Any government’s job in a free market economy is to level the playing field for workers and employers. This is true nationally, and it is certainly true internationally. However, the government’s current demands through payroll taxes are contributing in the creation of an uneven playing field in that American employers are required to pay taxes over and above their American employee’s salaries.
When an American company hires an American, they are expected to pay 6.2% to social security, 1.45% to Medicare, and .8% to state and federal unemployment insurance. Thus an American worker making $5,000 is costing his or her employer $5,422. That same employer could employ a Chinese or Indian worker for $5,000 without any extra taxes. Payroll taxing punishes employers who hire Americans and encourages employee outsourcing.
To solve this problem, we suggest that two policies be put in place by the federal government. First, the payroll tax must be lowered to make American employees competitive in a global economy, and second that an equal payroll tax be levied to payments that American companies make to foreign companies / individuals for services that they receive. This is just one of the steps required to level the playing field and thus make the American worker competitive again in the world market.