If you aren’t concerned about the elimination of the payroll tax, you should be. In 2019, the federal government collected 36% of total revenues from payroll taxes.

It means NO unemployment, Social Security and Medicare run out in 2023, and if you are young, you lose what you put in already and have NO monies for when you do retire.

The majority of these taxes fund Social Security and Medicare. Federal payroll taxes also fund the Unemployment Insurance program and retirement for federal and railroad workers.

The Social Security portion funds Old Age and Survivors Insurance and Disability Programs and the payroll taxes account for 88% of their funds.

The Payroll Tax- employers and employees each pay 7.65% . The portion dedicated to Social Security is 6.2% to $137,700 in income and 1.45% is for Medicare.

In 2019, Social Security received $914  Billion from payroll taxes or 4.3% of GDP.

President Trump recent executive order suspends payroll taxes until the end of the year (to be paid back next year), however, he has said that if re-elected he will roll them back permanently. He says he will fund Social Security (no mention of Medicare) out of the general fund and get money someplace else.

President Donald Trump released a would-be record $4.829 trillion federal budget proposal for fiscal year (FY) 2021 on Feb. 5, 2020.

The U.S. government estimates it will receive $3.863 trillion in revenue, creating a $966 billion deficit for Oct. 1, 2020, through Sept. 30, 2021.

The Congressional Budget Office predicted that the COVID-19 pandemic would raise the FY 2021 deficit to $2.1 trillion. The FY 2020 deficit will be $3.7 trillion. And, still growing.

Government spending is broken down into three categories: mandatory spending, budgeted at $2.966 trillion; discretionary spending, forecasted to be $1.485 trillion; and interest on the national debt, estimated to be $378 billion. Each category of spending has different subcategories.

The federal government estimates it will receive $3.863 trillion in revenue in FY 2021. Most of the revenue is in the form of taxes, paid by taxpayers, either through income or payroll taxes. The estimate for each type of revenue is as follows:

  • Income taxes contribute $1.932 trillion or 50% of total receipts.
  • Social Security, Medicare, and other payroll taxes add $1.373 trillion or 36%. (Note that this is what Trump wants to eliminate)
  • Corporate taxes supply $284 billion or 7%.
  • Excise taxes and tariffs contribute $141 billion or 4%.
  • Earnings from the Federal Reserve’s holdings add $71 billion or 2%. Those are interest payments on the U.S. Treasury debt the Fed acquired through quantitative easing.
  • Estate taxes and other miscellaneous revenue supply the remaining 1%.

So, if Trump wants to eliminate the payroll tax and fund Social Security from “other places”- which based on the above means—higher income taxes, higher corporate taxes, higher estate taxes and it will have to result in 36% of the total federal revenue.

Source: Thebalance.com –https://www.thebalance.com/u-s-federal-budget-breakdown-3305789#citation-9

So, we can conclude that there are NO “other places” to fund Social Security, Medicare, Unemployment, and Federal and RR Retirement  and Disability benefits other than payroll taxes. And, given the Covid impact, it also means no money for unemployment.