Why lifting the cap on Social Security is the wrong solution to the wrong problem

Each time an article on SS is posted at DU, there's always a greek chorus chanting "just lift the cap!"


First, some aren't aware that SS is *required* (original SS Act & amendments & 1983 amendments) to regularly review SS financing & raise the cap to cover 90% of total wages.

Currently the cap is $106,800.

But it was $102K in 2008, $97.5K in 2007, $94.2K in 2006, etc. It rises regularly:

http://www.socialsecurity.gov/OACT/COLA/cbb.html


Second, why raise the cap now, when SS is running SURPLUSES?

SS taxes currently cover expenditures & more:

Income = $805.3 billion
Expenditures = $625.2 billion
Surplus = $180.1 billion.

$689.1 billion of income came from taxes on wages or taxes on SS benefits (thank you, Ronald Reagan). $116.3 billion came from interest payments to the Trust Fund.

http://www.socialsecurity.gov/OACT/TRSUM/index.html (Scroll down for data)


Thus, 63.8 billion of the surplus came directly from workers' pockets.

That was 9.2% of total SS tax collections.

4.6% of it you saw taken directly from your check. Another 4.6% you never saw, but it's part of your compensation for your labor, even though your employer paid it directly.

That surplus 9.2%, along with the $116 billion in interest on the rest of the surplus money taken from your check over the past 30 years, went into the SS Trust Fund, bringing Trust Fund assets to $2.2 trillion at the end of 2008.

That's money owed to retirees, & it's about 20% of our total national debt. It dwarfs the pittance we owe to China, for example (about $800 billion). http://en.wikipedia.org/wiki/United_States_public_debt


The Trustees forecast(*2) that in six years (2016) SS TAX INCOME will fall short of expenditures. At that point, SS would have to begin drawing on the Trust Fund.

However, the Trust Fund would continue to grow -- to over $4 trillion, according to the Trustees -- until 2024, when SS expenses would fall short of TOTAL INCOME, including INTEREST income.

It's not until 2037, 27 years from today, that the Trustees forecast* the Trust Fund would be exhausted.

http://www.cbpp.org/cms/index.cfm?fa=view&id=2819


At that point, the youngest baby boomer would be 76, the oldest 91, the majority dead, & SS would still be paying out 75% of SCHEDULED benefits.

Because SCHEDULED benefits encompass planned real benefit increases, this means the retiree of 2037 would still be getting MORE (constant dollars) than today's retiree.

Furthermore, the predicted shortfall = about .7% of GDP over the 75-year actuarial window, 2% of taxable payroll in the same window.

http://www.cbpp.org/cms/index.cfm?fa=view&id=2819


Thus, ASSUMING the Trustees' forecast is right on the money, "fixing" SS would require $42 more every month out of the paycheck of someone earning $50K in 2037 dollars, without changing ANYTHING else at all.

So why would ANYONE want to lift the cap NOW?


Currently, the BIGGEST problem with Social Security's finances is that certain interests don't want to be taxed to repay the Trust Fund.

Some people say, "Well, that's just 'us' repaying 'us,' so what's the difference?

There's a BIG difference.


SS taxes were taken from workers' WAGES, & only WORKERS' WAGES -- from the bottom 90% of total wage income.

Excess collections were borrowed into the general budget, which is supposed to be funded from INCOME TAXES.

Income taxes tax both WAGES & CAPITAL INCOME -- capital gains, interest income, profit income, & the like.

The richer one is, the larger the percentage of income they get from CAPITAL. SS taxes don't touch capital income.

Additionally, the richer one is, the easier it is to adjust one's income sources. The super-rich don't, typically, NEED to take much of their compensation in WAGES unless they choose to.


The top 1% pays 40% of income taxes. The top 5% pays 60%.

The bottom 95% pays 40% of income taxes, & the bottom 75% pays only about 15%.

http://www.ntu.org/main/page.php?PageID=6


So it's not the case that when money from income taxes goes to repay the Trust Fund, "we" are paying back "us". In fact, the very rich are mostly paying back the relatively poor.

Now let's look at the SS Trust Fund in relation to this fact.


In 2000, the Trust Fund contained about $1 trillion. Today, it contains over $2.5 trillion.

http://www.frbsf.org/education/activities/drecon/answerxml.cfm?selectedurl=/2001/0101.html


The bulk of the TF money was collected & borrowed into the general budget under Bush II. With this growing source of borrowed funds available, he cut taxes.

33% of his cuts went to the top 1%. Over the next 10 years, this small fraction of the population got to keep an extra $700 Billion. The next 4% got $300 billion.

That's about $1 trillion to the top 5% over 10 years, 50% of ALL Bush's tax cuts.

This amount is approximately equal to the $1.5 trillion, less interest payments, that was borrowed from the SS Trust Fund in the same period.

www.ctj.org/pdf/bushtaxcutsvshealthcare.pdf




Investment income is taxed at LOWER RATES than wage income:

http://docs.google.com/viewer?a=v&q=cache:I7SnVDjDnsYJ:www.ctj.org/pdf/earnpr.pdf+top+1%25+pays+percent+of+income+taxes+ctj&hl=en&gl=us&pid=bl&srcid=ADGEESjSke3jALOpHdCRrLT7pH1zdwlvzxW_HR38TBvwRkQA4Y3VPp_UMsPsG4b3n2oEKZN-KDL6j2pkQcHJKZE2ZM804MBreOOmNYgapI6epfH-PqJWJNRqGGkcxDEzWDXYr9nzm6w5&sig=AHIEtbShQHs04FHPraiFef1YKLwJ4J1v4A



Don't fall for this three card monte game by buying into the calls to "remove the cap" on SS taxes. It just gives them more money to keep the game going -- while destabilizing the financial structure that made SS the most successful, most popular, & most fiscally sound government program in US history.

Rescind Bush's tax cuts, keep the cap at 90% of total wages, start repaying the Trust Fund -- and reassess the situation once that's accomplished.

Including the inequality between capital & labor that's kept wages flat or declining while capital's share rose, & while capital off-shored production jobs to cheaper labor outside the US.

That's the root problem with Social Security's finances.

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html




1* The most recent full Trustees' report is 2009's, which covers 2008. OASDI = Social Security & Social Security Disability -- not the same thing as SSI!

2* The SS's Trustees' forecasts aren't god-given writ. They change year-to-year, & there are three forecasts made each year, two of which you never hear about in the papers.

The "optimistic" forecast has, historically, had more short-term accuracy than the mid-range forecast that's publicized in the media.

so that it matches pay as you go. It would be an immediate boost in take home for lower income workers and eliminate the use of S.S. money to paper over the deficit. To keep from messing up the formula adjust the percentage above $105K so that it only reflects the amount which is used to subsidize the lower workers thus not increasing these individuals later claims on S.S.

