Tax Waste Not Work!

by June Taylor

Friends of the Earth newsletter, Fall 2003

While the government rewards the energy industry with generous subsidies, hardworking Americans are punished with high payroll taxes. For nearly 90 years, the federal taxpayer has been bankrolling the oil and coal industries, and getting paid back with polluted air, water and a dangerous dependence on fossil fuel. Why should hardworking Americans have to give up so much for so little?

If we shifted taxes - lowered the payroll tax and instituted new taxes on energy production, raw materials and toxic pollution - we would send the right signal to American business and industry: employ people, conserve energy and reduce waste. And we would boost the economy by putting more people to work. A leading economist estimates that a 10 percent reduction in payroll taxes would create a 3 percent boost in employment levels in the short run and 10 percent in the long-term. Substituting other taxes for payroll taxes would also help to diversify and, ultimately, strengthen the funding base for Social Security and Medicare.

Payroll taxes for employees and employers, combined, now total 15 percent of wages - 12 percent allotted to Social Security and 3 percent to Medicare Hospital Insurance. The Social Security tax is our most regressive federal tax - it's a flat tax rate that applies to the first

$80,400 of wages, so lower-wage workers pay on every dollar they earn. Today, 80 percent of Americans pay more in payroll taxes than income taxes. Historically payroll J taxes have been a small part of federal revenues - starting at 2 percent and rising this year to 37 percent. With the recent reductions for income and dividend taxes, payroll taxes could easily jump to 40 percent of federal revenues. And, as we have learned, there is no "lock box" on payroll tax revenues; so the taxes of workers earning under $80,400 are going to subsidize coal companies, oil companies and our excess energy consumption.

At a time when we need job creation we should not be taxing those businesses that provide jobs and bring on new workers. Small business managers (the ones that create the most jobs) say that payroll taxes are their number one obstacle to new hiring. As impressive (or depressive) as the official unemployment statistics are, they fail to show the true picture of unemployment in America. Folks who are not actively looking - the people who have given up, the young minorities who've never had a job, the moms who might like to work part-time but can't find flexible work- are not even counted. Nor are the 70 percent of disabled who are able to work, but still unemployed more than a decade after passage of the Americans with Disabilities Act.

Environmentalists alone may not have the power in Congress to "tax waste, not work," but working in concert with other groups who are concerned about health, national security, jobs, a strong economy and protecting Social Security we might just get what we need.

June Taylor is a long-time environmental writer and a consultant to the non-partisan full employment group GetAmerica Working! Friends of the Earth President Brent Blackwelder is a member of GetAmerica Workings advisory council.

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