Two articles in today's New York Times understate the size of the payroll tax, inaccurately leaving readers with the impression that the tax is about half of its actual size.
One article, by Binyamin Appelbaum and Catherine Rampell, reports:
lawmakers' decision not to reverse a scheduled increase in the payroll tax that finances Social Security, while widely expected, still means that about 77 percent of households will pay a larger share of income to the federal government this year, according to the center's analysis.
The tax this year will increase by two percentage points, to 6.2 percent from 4.2 percent, on all earned income up to $113,700.
A second article, by Nathaniel Popper, reports, "as expected, Congress decided to allow the payroll tax to rise 6.2 percent from 4.2 percent." (The sentence should say "rise to 6.2 percent from 4.2 percent," but that's a separate issue.)
In fact the Tax Policy Center of the Urban Institute and the Brookings Institution, a center-left group that the Times often relies on for this sort of thing, has a table with the payroll tax rate. In 2012 it was 10.4%, with an additional 2.9% Medicare tax, for a total payroll tax of 13.3%. A two percentage point increase will bring the Social Security portion of the tax back to 12.4%, which, with the 2.9% Medicare tax, brings the total payroll tax — a tax on employment, which is something that policymakers profess to want to encourage — to a monstrous 15.3%.
The Times' confusion on the point arises probably because the payroll tax is split between and "employee portion" and an "employer's portion." But Americans who are self-employed, as many are, pay both halves of the tax. And economists almost universally agree that the even though the employer's portion of the tax is remitted to the government by the employer, it in effect comes out out of the employee's pocket. It may seem like a subtle, technical point, but as a matter of framing the issue, it's important. How can one expect voters or members of Congress to support tax reductions when their newspapers won't even accurately report to them how much tax they are paying?