I am still not certain why individuals making between about $50K and $105K are asked to subsidize the system to the level which they do when compared to those over $105K.

Adjust the percentages each year to maintain the pay as you go aspect of S.S. going forward (with some gradual draw down of the Trust Fund).

distribution will be paying the majority of SS taxes without receiving anywhere near commensurate benefits back. For the most part, they don't really *need* SS anyway.

So you've just created a powerful pressure group who'll lobby for benefit cuts, private accounts, etc.

The original funding scheme is sound. SS is regressive in its taxation & progressive in its payout.

but you have helped all those making less than $105K which ia an even more powerful block of voters. Going to a strictly pay as you go with annual adjustments will make the elders nervous, but at least you will be addressing the deficit issue immediately and creating pressure to solve the problem - not kick the can down the road further.

lifting the cap does not.

lifting the cap = taking more money from workers without returning what's already been taken.

those making over $106.8K are well-paid workers, but they are nevertheless workers, for the most part, not capitalists, & they already pay more in combined taxes than the very top brackets.

If someone makes e.g. $212K, "removing the cap" = 6.2% more out of their check.

Do you really think that big of a hike won't be noticed and reacted to?

WHY DOES EVERYONE WANT TO LET CAPITAL STEAL THEIR MONEY?

We eliminated the cap on medicare in 1993. There are not calls to destroy and privatize it. In fact even the GOP is talking about changing medicare part D to have higher premiums for the wealthy. Plus Obama and the dems wanted to cut funding for medicare advantage, which was an effort to privatize it since it was less efficient.

So the wealthy pay more into medicare, then when they are older they may pay more for part D.

Your argument about how lifting the cap on SS will destroy it has been done with medicare for 16 years and it hasn't happened yet. In fact, medicare is far more solvent than it would be otherwise if it were not funded in part with progressive taxes.

The SS tax is higher than the medicare tax. But again, a tax of 4% or so starting at 250k income would help keep SS solvent.

Your entire argument is lifting the cap will destroy SS. I'm saying we did lift the cap on medicare in 1993 and it is more solvent because of that.

nothing to do with anything related to SS.

The only possible reason for introducing Medicare into this conversation is to CONFUSE THE ISSUES.

You've already shown you either didn't read my post or didn't understand it.

Throw in the kitchen sink, why don't you.

Medicare is open to everyone over 65 that has paid into the system and everyone has the same benefit, regardless of what they paid in. The multimillionaire that paid in more has the same benefit as the autoworker that paid in much less. In other words, there is no cap on benefits.

Social Security is different. If you lift the cap, those at the higher end will see no cap on contributions, but a very definite cap on benefits. Someone with a $210,000 income will be paying twice the SS tax he was paying, but when he retires, he will see no increase in benefit, and that's where it becomes viewed as more of a welfare program than an insurance program, as it was meant to be.

It is simply their due to pay us back for profiting off the backs of our labor. They owe it to the people they exploit.

Rich people SHOULD pay the bulk of SS taxes, even if they not collect in the same proportion. They actually should pay the bulk of ALL taxes but that is a separate argument.

In addition, the SS trust fund needs to be off limits to any other budget use.

They pay INCOME TAXES.

Labor pays SS taxes (& a little bit of income tax).
Capital pays income taxes (& a little bit of SS tax).

Lifting the cap = taking more from high paid LABOR - not from capital. Capital can avoid that tax, but, eg. the Department Head at the local state university, the city fire department chief, etc. CAN'T. They get paid well, but most of their income comes from WAGES.

yours is so well-done, so outstanding that I don't need to.

My short summary is "The wealthy took the Social Security Trust Fund and they don't want to pay it back."

That's what many people don't understand. It's all about the fact that we won't be able to run the government without the Social Security surplus each year, unless we raise taxes or raise the deficits.

Your explanation is truly outstanding.

retire a huge burden will fall on the workers left working. The surplus was created to cover the bulge created by the boomers. The boomers will be the only group to fund not only their parents retirement on SS but their own. Now it appears that we will have to pay for our own retirement twice since the government borrowed the money and has no way to pay it back without asking us to pay again. Taxing those that benefited the most from the spending of this money would only be fair. The trust fund is full of IOUs from the government. I don't think the grocery store is going to take an IOU for groceries when I retire in the future.

-- and reassess the situation once that's accomplished. I suppose there will have to be a commission of the Repubs. to tell us no. I wish the Dem's. could get it done without the dog and pony show.

It could mean ensuring that the only national debt is Trust Fund and federal pension related (Treasuries are used for both)? Do you mean changing the law to allow the Trust Funds to hold non-Treasuries (such as the debt of other sovereign countries) or -shudder- even equities?

the bush income tax cuts on the top 5% & directing those new income taxes into the SS trust fund. Over 20 years, it more than pays off the debt.

it is continuing to buy Treasuries. If you rescind the tax cuts then it will just buy more Treasuries thus leaving less that needs to be sold to others (effectively reducing the National debt). Later (probably not that much later given the hammering the recession has had on S.S. by the more than anticipated early retirees the fewer individuals paying taxes) the Trust Fund will be drawn down by presenting the Treasuries to the U.S. Treasury for cash. At that point general taxes will need to go up, general spending will have to be reduced, or the national debt will need to increase.

I don't have a problem with rescinding the tax cuts, but that is a separate issue. The question on the table was repaying the S.S. Trust Fund. I really don't care which pocket you keep your dollars in, but I view the Trust Fund as a mechanism for papering over the national debt. Granted the Treasuries held by S.S. give a claim against the Treasury like any other entity holding debt, but what does that really mean? In the future you are going have to have the political will to do one of the three (increase general taxes, reduce spending, or increase the national debt).

not SOCIAL SECURITY TAX. Social Security tax rates were RAISED.

Rescinding Bush's INCOME TAX cuts has nothing to do with, & would not cause, the SS Trust Fund to buy more US securities.

money to the Trust Fund (ie buy more Treasuries for S.S. with this change) thus increasing the Trust Fund. I agree right now income taxes have nothing to do with S.S. taxes, but you were the one proposing the change which I responded to. Now you are slamming me about not knowing the differences between the two?

If you want to address the national debt by rescinding the tax cuts, then go for it. It will make S.S. draw down of the Trust Fund easier in the future. I guess if you want to change the funding formula by including capital taxation to the mix, then I also agree with you. Just be sure that the things which are done actually do increase revenues and not lead to high earner tax avoidance strategies/flight or capital flight.

The EXCESS money not needed to pay current retirees is borrowed into the GENERAL BUDGET in exchange for US SECURITIES.

SS taxes ------> General Budget
Trust Fund <----- US Securities

The government can take the INCOME TAXES it collect to BUY BACK the securities in the trust fund with "real money," which can then be sent out to retirees. When the securities are bought back by the government, they disappear & the Trust Fund shrinks.

