There are three situations where employers are not giving a true match of payroll taxes.
First, with the Affordable Health Care Act, the highly-compensated employee pays the .9% Medicare Tax, whereas the employer does not match it.
Second, the employer gets a US federal income tax deduction for the payroll taxes it pays, whereas the employee does not. Thus, most of the large C Corp employers are effectively getting a 35% discount on their payroll taxes paid.
And third, the employee got the one-time payroll tax holiday, but the employer did not. Since this was a one-time event, it does not have a long-term effect.
My recommendation is to have the employer, both the C Corp and the pass-thru entity, pay a true economic match of payroll taxes, on a long-term ongoing basis.
Thus, the .9% Medicare Tax should also be paid by the employer.
And also, all Social Security and Medicare payroll taxes paid by the employer should be grossed up so that the after income tax benefit effect is accounted for, and thus the present 35% discount that most C Corps now receive is eliminated. Or perhaps an easier way here would be to just disallow as a US federal income tax deduction the payroll taxes paid by the C Corp or by the pass-thru entity (i.e. the US federal income tax deduction now passed thru and thus effectively allowed at the individual owner level).
All of the money raised here, which will be very substantial, should be used to reduce the US Debt.
Having the employer pay a true match of Social Security and Medicare payroll taxes is a much better and fairer way to reduce the US Debt than either reducing Social Security or Medicare benefits of the elderly.
And as another thought, it would be far better for the US economy for highly profitable pass-thru entities to effectively pay a fair true match of the payroll taxes than to increase the marginal income tax rate of pass-thru income at the individual income tax level by a like amount.
Further, by employers paying a fair true match of payroll taxes, both the Social Security Trust Fund and the Medicare Trust Fund, if there is one, would get in substantially better financial shape over the long run.
