ss reform

[DOGS THAT BARK]

Was interesting hearing Greenspan comments also interesting to see GW's saying he would consider doing away cap on SS tax on wages above $90,000.

To me this should have been done long time ago--as I mentioned prior I think this WAS one of those tax adv to rich that was biased.

Is also interesting to see all the bi partisan BS.
Clinton had same rant as BUSH about SS needing immediate fix and the Dems were all for but the Rebs nixed it. Now the Rebs are all for it and the Dems nix it--go figure--

Maybe more scary than SS is U.S. pension funds. They had Wilshire(sp) report out yesterday and in 2000 20% of pension funds were underfunded---today 96% are underfunded and maybe beyond repair in CA.

 

[Turfgrass]

Back during his State of the Union address, President Bush stated his desire to reform Social Security. While he did not put forth a specific proposal, he has said he wants Congress to craft a plan that does three things: 1.) Instituted private investment accounts for younger workers 2.) Does not cut benefits for people 55 and older and 3.) Does not increase payroll taxes. So that's been the template so far. He's open to anything else, including raising the retirement age, changing the way cost of living increases are calculated, and so on.

Now he says that he would not rule out making more wages subject to Social Security taxes. At the same time, as before, he says he would not support increasing the payroll tax rate. So what exactly does that mean? Time for a little math.

Under the existing system, only the first $90,000 of income is subject to the Social Security taxes, which is 12.4%. That figure actually rises with inflation, because last year it was $87,100.

If you look at your check stub, you won't see the full 12.4% coming out of your check because your employer allegedly "contributes" half the Social Security taxes, but trust me, you're paying it in the form of reduced salary. Employers aren't stupid, you know. That's why they're rich and you work for them, and not the other way around.

So as the theory goes, sticking it to the rich would get some Democrats on board with Social Security reform.

Here's a better idea: why not let rich people opt out of Social Security entirely? In exchange for no big tax increase, they give up any and all future claims to Social Security. Probably won't happen though.

There is still rampant ignorance out there that is being perpetrated by the Democrats that a "Social Security Trust Fund" exists. Of course, there's no such thing. The money is gone - spent. The only thing left is trillions of dollars in I.O.U's, in the form of government securities.

So now you can add "screw the rich" to the list of possible Social Security reforms. Feels so good to say, doesn't it? That is, until you discover you're one of the "rich" ones.

 

[dr. freeze]

i think it is BS

no need to raise taxes

it is read my lips part deaux

 

[pirate fan]

I like the private investment part, why not take advantage of better returns if available? I know many people aren't savey enough for this so there has to be a place to keep the status quo. As far as the rich opting out, I think many would be for that as they get taxed on half their SS tax if there income is over 35,000 a year I think, maybe a little higher. So they already pay tax on money they were taxed while working to help them financially in their golden years. Something needs to be done and these idiots better stop worrying about which party is doing what, start working FOR the people like you were voted in for! I own a small business and I have to pay half of all my employees SS. Turfgrass is right on, I just can't pay my employees additional, the money has to come from somewhere.

 

[StevieD]

When Clinton wanted to fix it we had a surplus, now we are running a huge deficit. Not the time to fix it right now. Lifting the $90,000 limit would be the way to go IMHO.

 

[djv]

There are only 5.5% of the American folks over 90000. You want to fix it for 125 years as the economist stated. The good news is that number 5.5% will stay or grow over next 100 years if history is correct. So Change to 63 the youngest one can take early retirement. And you get 70% at 63. You can take it at 64,65,66,67 if you want but at reduced amounts. No one under the age of 54 at this time can get full amount till age 68. And of
course taxes can be taken out of ones check till 120000. There you have it 125 years. But wait we all know our government. This would be to easy lets try and screw it up. Oh by the way the money man said if you take it up to 150000. Your good for at least 175 years. Using 2.75%for inflation. Funny thats the average rate for inflation last 75 years. Dam we sure do have other very serious problems our priorities seem back-wards. In any case the man was on C Span and I did not get his name. One of those money keeks.

 

[Turfgrass]

When John Kerry floated a payroll-tax cap increase during the last election campaign, esteemed Harvard professor Martin Feldstein calculated that a family making $110,000 a year would face a tax increase of more than $2,700, essentially a 20 percent hike.

