A Grim Outlook on Benefit Taxes

Medicare and social security will eventually go bankrupt and leave all those who paid in without benefits. There has been recent talk especially by Senator Harry Reid of putting a surcharge on Medicare payroll taxes for those who make over $200,000. This in effect would increase taxes for the wealthy even more with them paying like 12 or 13 times more than lower-income workers. This would hurt the economy and decrease productivity because of the reduced incentive to make money since it will just be taxed away. 

The author make a very interesting point about the long term effects of increasing taxes: "For high-income workers (earning the equivalent of $500,000 in today's dollars) the combined Medicare and Social Security tax has been growing at about 6% per year for 33 years. Another 50 years of such growth in entitlement taxes versus, say, 3% per year growth in income, means that two-thirds of a high-income earner's pay will go toward Medicare and Social Security. Assuming federal and state tax rates stay "reasonable" at 45% or so of income, the rich will have to borrow money in order to meet their total tax burden."