Income taxes --------> Trust fund (= securities cancelled) ------> SS payments to retirees.

The Trust Fund is just a bunch of US securities. When income taxes are used to buy back those securities, the Trust Fund gets smaller. When SS taxes are collected above what's needed to pay retirees, the extra money goes into the general budget in exchange for securities, & the Trust Fund gets bigger.

Securities in the Trust Fund are just the government's chits representing the money borrowed into the general budget.

When the borrowed money is repaid as the Trust Fund is drawn on to pay retirees, the securities are cancelled, they effectively disappear.

The Trust Fund represents a $2.5 trillion intragovernmental loan from its Social Security account (funded 100% by SS taxes from the bottom 90% of workers, LABOR INCOME) to its general budget (funded 60% by the top 5% of the income distribution, mostly from CAPITAL INCOME).

The general budget must repay its debt to the SS account from INCOME TAXES from CAPITAL.

Not assess more taxes on LABOR.

Yeah we are running surpluses. But we spent them already. That is not a surplus. We spent money we owe ourselves, then charged ourselves interest. That is like me borrowing money from my brother with interest, then saying how wealthy my family is because of all the money we have coming to us.

Bill Clinton lifted the cap on medicare. Had he not done that, I have no idea how much worse condition medicare would be in over the next 75 years.



Why is that a bad thing? The very rich pay a lower % of gross income in general taxes than the rest of us. Because SS takes up 6.2% of our wages (combined with 6.2% from employers) the very rich end up spending far less than that due to the cap. The capital gains and dividend tax rates are also low.

You talked about how money from the SS trust fund was spent on tax cuts for the rich. The surplus is used to fund supply side tax cuts. Then you implied it wasn't fair to tax the rich to recover that money via income taxes.

Removing the cap might raise 'too much' money anyway. I think medicare takes in $400 billion or so at 2.9% w/o a cap, while SS takes in $800 billion at 12.4% with the cap.

Obama's idea was a donut hole then a 4% tax rate starting at around 250k. That would work fine by me.

Either way, medicare is the real problem over the long term. Social security can be fixed with minor tweaks.

mean they "spent" your money & you can't have it back? That's what you're arguing.

2. As I've already demonstrated, "we" didn't borrow the Trust Fund from "ourselves". The top of the income distribution "borrowed" it from the bottom.

3. An economic projection that presumes to extend 75 years, let alone into infinity, is unmitigated bullshit.

Your plan is a plan to destroy SS. You may not realize it, but that's what it is, doughnut hole or no doughnut hole.

The CBO is full of shit and I want to destroy social security. That sums up my argument.

If you want to have a discussion, then that is fine. But there are points of your argument I do not understand.

We have spent the surplus. Yes, we owe ourselves back the money we spent, but we still spent it. So in order to get the surplus back we have to raise taxes. Unless those taxes avoid the first 106k in income, we will be paying ourselves back with interest for money we gave to the top 10%. About half of all federal income comes from corporate taxes and federal income taxes. We'd have to selectively raise taxes on the top wage earners to avoid taxing ourselves (the bottom 90%) for money we borrowed from ourselves.

Your argument about the surplus still doesn't really make sense to me. Yes, we 'owe' ourselves about $3 trillion. But we don't have $3 trillion. We have to raise taxes to get it.

Also, how does my plan destroy SS? How does yours save it? I really don't get your underlying argument. Are you claiming getting rid of the cap will result in more of this borrowing from the surplus and giving it to the wealthy to play with?

Social security taxes are taken out of WAGES. They're not assessed on CAPITAL income, such as profits, interest income, rents, stock options, capital gains.

Income taxes tax those things.

The richer you are, the more your income comes from CAPITAL, not wages.

The bottom 90% of wages were taxed. 2 trillion of it, over 30 years, was surplus not needed to pay to current retirees.

That surplus was borrowed into the general budget - which is supposed to be funded by INCOME TAXES.

Forty percent of income taxes are paid by the richest 1% of the population. They got their taxes CUT to the tune of about $1 trillion dollars by Bush 2.

This is about how much money was collected in extra SS from the bottom 90% of wage earners under Bush.

The money essentially went out of the pockets of workers to fund tax cuts to capitalists.

You apparently think they should get away with stealing it.

LIFTING THE CAP ON SS TAXES WON'T HIT THE PEOPLE WHO GOT THE TAX CUTS. THEIR WAGES ARE A SMALL PART OF THEIR INCOME, & SS TAXES DON'T TOUCH THEIR CAPITAL INCOME.

The wages that fund SS are not paid by capital, so raising the cap just increases taxes on workers and leaves capital untouched. Warren Buffet, who gets his income from dividends and capital gains will not see a tax hike from lifting the cap. But doctors, lawyers, etc. will see a tax hike which means more surplus money is gained to be used to fund supply side tax cuts.

So you raise the cap, get hundreds of billions in new taxes from higher taxes on doctors, pharmacists, lawyers, small business owners, etc. and that money is used to fund more supply side tax cuts while making social security seem like a 'welfare' system that takes from the rich and gives to the poor.

Is that your argument?

distribution was borrowed into the general budget, which is mostly funded by the top 5% of the income distribution.

They get a big chunk of their income from CAPITAL, not wages. They got tax CUTS.

Workers got tax HIKES.


Before any changes are made to the funding structure of SS, those what borrowed the money need to repay it.

Cause once funding changes are made, they ain't going to. Ever. You are, one way or another.

Many small business people, doctors & lawyers can adjust their compensation to take more income as e.g. profits or rents, rather than in wages. Your assumptions about who would likely pay SS taxes under an uncapped system aren't necessarily so.

The most likely candidates to me would be well paid employees who are JUST employees, not people who own their own businesses or are in partnerships, etc.

Oh, & I didn't use any data from the CBO. It's from the SS Trustees' reports. So your feelings about CBO are irrelevant.

As much research as you did, i don't buy the conclusions.

First of all, raising the cap could actually have the effect of adding to a performing surplu, as well as increasing the velocity of money. Since it is unlikely that the preponderence of dollars above $106k is spent, but little of it is invested in long-term capital perpetuating instruments (too small an amount for each individual investor to bother), moving the money through two more channels of cash flow actually could reduce the amount of printed capital required.

Nicely presented, Hannah, but i don't agree with your premise.
GAC

(and I think, unsupportable, even if you tried) assumptions about too many things.

In other words, important-sounding BS.

Prove me wrong.

And if it's gobbledy-gook to you, then that's on you.

You obviously know very little about how large economies function.
GAC

put up, or shut up.

I provided data, links & supports for mine. Anyone who takes the trouble to read it can understand it & debate it.

