Last year’s unsurprisingly dismal budget numbers contain a surprising revenue story. While overall federal revenue fell precipitously, payroll tax revenue barely dipped at all. This divergent tale of two taxes has one conclusion but many implications. America’s tax system, decidedly tilted toward upper income earners, is precariously balanced. It is not only volatile in economic downturns – it is unsustainable long term.

The Congressional Budget Office recently reported that overall federal revenues fell 16.6 percent in fiscal year 2009.  While corporate income tax revenues fell 54.6 percent and income tax revenues fell 20.1 percent, payroll tax revenue funding Social Security and Medicare slipped just 1 percent.

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