AFL-CIO: freeze payroll tax

The AFL-CIO is plying the democratic and Republican platform committees to replace most of a big social security tax increase coming next January with federal income tax money.

The federation, which represents almost 13.5 million US workers, says a rise in the tax next year -- from 6.13 percent now to 6.65 percent -- would further burden those in low- and middle-income groups already struggling to make ends meet.

In effect, the proposal would freeze the tax rate at this year's level and make up for the lost increase with other federal revenue.

According to the federation's chief economist, Bert Seidman, reinforcing social security through partial funding from income tax revenue would ease the burden on lower-income groups by requiring those at higher earning levels to bear a larger part of social security costs.

The federation is less concerned with another change due to take effect in 1981: The social security tax now is levied only on the first $25,900 of annual earnings, but under legislation enacted in December 1977, aimed at reinforcing the financing of social security, the taxable amount is due to rise to $29,700. Few AFL-CIO workers would be affected.

Many unions have advocated a total rollback of the 1981 tax increase, with either cancellation of the higher rate or its deferral until times get better. The AFL-CIO considers these alternatives unwise on the grounds that social security needs more money.

The federation also opposes any plan to reduce benefits for some social security beneficiaries, to reduce annual cost-of-living increases in monthly payments, or to tax a portion of benefits.