I thought that Robert Shapiro’s Washington Monthly plan for financing a reduction in FICA by increasing capital gains and corporate income taxes was better than a lot of plans for redistribution I’ve seen. He concludes:
Whatever the details, payroll tax relief provides an unambiguous way to give working Americans meaningful support. At the same time, higher taxes on the capital gains and dividends banked predominantly by high-income investors, their stock market transactions, and the corporations that generate those capital gains and dividends can all provide equitable ways to pay for it. Any Democrat looking for a meaningful way to resonate with today’s voters might want to think about making such a proposal.
IMO an even better plan would be to increase FICA max to the threshold wage for being in the top 1% of income earners and reducing the FICA rates for both employers and employees commensurately. But I’m glad to see somebody thinking along these lines. If he added economic efficiency to his thinking it would be even better.
