Eliminating cap on Soc Sec payroll tax wages solves 93% of problem

http://story.news.yahoo.com/news?tmpl=story&cid=676&ncid=716&e=24&u=/usatoday/20050318/ts_usatoday/politicianstotakeahitwithanybenefitsfix

• Increasing the amount of income subject to the Social Security tax. The Social Security payroll tax of 12.4% will be levied on the first $90,000 of income in 2005. The amount rises annually with inflation. About 16% of all wages are untaxed.

An ABC/Washington Post poll this week showed that raising the cap on taxable wages is the most popular option to improve Social Security's finances. President Bush says he will consider it, but Republican leaders in the House of Representatives have ruled it out. The president and congressional leaders have ruled out raising the Social Security tax rate.

The AARP, a lobbying group for people 50 and older, says 43% of the system's deficit would be eliminated by raising the taxable income limit to $140,000. Actuaries say 93% would be eliminated if the cap were removed entirely.

One problem: Social Security bases benefits on a retiree's income that is subject to the Social Security tax.

"The taxable limit is there partly so Social Security doesn't have to cut $100,000 monthly checks to Bill Gates, Warren Buffett and Donald Trump," says David John, a Social Security expert for the conservative Heritage Foundation in Washington.

Sen. Edward Kennedy, D-Mass., and other liberals oppose denying benefits to the affluent because they fear it will change the image of Social Security from a quasi-pension system to a welfare program. That could diminish its broad political support.

I hadn't thought of SS in the terms that Sen. Kennedy discussed---Political reality is that he's right...

:-)

with payroll taxes which will remain as a most regressive tax, also subject to income tax, that is inflicted upon all the income of a very high percentage of taxpayers.

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would also solve a lot of the solvency problem. If Bush is so concerned about solvency, why would he spend so much energy promoting private accounts which does nothing for the solvency and why did he say nothing about the impending bankruptcy of Medicare? I don't want to think of our president as a bad man, but maybe he is.

and I am a happy camper!.

:-)

NPR said that public surveys showed that raising the income cap at which social security taxes are paid is by far the most popular alternative.

There is a big problem with the alternative of raising the retirement age. Many people work in jobs that result in their being physically worn out by age 65 or 67. (People born after 1960 don't collect full security until after age 67 under present law.) If you work in a physically demanding occupation, you probably will not be able to keep going until 68 or 69. As it is, even in office jobs, many people have trouble driving and have hearing, arthritis, sight and heart problems by that age that limit their ability to earn a living.

Maybe there could be additional incentives for people to keep working, but without penalizing people who feel a need to retire at 66 or 67.

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There is one other factor in these long-range projections. We have absolutely no idea what birth rates and immigration rates will be like in the future. Many European countries are having big problems with their government pensions because their birth rates are much lower in the U.S. For example, Italy is facing a major decline in their working population. Russia has also seen big declines in birth rates.

Also, we don't know whether millions of current illegal immigrants, in the future, could be granted amnesty and brought into the social security system. That has happened many times in the past.

on tax cuts for the rich. Without those tax cuts for the rich, there is NO problem. Ever.

The projections of a SS problem assume a US economic growth rate lower than the growth during the Great Depression. Which is why -- for the last decade -- the alleged problem has been receding by about a year-and-a-half per year; every year, the alleged problem is FARTHER away than the year before.

And if SS benefits are cut or SS taxes increased, Bu$h will use that money for more tax cuts for the rich. Leaving nothing for Social Security.

The only fix is to end the Bu$h tax cuts for the rich -- and HIKE taxes on the rich to recover the taxes they failed to pay under Bu$h.

Vitruvius

P.S: I do favor eliminating the cap on earnings taxed for Social Security -- to increase Social Security benefits -- especially for the poor, who need it the most and get the least.

But -- again -- the first priority is to end the Bu$h tax cuts for the rich and recoup the taxes the rich failed to pay, thanks to Bu$h and the Rethugs.

Particularly since the Bu$h tax cuts for the rich are so huge that they have not only burned up the Social Security Trust Fund, they have also guaranteed that we will have a TREMENDOUS round of inflation that will cut the actual value of promised SS benefits, plus most peoples' pensions to below the poverty line.

If you doubt this, look at how the dollar has tanked relative to the Euro; right now, the dollar is worth only 60% of what it was when Bu$h took over -- when measured in Euros. By the end of 2005 or early 2006, best estimates are that the dollar will be closing in on 50%.

Isn't that more reasonable?