August 11, 2011
Governor Mitt Romney
Mitt Romney for President
585 Commercial St
Boston, MA 02109
Dear Governor Romney:
While campaigning at the Iowa State Fair, you were asked by a member of the crowd if you support raising the cap on payroll taxes, so that the rich pay more into the system. You responded by saying “…When it comes to Social Security, Medicare, and Medicaid, the truth is that we need to make sure we can keep the promises we’re making to 20 and 30 year olds. You may say we should just raise everyone’s taxes. Do you know what the tax rate would have to be if we wanted to keep the promises we made? Right now those programs take a payroll tax out of earnings of 15.3 percent. That would have to rise to 44 percent. We’re not going to do that.”
Actually, according to the Congressional Budget Office, there is no need for an increase in Social Security taxes through 2038, a full 17 years after the last date you could possibly be in the White House. In 2050, when today’s 20 and 30 year olds will be in or near retirement, the combined Social Security and Medicare tax rate would be 17.3; in 2085, the tax rate would be 22.5 percent, assuming that no changes are ever made in these programs and their costs follow the trustees’ projections.
Neither of these rates approaches the 44 percent you mentioned at the State Fair. The necessary tax rate would be even less if the Social Security tax cap was set at 90 percent of wage income as suggested by the Greenspan Commission in 1983.
As a candidate for President of the United States whose decisions could have a tremendous impact on vital programs like Social Security and Medicare, I hope that you will be careful to present the facts more carefully in the future. If you would like any additional background on the program, I would be happy to assist you.
Best Regards,
Dean Baker
Dean Baker
Co-Director
Center for Economic and Policy Research