According to Americans for Tax Reform, a new tax cap of $150,000 would increase the combined employer-employee tax burden by roughly $7,400. The Heritage Foundation estimates that raising the cap would directly increase taxes for 7 million middle-class families.

Wall Street economist Michael Darda has also turned in some startling numbers. Eliminating the $90,000 ceiling on payroll taxes would boost the top marginal income-tax rate to 47.6 percent from 35 percent. Darda estimates that after-tax returns on marginal work effort would fall from 65 cents to 52.4 cents on the extra dollar earned, a 20 percent decline.

This is big money. What is more, economists have long acknowledged that the Social Security tax is a direct levy on employment, increasing the wedge between work effort and reward and making new jobs more costly.

Any hike in the wage tax cap would most significantly impact small-business owners and the self-employed -- the most dynamic growth sector for job creation. Should the combined marginal tax rate on personal income and Social Security wages increase significantly, both economic and job growth would be greatly deterred.

Ironically, Harvard?s Feldstein argued that hiking the wage cap would create a dead-weight loss on the economy and would lead to significant tax evasion by small-business owners who have chartered as S-Corps or LLCs.

Consequently, the net revenue gain from a wage-cap increase might be only $14 billion if the cap were hiked to $110,000. While damaging the economy in terms of rolling back incentives to work, this small revenue yield would do virtually nothing to solve the pending Social Security financial problem.

 

[djv]

Turf when they took it up from 5000 to 20000 back in 70's they said it was end of the world to.

 

[Turfgrass]

Social Security wasn't always a sucker's game. As with all Ponzi schemes, players who got in early made out like bandits. For many years, Social Security deductions were minuscule. Until 1949, the combined employer/employee tax rate was only 2 percent, and it was imposed on just the first $3,000 of income, for a maximum payroll tax of just $60 a year. The first Social Security recipient was Ida May Fuller of Ludlow, Vt., who retired in 1940 after having paid a grand total of $44 in payroll taxes. By the time she died in 1975, she had collected $20,933.52 in benefits -- a return on her "investment" of more than 47,000 percent.

It wasn't really an investment, of course. It was a forced transfer of wealth from younger persons to an older one. And as the number of Ida May Fullers grew, and the value of their benefits increased, the amount of wealth that had to be transferred kept climbing. By 1975, the Social Security withholding rate was 9.9 percent, applied to wages of up to $14,100. Maximum tax bite: $1,395 a year -- more than 23 times the $60 of a generation earlier.

And a generation later? Today Social Security skims off 12.4 percent of the first $90,000 earned - one-eighth of every paycheck. There are no exemptions, no deductions. It kicks in from the very first dollar of income. It is the biggest tax the average American household faces -- 80 percent of us pay more in Social Security taxes than we do in income tax.

One tiny notch at a time, payroll taxes have been ratcheted up to a level that would have been unthinkable in Franklin Delano Roosevelt's day. No wonder Social Security is so unpopular among the young. It provides no security for their retirement, while it impoverishes them in the present. In exchange for an eighth of their earnings today, it guarantees nothing but higher taxes tomorrow. That there are politicians who defend so regressive an arrangement wouldn't have surprised FDR. But how shocked he would be that they call themselves Democrats.

 

[Englishman]

Turfgrass, that was perfectly put. Post of the year so far!!

 

[dr. freeze]

its absolute BS

give me the money now and let me invest it myself

its a scam that only a fool would love

 

[DOGS THAT BARK]

Interesting post Turf--Thanks--you hit the nail on the head when you said Ponzi scheme.

 

[BobbyBlueChip]

Ponzi scheme is the word I use when I think of the stock market and that's what concerns me about the privatization issue. A flood of money into the market will increase the value of the previous owners stock and then when the bubble does pop, who do you think is going to be in a better position to get out quickest? The guy w/ his broker on speed dial or the shlep who's got to go through a government agency.

And dogs, keep in mind Turfgrass's post regarding the payroll tax burden on all individuals the next time you quote those misleading statistics on the income tax and who pays what. It all goes into the same big pot.