You've provided 3 sentences of unsupported speculation based on unsupported assumptions.

that would have the same impact on the surplus and the velocity of money without creating the problem we had in 2000. Which was a bunch of talking heads talking about the "surplus that could eat New York" and thus making a case for huge income tax cuts.

the amount they have for their important INVESTMENTS, thereby stalling the economy.

If you take from high wage workers to give to retirees, the "velocity of money" speeds up. But if you take from CAPITAL to give to retirees, the economy crashes.

Which is one reason i want the poster to support his assumption that taking more from labor is a better option than having capital repay the windfall they got over the last 10 years.

At least not without some other significant changes.

Moreover, there is simply no mechanism in law at the moment for a present increase in the top marginal tax rate to be placed in a "lockbox" for the future benefit of Social Security. Repeat: no such mechanism exists.

transferred to the gov't's ss account every year to repay a portion of the securities held there, then mailed out to SS recipients.

your position now seems to be that only workers can be taxed to repay the 2.5 trillion debt to SS. that they must not only pay TWICE (as since 1983 they've been paying both for themselves & their elders), they must now pay THREE TIMES.

what has been "lent" to the Federal Government. All of your "solutions" fob the problem off into the future.

"your position now seems to be that only workers can be taxed to repay the 2.5 trillion debt to SS."

No it's not. It's that payroll taxes are the only current mechanism for collecting any monies earmarked for SS. That can and should change.

"that they must not only pay TWICE (as since 1983 they've been paying both for themselves & their elders), they must now pay THREE TIMES."

Your empathy for your betters is touching, but I am simply not concerned with "how many times" a person has paid (another illogical concept in a system at least partly based on the concept of progressive taxation.)

"How many times" should I, a childless person, be asked to pay for school millages? The answer is every year. That's because being a member of decent, humane "society" means that we don't get to run ledgers detailing our individual inputs and withdrawals from the public coffers--there's no app for that!

And the suggestion that we should view our relationship with our fellow citizens that way is surely radical--one might even say reactionary. :hi: :eyes:

workers paid about 2 trillion more than needed to fund current retirees from 1983 to the present. That amount, plus continuing SS taxation, is enough to fund the SS of the baby boomers until about 2040, by which time most of them are dead.

The boomers & younger workers have already paid for the SS of their elders & prefunded most of the boomers' SS. The excess was borrowed into the general budget & over $1 trillion of tax cuts was given to the top 5%.

your proposal is to increase SS taxes on labor income further.

sorry you don't get it.

SS surpluses are already "spent" doesn't get it or is being disingenuous. at all.

there is no good rationale for collecting extra SS taxes today to pay for retirees 30, 40, 50, 60, 75 years from now. none.

it's a recipe for theft.

capital needs to repay the 2 trillion they already "borrowed" from workers.

Not that I am against that, because there are only two alternatives that I can see.

1. Put the surplus in the stock market, which can be kinda risky, and also is likely to inflate stock prices and thus enrich the people who own 90% of the stocks (i.e. the wealthiest 10%)

2. Put the surplus into some sort of safer investment. But what is a safe investment that pays better than government bonds?

and finally, if the government had not borrowed trillions of dollars from the social security surplus, they would have had to borrow it from somewhere else. Curiously enough, that does not reduce the total deficit at all. The other alternative, that billions and hundreds of billions would be cut from the budget if social security was not there to borrow from, seems like a pipe dream. Republicans have been dreaming for years about slashing the (non-defense) budget.

I'm no economist, have never even taken an economics class and what little I know about it I've learned from the internet.

Having said that--this seems to make sense to me. Raising the cap certainly WOULD hit wages and the people making most of their earnings from capital seem to escape.

What's wrong--really--with taking back the Bush tax cuts and repaying the fund?

It seems so simple but it makes sense. That money came from the fund. Put it back.

I also agree with the political reality of raising that cap. We can't even get health care passed--what are the chances of raising that cap anyway? I'd say slim.

Great post.

I agree with you to some extent.

I think the cap should be raised as a form of fairness and justice. It has nothing to do with how much money we collect in the trust fund or anything else. The few rich people who get wages above the cap should be paying in as much as I am. Why is their income so special? The more money we have in Social Security the more we can expand the pay outs and the coverage.

I also think CAPITAL INCOME should be taxed at the same rate as wages. Again, why is sitting around the pool waiting for the dividend check to come in, so much more special than working for a living?

making here is -- regardless of the status of SS, priority number one is ensuring that the Trust Fund is repaid out of the general budget -- not raising more SS taxes from wages.

The top 5% got tax cuts worth $1 trillion over the last 10 years. Their tax cuts = almost exactly the money that was borrowed, from the bottom 90% of wages, into the Trust Fund.

Put it back first, then reassess.

It's very simple, like you said. Why anyone would disagree but the top 5%, I don't know.

I thought you explained it very well.If people don't understand maybe they need to re-read it again while paying attention.

I don't think anyone is opposed to the concept of requiring capital to pay extra taxes to replenish what they took out of the trust fund.

What some of us oppose is the idea that we shouldn't touch the cap to keep SS solvent for the next 75+ years.

taxes or cutting benefits.

both options allow the 30-year robbery to continue.

as it is a US government obligation.

Once we say that there is no trust fund, it becomes a SS problem.

On the other hand, if it is stated that the general budget owes the trust fund because it borrowed against it for tax cuts/wars then any revenue generation ideas and budget cutting looks to the general budget, not just SS.

The distinction takes on a whole new direction.

:)

n/t

such small salaries.

since in my opinion SS does have many of the ingredients of a ponzi scheme (or at the very least has the potential to be run like a ponzi scheme depending on the actions of Congress). But here you present a very good case for not raising the income cap subject to SS tax.


Another good reason to not raise the cap is that the amount we would then owe to the average future recipient would continue grow and we would simply be chasing our tail. It is better to leave the cap as is and force the general fund to pay back what it owes to the SS fund. When the SS fund is depleted (2040 or there abouts) the SS fund might, depending on the economy and actuarial projections @2040, borrow from the general fund rather than increase tax rate or cap -making SS sustainable for the long run. If the general fund can borrow from the SS fund for some 60 or 70 years, then surely the SS fund could borrow from the general fund.

Some generation(s) will have to get back something less then the rates of return enjoyed by SS recipients up to the present, but any pain might be spread over many years if planned well enough. We need to guard against the rachet effect of simply raising tax rates or raising the cap whenever there is a projected shortfall -those actions would insure a ponzi-like collapse at some point.

this, i agree with. in fact, reagan's changes started that process, & not repaying the trust fund borrowings would make it a fait accompli.

so i'm glad you agree that repaying the TF = priority #1. that would put it back on a pay-go footing, per its original design, & financing could be reassessed at that point.

but outfits like the Concord Coalition and the Cato Institute twisted the projections to claim there was a crisis.

