Since Matt Yglesias is talking about the payroll tax a lot, I think its time to talk about my government pet peave: The Social Security Tax.

Facts about the Social Security Tax:
It is 12.5% of your income (half of which is hidden unless you're self-employed)
But only on the first $85,000 of your income!

So let's do a few little calculations... Suppose the amount you're a median family making (not including deductable, but including the amount your employer pays for social security) about $48,000. Then the social security tax is (12.5 is nicely 1/8) $6,000. This is of course %12.5 of your income.

Now suppose you're slightly more rich (or as we say at harvard "middle class") and making $200,000. Now 1/8th of $85,000 is about $11,000 so you're paying just over %5 of your income.

Now suppose you're a CEO making $2 million a year. Then you're still paying $11,000, which is roughly .5% of your income.

This is what is known as a regressive tax. A very very regressive tax. And, according to this goverment pie graph 34% of our federal government's income comes from this extremely regressive tax!

Why is no one talking about this? Why isn't this the new democratic rallying cry? Stop the regressive tax! Raise money for social security the same way you raise money for everything else, with a progressive tax, or at least a flat one.