May 16, 1996 | Commentary on Jobs, Jobs and Labor Policy

ED051696a: Your Right To Know

Once in a while, someone comes up with an idea everyone can agree on. Michigan's Mackinac Center for Public Policy has come up with a way for all Americans to know exactly how much their employers have to pay the government -- and for what -- in order to keep them on the payroll. It's called "The Right To Know Payroll Form."

If your employer adopted this form, your pay stub would show every bit of money the government takes from your pocket each payday. And why shouldn't you have this information? You're a taxpayer and the government is supposed to serve you, not the other way around. These costs affect you directly. Who can object to your knowing?

The "Right To Know" pay stub would tell you how much your employer paid: 1) to administer federal, state and local taxes; 2) to comply with mandatory programs like the Americans With Disabilities Act, Family and Medical Leave Act, Equal Employment Opportunity Act, etc.; 3) for unemployment insurance; 4) for workers' compensation; 5) for the employer's share of Medicare; and 6) for the employer's share of Social Security.

Did you know all that was coming out of your paycheck? Well, we're not through, of course. We haven't mentioned the rest of the items that would appear on your pay stub: 1) withholding for federal income tax; 2) withholding for state income tax; 3) the employee's share of the Social Security tax; 4) the employee's share of the Medicare tax; 5) withholding for local income tax.

After all that is deducted from your earnings, you get to keep what's left. Just so you have some idea how your pay stub would look moneywise, take the example provided by the Mackinac Center, based on current tax rates. John Doe's two-week pay stub starts with an amount of $1,026.59, which represents the total amount his employer must put up to pay all the costs we mentioned, plus pay John Doe.

After the first group of costs listed above are taken out -- in other words, the "hidden" money that vanishes before Mr. Doe sees a single penny, even on paper -- John is left with a gross of $916.67.

Now, take special note: The way John Doe's pay stub now reads, he has the impression that $916.67 is his total cost to his employer. Yet, the "Right To Know" payroll stub tells a different story: that his employer already has paid $109.92 to the government just to employ Mr. Doe. Every two weeks. And the same is true for every employee.

Then, all the rest is taken out -- Social Security, income tax, etc. And what is John Doe left with out of a total $1,026.59? Just $686.67. Another way to put it: Before John could be paid $686.67, the government had to be paid $339.92.

Well, now. Doesn't that seem like a lot? It does to me. Don't you think that if all Americans could see in this kind of detail exactly how much of their money is being diverted to the government -- much of it before they even know about it -- they might have a few more questions about why the government needs that much money and what is being done with it?

I do. In fact, I think every employer should give this sort of accounting to every employee.

I suppose this kind of "better-informed citizenry" would make a few people in liberal, big-government circles just a wee bit uncomfortable. After all, people suddenly would see the hand of big government dipping into their wallets every couple of weeks, whereas before it was done on the sly. But liberal discomfort has never bothered me before.

And it doesn't bother me now.

Note: Edwin J. Feulner, Ph.D. is president of The Heritage Foundation, a Washington-based public policy research institute.

About the Author

Edwin J. Feulner, Ph.D. Founder, Chairman of the Asian Studies Center, and Chung Ju-yung Fellow
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