The problem, if it should ever surface, is easier than raising the cap: Simply put the people who work for school districts, and state and local governments in 15 states on Social Security and make them pay into the system. In other words, abolish the opt out of paying Social Security that several states have done. People think these state pensions are so great, but they only are if people work some 30 years in it. If people don't pay into Social Security in other jobs for at least 30 years but they have worked in jobs covered by Social Security, their Social Security benefits are reduced. It's called the WEP, the "windfall elimination provision." Some fucking "windfall" if you get less than $500 a month in PERS IF you wait until age 65 to collect.

This is nothing but theft for the millions of people who didn't start in public employment in their twenties or thirties. It's not fucking "double dipping" if you WORKED for and PAID into SS.

K&R

And Rosie Scenario's evil twin Grim Scenario will be trotted out to convince us that the Trust Fund should be saved for an even rainier day. Count on it.

Rescind the tax cuts, raise taxes on the rich AND raise the SS cap.

So they can keep stealing -- oh, sorry, "borrowing" it?

There is no yawning deficit. The forecasted revenue gap is very small.

And the forecasts have a history of being more often wrong than right in predicting even the short term.

for anything but bankster bailouts and war while our infrastructure crumbles around us.

I'd say that's a better reason than a desire to shield top earners from the same taxes that the rest of us pay. :hi:

tax, one mostly paid by workers/employees & one mostly paid by capitalists/employers.

Income tax funds the GENERAL BUDGET - for infrastructure, wars, bankster bailouts - the things capitalists want.

SS taxes fund Social Security - something workers want.

The top 5% of the income distribution pays 60% of income taxes, mostly from capital income. They don't pay much SS tax, because they don't get most of their income from wages.

The next 20% pays about 25% of income taxes, mostly from wage income. They also pay a disproportionate share of SS taxes, because they have high wage income. But they're not "the rich," they're mostly not capitalists - they're the upper middle class, high-paid workers, & they're the ones who actually are taxed (total taxes) at the highest rate of anyone in the income distribution, because they take big hits on both income & SS taxes, as well as state/local & property taxes (which the state-less superrich can avoid to a bigger extent).

The bottom 75% pays only about 15% of income taxes. This is the middle class & the poor. They basically only make enough money to survive & reproduce themselves at their current living standard -- their income taxes are relatively low. Most pay more in SS taxes than in income tax.


In 1983, Reagan jacked up SS rates to produce a continuing & growing surplus in SS tax collections for 30 years. So workers paid more than was needed to fund retirees FOR THIRTY YEARS - A 30-YEAR UNNECESSARY TAX HIKE.

The overpayments were borrowed INTO THE GENERAL BUDGET -- which is supposed to be funded mainly from INCOME TAXES -- which the top 5% pays most of.

The top 5% got TAX CUTS - funded by workers. They got the use of that extra money to invest & make more money -- a kind of free loan from workers.

Now it's time to repay the loan.

Raising the cap on SS MAKES WORKERS PAY, NOT THE CAPITALISTS WHO GOT THE LOAN.

Rescinding Bush's tax cuts to the top 5% produces $1 trillion in NEW INCOME TAX REVENUE over 10 years, $2 trillion over 20 years, 3 trillion over 30 years. That pays off the entire SS Trust Fund, & pays for workers' SS for twenty-seven years, until about 2037.

I hope it's clear.

"Raising the cap on SS MAKES WORKERS PAY, NOT THE CAPITALISTS WHO GOT THE LOAN."

Even allowing, arguendo, that people earning over $250,000 annually are "workers" in the commonly held sense of the term, you've failed to explain (aside from the "rich don't like paying taxes and will make things difficult for us!" argument, which I think you'll admit is weak) why it is so tragic that high earners should have to pay taxes at the same rate as the rest of us. (And, fyi, I am perfectly aware of the difference between income and payroll taxes.)

Moreover, you fail to explain how the self-same persons who you say "got the loan" (a loan is a personal obligation, so your discription is off, btw,) shall be forced "repay" this alleged "loan", when these self-same people were impossible to stop when they were pilfering the monies in the first instance. This is perhaps the most significant flaw in your argument, except for the next part...

"Rescinding Bush's tax cuts to the top 5% produces $1 trillion in NEW INCOME TAX REVENUE over 10 years, $2 trillion over 20 years, 3 trillion over 30 years. That pays off the entire SS Trust Fund, & pays for workers' SS for twenty-seven years, until about 2037."

Rescinding Bush's tax cuts won't do a thing to shore up SS, because any SS surplus, is, by law, "loaned" to the federal government. And then spent. Your argument is vulnerable to the same criticism you level at those who advocate eliminating the cap, therefore--to whit, there is presently no mechanism forcing anybody to "repay" the SS trust fund. And given our government's history of mortgaging the future (you know, the trait which occassioned this crisis in the first instance,) there is simply no logical reason to assume otherwise.

More likely, we will run deficits until no creditor can be found, then we will simply slash benefits. That day, we will thank GAWD that the rich weren't saddled with the indignity of paying payroll taxes at the same rate as the rest of us. :eyes:

1. Pay level has nothing to do with whether someone is a worker or not. A worker is someone hired by an employer, for wages, to do work, who gets the majority of his income from wages.


2. "why it is so tragic that high earners should have to pay taxes at the same rate as the rest of us."

High WAGE earners ALREADY pay combined taxes at a higher rate than "the rest of us," if by "the rest of us" you mean the middle class and the poor -- OR CAPITALISTS.

Assume standard deduction = $10K.

You're an auto worker making $60K.

Mr. Smith is a college president (wage worker) making $250K.

You're both single. Neither of you have investment income.
You both take the standard deduction of $10K (a bit unrealistic, but this is example).

Using current income tax brackets, Mr. Autoworker pays:

6.2% SS tax on $60K = $3720
10% income tax on the 1st $8K above the SD = $800
15% from $8.01K to $50K ($41,999K) = $6300

Total taxes = $10,820
18% total tax on income of $60K.


Mr. college-pres Smith pays:

6.2% SS tax on $106.8K = $6,622
The same income taxes Autoworker does to 60K = $7100.
25% income tax from $50.001 to 171K ($120,999) = $30,250
28% from $171,001 to $250K ($78,999) = $22,120

Total taxes = $66,092 or 26% on income of $250K.

If he pays SS tax on all income, add $8878.
Total taxes now = $74,970, or 30% total tax on income of $250K.


Mr Richie Rich, on the other hand, makes $1 million, none of it as wages.

Richie pays no SS tax, cause he doesn't work for wages.
He pays the same INCOME TAX as Mr. Smith does on his first $250K = $59,470.
Richie keeps paying the same 28% rate Mr. Smith does up to $372K ($122,000) = $34,160.
He pays 33% on the rest ($628,000) = $207,240

Total taxes = $300,870 on income of $1 million = a 30% tax rate.
The same rate Mr. Smith would pay if all his income were subject to SS tax.

