Social Security Financing Legislation White House Statement.

We are very concerned about current efforts to amend the recently passed social security financing legislation. Upon signing the bill, the President praised the Congress for its political courage in voting for the taxes necessary to restore the financial integrity of the social security system. He did so, even though the bill adopted a financing plan different and more expensive than we had proposed.

It would be a mistake for the Congress to retreat from the 1977 legislation so soon after its passage. Hasty action now could result in ill-considered legislation which might again place the trust funds in jeopardy.

It is often forgotten that those taxes pay for important benefits for our people. Our first priority must be the protection of the social security system and the restoration of confidence of those who support it and those who benefit.

Much of the concern about the 1977 legislation appears to be the result of misinformation. News articles have asserted that the law would triple the payroll tax burden on workers and employers. That is simply not so. The correct measure of burden is the percentage of earnings which is devoted to the social security tax. By that measure, the payroll tax burden on the average worker, and the worker earning the maximum covered wage, will increase from 6.05 percent in 1978 to 7.15 percent in 1987. The high-income worker earning $30,000 today will experience a more substantial percentage increase from 3.5 percent in 1978 to 5.9 percent in 1987, because the payroll tax has become more progressive. These increases in tax burden are far smaller than those so often mentioned. We believe that most Americans would agree that this is a reasonable price to pay to ensure that the social security system is once again made sound.

Moreover, the President's proposals to reduce income taxes will more than compensate most workers for the increases in payroll taxes. The reform of the income tax is part of a carefully coordinated economic program, which will improve the equity of the Federal tax system and sustain economic growth. We urge the Congress to focus its attention on those fundamental proposals, rather than a short-term reduction in the payroll tax.