12 December 2015

Dean Baker: The Federal Reserve Board's 8 Percent Hike in the Social Security Tax

In the last couple of weeks the prospect of a 0.2 percentage point increase in the payroll tax has become a major issue separating the two leading contenders for the Democratic presidential nomination. Sen. Bernie Sanders has proposed an increase of this size to pay for system of paid family leave that is part of his platform. While former Secretary of State Hillary Clinton also supports paid family leave, she opposes any tax increase on middle-class workers, and insists she can get the money elsewhere.

The intensity of this debate over a tax increase of 0.2 percentage points (at $70 a year for a typical worker), should have people wondering why the candidates aren't talking about the prospect of a much larger tax increase imposed by the Federal Reserve Board. The Fed's tax increase could easily exceed 8 percent of the wages for ordinary workers, yet it is not drawing any attention from the presidential candidates.


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