It is certainly a new idea to me to suggest that the social security tax is desirable as a leveler of the income tax. I don't think the income tax should be leveled unless another adequate source of revenue to replace it can be found. However, this is exactly what a wealth tax would do. Institute a wealth tax and lower both income and social security taxes.
If the 10% of the people who are wealthy pay 60% of the money that the government collects by taxing income, this is simply a characteristic of the income tax system, which is designed to be progressive and could hardly be anything else. Any inequities within the income tax system have nothing to do with social security of the distribution of wealth and income.
The federal budget for the US in the year 2000 is about $1.77 trillion. That means the government will collect $1.77 trillion and it will dispense $1.77 trillion. Since the government expects to collect more than it needs for all of its operations, it will have a surplus of $250 billion. Newsday says that this money should be used to help save the social security system and that this can be accomplished by using the surplus to reduce the national debt; this can be done by buying back $250 billion worth of US government bonds that are now owned by banks and individuals. In year 2001, the budget will be similar but a little larger and the debt can be further reduced.
At some time in the future, if all goes well and surpluses continue, the debt will go to zero and the government will have to get rid of the surplus some other way; it can reduce taxes; or it can invest more in infrastructure such as roads and education. An alternative would be for the government to invest in the private sector, but that would be a very bad idea because it would put the US on the road to some form of corporate state of the type that eventually destroyed the USSR.
Of course the surpluses are not going to continue forever. At some point the government will need more money (especially to make social security payments) than it expects to collect. As this process begins, the government will either raise taxes, sell US bonds, or sell government property.
The point was raised that a 1% tax on wealth would only bring in $450 billion and that this would hardly solve the burden now being created by social security. But if you collect 1% every year, then in 10 years you collect $4.5 trillion. Further, the social security tax started in the 1930s at a very low rate and is now above 10%. A wealth tax need not stay at 1%; further it could be somewhat progressive.