However, there's a further twist:

Various kinds of CAPITAL INCOME, such as long-term capital gains, are actually taxed at LOWER rates (15%) than wage income. "Long term" = invested for more than one year.

So say 20% of Mr. Rich's income came from cashing in some stocks he held for 1.1 years. Now $200,000 of his income is taxed at 15%. That =
Taxes to $372K = $93,630
33% on the next $428K = $141,240
15% on the last $200K = $30,000

Total taxes now = $264,870 on income of $1 million = rate of 26%.
Exactly the SAME RATE currently paid by Mr. Smith, the worker, on his income of $250K.


Your proposal is to have Mr. Smith pay 30% while Bill Gates pays 26% & you pay 18%.

You can quibble with the figures, but in practice, this is what's going to happen.

Rich Wall Streeters currently taking part of their compensation as high salaries will just adjust their compensation to take less as salary & more as stock options or some other form of CAPITAL INCOME. Heads of corporations & people like Bill Gates can do the same.

But Mr. Smith, who makes all or most of his income from WAGES, can't do the same. People like him will be paying much higher taxes than the super-rich.


Why is it you don't want to tax capital?

Why is it you don't want capitalists to repay the windfall they got in tax cuts, funded by excess social security collections?

Why is it you want to continue to fund excess SS collections that can be borrowed by the super-rich in the form of lower taxes?

Why is it you want to shift the tax burden further on to wage workers?

Your straw man stuff (why don't you want to tax capital????) is scraping the bottom of the barrel.

"Why is it you want to shift the tax burden further on to wage workers? "

There is simply no solidarity between "wage workers" earning over $250,000/year and the rest of us; fuck 'em. :hi:

there is solidarity in the current neutrality or support for SS.

That's because your thesis isn't logical. :hi:

a worker, they are management. The question is how do we get enough money to meet the obligations we have made. SS is just one obligation. The rest of the national debt is another. Taxing the most well off in our society is the only way. We should do many things raise the cap, end the tax cuts, taxes capital at the same rate as workers maybe even higher, what ever it takes to make our country solvent again but bottom end works should not be asked to pay again.
on edit
The budget the President is proposing today (or soon) will contains a huge amount of money to pay interest on the debt from the Reagan Administration. We can not continue to borrow money.

SS = 20% of the national debt.

most "managers" wouldn't have much capital.

:shrug:

The lack of solidarity between this cohort and the real working classes isn't my invention, in any event.

some kind of radical.

you're not.

And you're projecting, re: the "radical" stuff.

then they can be forced to "pay back the surplus" + X. The fact is, the rich are too powerful to be forced to "pay back" anything (in fact, they just helped themselves to several trillion more in the past 12 months.)

And, as a basic matter of fairness, the rich should pay tax at at least the same rate as the rest of us. :hi:

All that's needed is to rescind the Bush tax cuts to the top 5%, which would reset back to Clinton-era levels. Doing that alone brings in $1 trillion of new income tax revenue over ten years, providing $ to pay down the Trust Fund & send out to retirees.

If you think the rich should pay the "same rate" as us, I guess you also think we should pay the "same rate" they do in income tax?


There's a reason SS is capped, & it was politically astute. If it wasn't, high-income wage earners who typically don't really "need" SS would be funding most of the program. And getting very little in return, unless you wanted to give them benefits commensurate with their contribution. In which case, there'd not be much for YOUR benefits.

If the wage distribution is as follows:

Top 20% = 60% of total income
Bottom 80% = 40% of total income

& there's no cap, that means the top 20% of wage workers would be funding 60% of SS.

But they don't NEED SS. The bottom of the income distribution DOES.

And since the top 20% of wage earners also pay high INCOME taxes on their wages, & are already taxed (total tax burden) at a higher rate than the CAPITALISTS in the top 1-5%, adding another 6.2%/12.4% tax on all their wages is a HUGE political problem, & would end with this segment of the population fighting to reduce SS taxes, benefits, or convert to private accounts.

SS is regressive in its taxation, but progressive in its payout. The well-off get less than their % pay in, the poor get more. The poor die earlier, but their survivors get benefits. The poor are disabled earlier, but get SS disability.

The people who set up SS were plenty smart, & their design is why SS has lasted so long. Most people are happy with it.

Hubris to think we improve it by changing the funding structure.

"There's a reason SS is capped, & it was politically astute. If it wasn't, high-income wage earners who typically don't really "need" SS would be funding most of the program. And getting very little in return, unless you wanted to give them benefits commensurate with their contribution. In which case, there'd not be much for YOUR benefits."

And we arrive at your true objection (the ostensive objection as I've mentioned making little sense.) I've said it once, and I'll say it again: a poster who wears a Marx avatar who argues against the basic concept of progressive taxation because "it angers the rich" just is so far from any frame of reference I may have to form any coherent response (the argument itself lacking coherence to my view.)

The rich control all aspects of our government as it is (and by far derive the greatest benefit therefrom). There is simply no risk at that we plebians might receive a free ride at their expense; on the contrary, they live off of us.

"Most people are happy with it."

Most people are not actuaries.

"Hubris to think we improve it by changing the funding structure."

What you call "hubris" the rest of us call "fundamental principles of social democracy". :hi:

People who earn most of their money by working for someone else aren't "the rich", & "the rich" don't pay much in the way of SS taxes, because their wage income isn't the main part of their total income. I've only said this seven different ways, how is it you don't understand?

Bill Gates gets no wage income. He pays no SS taxes. Do you think he has no OTHER income? Warren Buffet draws $1 in salary. How does he live?

Off his CAPITAL. Which isn't subject to SS TAXES.

Clinton raised taxes on the rich, as you can verify here:

http://www.truthandpolitics.org/top-rates.php

In 1990 the top bracket was income over $32.5K, taxed at a marginal rate of 28%. Which meant the superrich paid at the same rate the middle class did.

By 1994 the top bracket started at $250K, taxed at almost 40%.

He also raised capital gains taxes, as you can verify here:

http://www.taxpolicycenter.org/publications/url.cfm?ID=1000519


Capitalists make money from making others work for them. They may pay some of their employees well, but their employees aren't capitalists.

The president of my local community college makes $150K, but he's not "the rich". He's a high-paid state worker. And it's his segment of the income distribution that actually pays combined taxes - income tax, SS tax, state & local taxes, etc. - at a higher rate ALREADY than the super-rich - WHO DON'T PAY SS TAXES.

"It angers the upper-middle class," is more to the point. And that group makes a nice, influential political pawn for capitalists to use to kill SS. If you don't understand the political realities, too bad for you.

You seem to have some aversion to making the truly rich - the top 5%, the actual CAPITALISTS - pay a cent of what they've stolen.

Bill Gates owns the equivalent of entire countries. That's "the rich". They don't get rich by working for someone else.