 

[DOGS THAT BARK]

We are approaching the point where voters adversely affected by the income tax are a minority that can be exploited to the hilt. There are 129 million taxpayers. The top 5 percent of income earners (6.5 million people) already bear 54 percent of the income tax burden. The top 25 percent (32 million people) pay 83 percent of the total personal income tax collection.
The remaining 75 percent of taxpayers (97 million people) bear only 17 percent of the income tax burden, and 70 million voters have no income tax liability whatsoever.
With 167 million voters with little or no income tax liability and 32 million burdened with 83 percent of the liability, have we achieved the tyranny of the majority? Will the political temptation to plunder the minority and to turn them into tax slaves destroy the creativity and productivity of the American economy?
Paul Craig Roberts

Which do you feel or misleading Bobby and why?

2nd Would you deem Reids # s more accurate--in case you forgot he was one for it in Clintons adm but now against it.
Saw he and Kennedy putting up their charts on how one would earn more under current system than if the had indiv account---what they are assuming but not telling people is that for that to be remotely fact current system would have to remain solvent--in addition they would like you to believe you are better off with Gov keeping everything you paid in at death rather than you owning account and being able to pass it on to your heirs.
Would take true liberal to bite on that--yes?

 

[Turfgrass]

That's Federal Income tax not social security.

 

[BobbyBlueChip]

The problem debating taxes is that usually when you see this viewpoint, they only include income tax and sometimes include estate tax, but they always ignore payroll taxes which is the highest proportion of the tax that the working poor and the middle class pay.

Do you honestly think that we've ever reached the "tyranny of the majority?"

 

[DOGS THAT BARK]

I think it clearly points out income tax--so again which fact is not accurate--if anyone can show me I won't put it up again.

"but they always ignore payroll taxes which is the highest proportion of the tax that the working poor and the middle class pay."

would agree 100% that if they pay any payroll tax at all it is more than income tax considering 167 million voters have little or no income tax liability whatso ever.--I'm no Einstein but could figure that calculate that without a pencil

 

[djv]

Age is a factor when your under say 30 and young and stupid. I also said this sucks when not informed and young and thinking only of myself. But when I took time to think about how it helped all members of my family Mom/Dad/Grandpa/Grandma and so on I came to understand. Some time the good for all the people is the best. As for private accounts that can go broke and may have in the bear markets of the 70's. Or at least made less then 2% between 73 and 76. Or the complete melt down in the 30's. Or the big hit in 87 of over 25% in one day. And of course the hit we just had of over 35% 01/02. Just think your retiring on one of those days and watch your money get cut by 25%to 50%. And your one of the majority of folks here in USA that will only have that for your retirement. Many will just commit suicide as in the 30's. Please don't say it can't happen. Many of you here are gamblers and know history repeats it self.

 

[kosar]

Many will just commit suicide as in the 30's. Please don't say it can't happen. Many of you here are gamblers and know history repeats it self.

DJV,

For right now, we're talking about 2-4% of 6.2%(hopefully rising over the course of years, though). Even if the stock market collapses as in 1929, I highly doubt people would be jumping off buildings because they lost a miniscule % of their SS. People would still have the option to keep the status quo. And like Wayne mentioned, just the fact that you can pass these benefits down to heirs makes it appealing.

It's bullshit that you can pay into that system for 40 years, then die at 60, and you can't leave anything for anybody. It's just like our ridiculous estate taxes. How many friggin' times can a dollar be taxed?

 

[Turfgrass]

Age is a factor when your under say 30 and young and stupid. I also said this sucks when not informed and young and thinking only of myself. But when I took time to think about how it helped all members of my family Mom/Dad/Grandpa/Grandma and so on I came to understand. Some time the good for all the people is the best. As for private accounts that can go broke and may have in the bear markets of the 70's. Or at least made less then 2% between 73 and 76. Or the complete melt down in the 30's. Or the big hit in 87 of over 25% in one day. And of course the hit we just had of over 35% 01/02. Just think your retiring on one of those days and watch your money get cut by 25%to 50%. And your one of the majority of folks here in USA that will only have that for your retirement. Many will just commit suicide as in the 30's. Please don't say it can't happen. Many of you here are gamblers and know history repeats it self.

Here is the epitome of the uninformed that the AARP loves. Scared to death about what happened in the 30's.

Raising Social Security taxes today will not leave a dime more to pay pensions to future retirees. Right now there is more money coming into the system than is going out -- and the difference gets spent on other things. Higher taxes now would mean a bigger excess to be spent on other things, leaving nothing more for the future.

People who oppose the privatization of Social Security call it "a risky scheme." But is anything more risky than turning money over to politicians and hoping that they won't spend it before you retire? They have been spending the "trust fund" for decades.