I think I laid this out in a previous post but it bears repeating. If you believe in low marginal tax rates in general and you believe in low taxes on capital then you have a best friend, its called the Payroll Tax.

Your objective, singular, focused and unwavering should be to make the payroll tax the strongest revenue generator you can imagine. Forget about the income tax. It will kill itself.

My long thesis is that most fiscal policy evolves in structural ways dependent upon the deep moral beliefs of the populace. Government is not viewed by most as a public policy tool or instrument for making tradeoffs. It is viewed as the temporal authority and people will want it to be a “just” temporal authority.

That having been said you can stack the deck in your favor a bit, so that as the natural evolution plays out the righteous move will be the move that you wanted anyway.

Here are your steps

  1. Uncap the SS contribution without compensation – that is no additional SS benefits just more taxes for the rich. Look how Progressive you are – who could say no. I mean really, who?
  2. Then “strengthen” SS and Medicare by raising the Payroll tax rate. Insist that the Trust Fund be funded well out to 2080. For the kids, you see.
  3. At this point you will generate a large current surplus
  4. Use surplus to fund cuts in the income tax. This is not a hard sell when there is an actual surplus.
  5. When it comes time to dip into trust fund, switch rhetoric and return to step 2

Over time you will evolve a system where the US government is funded almost exclusively by a flat tax on labor. You do not have to do anything that runs against common moral sentiments. You don’t have to propose anything that’s not a logical step. You don’t have to propose anything that is shocking – as in the past payroll tax increases can be phased in.