earns. That means a person who earns $100 Billion a year would have to pay 28% of that $100 Billion in income taxes, or $28 Billion. But Social Security doesn’t work that way. For Social Security withholding, money is deducted until $113,800 a year. After that level is reached, the so-called “cap”, not another dollar is taken out for Social Security. That means someone who earns $100 Billion a year pays not one penny more into Social Security than does someone who earns $113,800 a year. Every dollar above that is untouched by Social Security.
What I am trying to say is: Reagan shifted the tax burden from wealthy people onto the backs of everyone who makes less than $113,800 a year. Reagan cut taxes for rich people, then stole the Social Security Trust Fund money to fix his deficits. Because money that was supposed to pay for Social Security was diverted to fix the deficits caused by Reagan’s tax cuts for the rich, to this day we have an underfunded Social Security Trust Fund, and people like Mitt Romney have the gall to say that “47% pay no income taxes” — conveniently ignoring the sweet deal the wealthy have on Social Security.
That “cap” on income that is taxable by Social Security is something Bernie Sanders wants to eliminate. Go Bernie!