Middle-income Americans are not squeezed only on the employment taxes nominally charged to them. They also bear the ultimate cost of the employment taxes paid by their employers, which also happen to be 7.65% for middle-income Americans. The employer’s share of federal employment tax is a cost of employment. Reduce it, and there’s more available to pay workers. If President Trump’s purpose in cutting the corporate income tax was to increase wages and create jobs for middle-income Americans, why didn’t he instead cut the employer share of employment taxes?
When you add them up, there are $8,815 in employment taxes paid on that median-income family’s wages, but Trump chose instead to focus on their measly income tax bill.
And why didn’t President Trump focus instead on the myriad other costs that are truly clobbering middle-income Americans? College expenses, as a percentage of middle-class incomes, have skyrocketed over the past several decades. While that median-income family of four faces an annual federal income tax bill of $3,375 or less, the cost of sending Junior to college, even at State U, is likely to be six times that much, or higher.
Or what about early childhood education? Children from median income families are at a disadvantage compared to their upper-class peers because their education starts later in life. Why not focus on making early childhood education affordable for all families?
That bottom line: If President Trump’s goal is to help middle-income Americans, the federal income tax was about the least likely path to get him there.
Which raises the question: What’s his real goal?