payroll tax

Engine: Engine 1

Framing

payroll tax 28% replaces FICA and the $17,000 average employer health premium. No separate insurance bill. The payroll tax is a single, uncapped levy on all forms of compensation — wages, salaries, bonuses, stock-based compensation, contractor payments, and deferred compensation — that funds Distributed Healthcare and Social Security 2.0 in one consolidated instrument. The federal social stack is paid from one source, not three (FICA + employer premium + state Medicaid match), and the household sees one withholding line, not two on the paystub plus a separate premium share.

The canonical parameters

Baseline payroll tax rate: 28.00%

Employer portion: 17.50%

Employee portion: 10.50%

Cap: none (applies to all compensation)

Corridor (Debt Sunset governor): 26.50% – 29.00%

Deductible: the employee portion is above-the-line deductible from AGI

Internal allocation

There is none. The 28% payroll tax is uncapped and flows undifferentiated to the General Fund — no destination silos for Social Security, Distributed Healthcare, the Skills Wallet, Baby Bonds, or any other obligation. Distributed Healthcare, the Social Stack, Defense, Infrastructure, and every other federal commitment all draw from the General Fund alongside SS 2.0. During the 2031–2036 transition the existing SS Trust draws down to fund benefits; after Trust dissolution, SS 2.0 becomes a permanent General Fund commitment calibrated to the bend-point structure (90/28/22/10/5) and the $1,150/month Dignity Floor for 30-year contributors. The architecture deliberately retires the FICA-style earmark and the political fiction that accompanied it ("FICA funds Social Security" was never literally true once the Trust went into cash deficit). What replaces it is a statutory benefit floor plus a cause-agnostic Debt Sunset Governor — protections that survive the political cycle better than the earmark did.

What payroll tax replaces

FICA (Social Security + Medicare payroll tax) is retired. Under the current system, employees and employers together pay 15.3% on wages up to the cap, with additional Medicare of 2.9%. payroll tax simplifies this to a single 28% rate with no cap. Net effect on a middle-earning household is modestly higher payroll tax, offset by Distributed Healthcare replacing private insurance premiums and by Universal Child Allowance and other benefits.

Why uncapped

The existing FICA cap creates a regressive structure. Removing the cap restores simple proportionality and produces approximately $3T more annually than capped FICA at identical rates.

Debt Sunset governor interaction

payroll tax is one of two instruments the Debt Sunset macrogovernor adjusts (the other is the top income tax rate). When Year N+4 projected deployable falls below zero, Debt Sunset moves payroll tax upward by 0.25pp and top rate upward by 0.25pp together. The payroll tax corridor is 26.50%–29.00%.