"People who earn most of their money by working for someone else aren't "the rich", & "the rich" don't pay much in the way of SS taxes, because their wage income isn't the main part of their total income. I've only said this seven different ways, how is it you don't understand?"

You're confusing a premise (what I've quoted above), with an argument (something that you've had trouble forming.)

"'It angers the upper-middle class,' is more to the point. And that group makes a nice, influential political pawn for capitalists to use to kill SS. If you don't understand the political realities, too bad for you."

LOL. Your argument is that the upper middle class may not be taxed at the same rate as the rest of us (let alone progressively!) because of their alleged immense political power--but on the other hand "the rich" (Bill Gates, George Soros, et al., according to you) can be yoked to our every whim. It's a silly argument, and one that betrays the insincerity of the beliefs you pretend to. :hi:

"You seem to have some aversion to making the truly rich - the top 5%, the actual CAPITALISTS - pay a cent of what they've stolen."

What basis have you for making this assertion? Here: I'll negative it for you right now. I am for both eliminating any cap whatever on SS deductions on wages AND raising the top income tax rate. That's because I believe in the fundamental concepts of Social Democracy. You are the only person I've ever seen attempt to posit a dichotomy between these otherwise seemingly compatible common-sense ideas.

Since we're flinging unsubstantiated (not to say half-baked) insults about, why are you opposed to the fundamental principles of Social Democracy (namely, progressive taxation)? And how do you reconcile this opposition with your pretense at being a Marxist? :hi: :silly:

And, not to be a jerk, do you have a link to any non-Hannah source that echoes your argument? Because frankly, sometimes a voice in the wilderness is a visionary.

And sometimes they're not. :shrug:

If a CEO gets a salary of 500,000, that's a lot of money, but more likely, the bulk of his compensation could come in the form of multi-million dollar stock options, and if he plays the market--and he usually does--he could also bring in millions of dollars more in terms of capital gains, which is taxed at a lower rate than payroll income (salary and hourly wages).

If we ignore all non-payroll income he is receiving and just look at the 500,000 he makes a year, you could imagine how big his check would be when he goes to collect SS in his retirement if he had been CEO for 20 or 30 years. FDR nor anybody else in his administration found the idea of cutting a 10,000 check per month to a captain of industry palatable.

Thus, the cap on SS payroll tax was born. True, the more sensible route would actually be to take any surpluses generated by income taxes and shoveling it into Social Security rather than giving it to the top 1%. This route would mean no changes to SS would be needed. If the cap is removed, sure, in the short term more money would be flowing into SS, but I believe you are right to assert that you'd make rich people into an interest group dedicated to either destroying SS or hijacking it for their own selfish purposes because now they hold it up.

"you'd make rich people into an interest group dedicated to either destroying SS or hijacking it for their own selfish purposes because now they hold it up."

The problem being, every other aspect of our government (including the things that could be cut before the rich deigned to raise taxes upon themselves!) are controlled by this self-same group. In other words, if you accept Hannah's underlying premise (mustn't upset the rich; they'll kill the program if they think its charity!), then there is no reason not to apply it beyond Social Security to the government writ large.

When you look at it this way, the OP makes no sense; if the rich can destroy SS through sheer weight of their political power because they perceive it to have become "charity", then they can similarly cut WIC, or education and infrastructure funding, or any other aspect of the non-SS budget, in preference of allowing themselves to be taxed on their capital gains.

In other words, if progressive taxation is not possible as to payroll taxes because of the "political realities" referred to by the OP, then there is simply no reason to believe that progressive taxation can be achieved via capital gains or other investment income taxes, for precisely the same reason.

Of course, rejecting the premises of the OP, it is perfectly logical to advocate for removing the cap and raising top marginal tax rates.

Currently, SS taxation is regressive but benefits are progressive.

You are mistaken when you say if there's not enough support to uncap SS because of the opposition of "rich people," there's also not enough to rescind Bush's tax cuts on the top 5% back to Clinton-era levels.

Here's why.

SS taxes are assessed only on wages. Someone making $250K in wages currently pays $6622 in SS taxes. Uncap it, & he pays another $8878 more - a 134% increase. This is in addition to the marginal rate of 28% he pays in income tax, making his effective total federal tax rate about 30%, as i demonstrated in a previous post.

In addition, many capitalists will simply shift their compensation out of wages & into capital forms & escape paying the additional tax, leaving mostly wage workers who CAN'T shift their income source to pay.

OTOH, if you return tax rates for the top 5% back to Clinton-era levels, you get a top rate of 39.6% (v. 35%) on ALL income, both wage AND capital, over $350K (current equivalent of 2000's $288K).

Plus the Clinton-era capital gains tax (20-28%) v. the current long-term rate of 15%.

For pure high-WAGE earners, who tend to be in the lower reaches of the top brackets v. capitalists, this is easier to take than the 6.2% hike you want to sock them with -- for example, our hypothetical college president making $250K.

But it hits some much bigger money. Enough to produce $2 trillion dollars in 20 years, more or less paying down the bulk of the TF.

Bush's tax cuts are *supposed* to sunset, but there's a push for them to be extended. Pushing back is COMPLETELY politically do-able in this economic climate, if people understood the issues.

Even the college president making $250k would likely support it -- whereas he probably wouldn't support a $8800 increase in *his* taxes that effectively leaves him taxed at a higher TOTAL federal rate than the capitalist billionaire.

Removing the cap AND raising top rates would still leave the $250K worker paying close to the same rates as the billionaire. He'd be paying 30% on his total income, while the billionaire would be paying top MARGINAL RATE of 39.6% on only PART of his income, and NO SOCIAL SECURITY TAX of 6.2% on EVERY DOLLAR HE MADE, IN ADDITION TO INCOME TAX.

http://www.ctj.org/pdf/regcg.pdf

Again, your advocacy for top earners is dumbfounding. Nor is your tax analysis impressive, as it doesn't take into account either deductions or the myriad of regressive Federal, state, and local taxes workers pay.

"Removing the cap AND raising top rates would still leave the $250K worker paying close to the same rates as the billionaire."

So what? Do you not understand that neither I (nor, I suspect, most Americans) have any issue with this? And those of us who do are more likely to support increasing the taxes on the wealthy rather than slashing rates on the bourgeoisie for whom you champion! :hi:

"In other words, if progressive taxation is not possible as to payroll taxes"


Whatever your opinion of my example (& one can't replicate every detail of the tax code in an example without reprinting the tax code itself), you've offered nothing but your insistence that the cap should be lifted.

If the Bush tax cuts are rescinded, there's no need to lift the cap for approximately the next 30 years -- unless you want to continue building the SS TF surplus & borrowing it into the general budget, against the intent of the original design of the program.


