Saturday, May 31, 2008

Tax Foundation: State-level statistics on effect of lifting payroll tax ceiling

The Tax Foundation provides state-by-state data on the number of individuals who would be affected by proposals to eliminate the payroll tax ceiling, with or without a "donut hole" as proposed by Sen. Obama. One thing that becomes apparent is that very few workers would be affected with the $200k or $250k donut hole exemptions, which is one reason why they address less than half the 75-year shortfall while eliminating the cap for all workers above the current ceiling of $102,000 would come close to fixing it.

Also worth noting is that the Tax Foundation's data is based on an annual cross section; while very few people earn over the taxable maximum in any given year, over their working lifetimes around one-in-five has at least some earnings above the cap.

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