McCain must focus on the payroll tax

Reihan Salam

TEXT OF COMMENTARY

KAI RYSSDAL: John McCain and the Republican Party will turn their convention back to politics tonight, which provides us the opportunity to do something similar to what we did when the Democrats were meeting last week -- ask some GOP policy types to weigh in on this topic: Where can your party do better?

Commentator Reihan Salam says some Republicans have lost touch with the economic anxiety of average Americans, and he offers a suggestion for self-improvement.


Reihan Salam: Republicans have been winning elections by promising income tax cuts for decades. But times have changed. When Ronald Reagan promised to slash taxes in 1980, a median-income family of four was paying almost 12 percent of its earnings in federal income taxes. It's no wonder that the tax burden was the number one issue for middle class families. Since then, however, that number has fallen to less than 6 percent.

Which is why the GOP seems so out of touch with the economic fears that keep Americans up at night. The working- and middle-class voters who form the bedrock of the Republican base still worry about their income taxes, sure -- but they worry a lot more about rising health insurance premiums and gas prices and the huge share of their income that goes to the regressive, job-killing payroll tax.

This year, John McCain has offered voters a decent plan to tackle health-care costs and a way forward on energy. But if he wants to win the election and build a lasting Republican majority, he needs to go further than Ronald Reagan ever dared. He needs to take on the payroll tax.

In 2005, the payroll tax raised $760 billion. The income tax raised $1.1 trillion. The main difference is the income tax burden is borne by the rich, while the payroll tax hits working stiffs. That's why we need a fairer, more family-friendly system. Call it a progressive consumption tax with a twist. The rich would pay a higher rate than the poor. Savings would be exempt. And now for the twist . . .

The idea behind the payroll tax is that, through Social Security, you eventually get out of the system what you put in. But we all know that today's retirees are supported by today's workers. And tomorrow's retirees will be supported by today's children. So why not give parents of young children a big credit against the payroll tax -- big enough so that a middle-class family with two or three kids will pay zip?

The Democrats will cry foul. But moms and dads across the country will know that the Republicans are looking out for them, and not just a bunch hedge-fund billionaires.

RYSSDAL: Reihan Salam is the co-author of the book "Grand New Party: How Republicans Can Win the Working Class and Save the American Dream."

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