Debt

While 50% of people pay zero income tax, every worker pays payroll tax (social security tax). One way to close the income gap is to remove the payroll tax on the first $25,000 of earnings and pay for this by raising the current limit on payroll tax from $160,000 to $400,000. This will remove the tax from the lowest quintile and increase the tax on the highest quintile. Another way to close the gap is to increase the child tax credit to $5,000. A family of four could earn $120,000 and pay zero income tax. Remove the payroll tax cap and that would pay for this benefit. Eliminating capital gains tax would bring in $30 billion per year. A recent proposal is to increase the top tax rate from 37% to 40% for people earning more than one million and use that to pay for the child tax credit. All of these proposals are ways to redistribute income and not one is used to reduce the deficit. It appears that closing the gap is more important than lowering the debt.