Yes, I think some workers would have a problem with this; the most politically powerful section of workers, for starters, the upper middle class who'd be paying taxes at a higher rate than Bill Gates.

you originally responded to.

your link above contains nothing related to that "point".

you're getting tiresome, this is all diversionary.

It became a train wreck when you began substituting insults for substance. Anyhow, this is a snooze. I'm sure you've convinced a lot of your "readers" today that it's not fair that top earners pay the same percentage of their wages into SS as the rest of us.

Because it might make them mad, and then they wouldn't let us have a sound SS system. So we must leave SS in its precarious state and by no means raise taxes on top earners to simply match those of minimum wage earners (it might end up being welfare! :wow: )

Would that this were a mischaracterization of your argument! :(

including a breakdown of tax rates.

your entire argument = characterizing high-wage earners as "the rich" while ignoring capital income & people like bill gates, warren buffett, the walmart waltons, & other denziens of the "world's richest" list who make none of their income as wages.

you can *say* you're in favor of lifting the cap *and* increasing income taxes at the top, but in fact, lifting the cap & cutting benefits is currently favored by capital so as to *avoid* raising taxes on capital, while siphoning more $$$ from worker/employees.

You apparently don't.

"your entire argument = characterizing high-wage earners as "the rich" while ignoring capital income & people like bill gates, warren buffett, the walmart waltons, & other denziens of the "world's richest" list who make none of their income as wages."

Hannah, will you ignore it this time when I say I would love a cap. gains tax increase too? Why are you still responding to me if the actual substance of my posts hold no interest for you?

Do you need me to believe you are a good person to have closure in this matter? OK...I guess. But it's silly to paint my strong disagreement with you in this matter as either a failure to understand the nuances of your argument or some sort of character flaw (you called me a "liberal", like a laissez-faire capitalist? Hah!)

There are some basic logic problems with your argument, as well as a fundamental innumeracy. If you post this thread for the fifth or sixth time, I will not hesitate to point these out. But any further exchange between us is obviously not going to be productive at this time. :shrug:

Busting money up into two or more flavors stopped making sense with the Reagan administration.

Lifting the cap would make no difference to me. Why is this? Because my income is below the cap, and while I started to get close to the cap 5 or 6 years ago, the adjustments upward have now placed it beyond my likely reach. Because of the constant adjustment, it is unlikely that 90 percent of workers will ever benefit from the cap or pay a single extra penny if it is removed.

The nice thing about raising the cap is that this is an exemption-less tax that provides no loopholes or write-offs. It would be even better if they implemented the self employment tax on passive capital gains, so we could also capture and tax compensation now given as stock options for beneficial tax treatment. This approach would not only increase revenue, but have the added benefit of diminishing the current tax perference for speculation in markets as a source of income.

Now, if you want to go one better, exempt the first 20K of income from the payroll tax, and lift the cap. Everyone under the current cap benefits, (about 90 percent of all workers) and tax consequences only begin to accumulate for folks currently earning greater than the cap + 20K.

& doesn't change the funding formula that has made ss the most successful federal program ever.

So securing its solvency for 30 years is not sufficient. This is definitional, so it shouldn't have to be pointed out. :hi:

be made more secure by (supposedly) "pre-funding" it.

It's not "definitional". SS was basically pass-through pay-go until Reagan.

in which you reasonably expect to personally collect? :rofl:

How then, pray tell, has it been possible to "pre-fund" for YOUR retirement (to whit--SS "trust fund" we are speaking about "paying back")? This gets sillier by the moment! It's only my retirement that may not be "pre-funded"; yours is paid for and owing to you, eh? :silly: :silly: :silly:


"It's not "definitional". SS was basically pass-through pay-go until Reagan."

Yes, it is definitional that Social Security is an inter-generational obligation. It is also basic mathematics that the ratio of workers to retirees has shifted dramatically since the program's inception (and not in favor of long-term actuarial soundness!).

it doesn't work that way. that's how we got $2.5 trillion in a trust fund that you now propose to have workers pay for a third time.

sorry you don't get it.

you can't make SS solvent 30 years from now by collecting extra SS taxes now. If you think you can, you don't understand SS.

Today's excess tax collections must, by law, be borrowed into the general budget & spent, creating a debt to SS.

When the time comes to collect on that debt, you'll have the same problem as we do today --

some twit will be telling you it's not possible to collect the debt from the general budget (mostly paid by capital) -- only more taxes on labor will solve "the problem".

Sorry Hannah, it becomes tiresome. :hi:

"you can't make SS solvent 30 years from now by collecting extra SS taxes now. "

What fresh bullshit! There is no reason why the US can't buy debt instead of sell it with the surplus from any SS collections. It simply isn't convenient for the Baby Boomers (who require both low overall taxes AND a fully funded retirement) to do so. Only the Chinese can lend money at interest? Again, what fresh crap!

during which young workers have paid an SS rate about 2% higher (employer+emplyee portion) than needed to fund current retirees over the same time period.

That's 30 years of wages down the tube, & some of the folks making $250K today paid over those 30 years too.

There is a reason why the US can't "buy" SS debt & "sell" it. It's illegal, by the terms of the original SS legislation.

In addition, SS is in the end always necessarily funded by simultaneous production, a pass-through from current workers to current retirees, & all "prefunding," buying & selling of "debt" are elaborate hoaxes to disguise that very basic reality. Most of them involve profits for capital as well.

sorry you don't get it.

being held safely till needed.

They have been bonded out.

The government fails, the bonds do not get repaid.

And little food in your grocery store to buy with them anyway.

So what?

You're the queen of bogus dichotomies! :hi:

you're the king of diversionary tactics.

diversion from your support for taxing labor income over capital income.

CLASS WARFARE IS REAL ...GET ON THE WAR PATH AGAINST THE RICH OR JOIN WITH THEM ASSHOLES!

They might get mad, and then make our lives difficult! :silly:

touch capital income at all. warren buffett, the walton siblings, and bill gates consistently head the "world's richest" list. none of them get wages, & none would give a rip if SS were uncapped.

nor would uncapping SS make it a progressive tax. it would make it a flat tax of 6.2/12.4% on all wage income -- but still of zero percent on all capital income.

It would also mean that the top 20% of wage earners would pay for 80% of social security, turning it (politically) into "welfare" for the bottom 80%.

involved.

Everyone is free to draw their own conclusions as to whom they consider their "class allies"--that's not for you to decide. :hi:

characterizing wage earners as "the rich" while completely obfuscating the distinction between labor & capital income.

There are subject lines with dollar signs throughout this thread. You apparently missed those, too. :shrug:

"Right. All those "young people" making more than $250k are the real victims here!"

Currently employees pay 7.5% of income to FICA and it doesn't matter what you make and the employer puts in 7.5% for a total of 15% right?

Why not put a starting point on what level of income you make before you start putting in your 7.5% but keep the amount fixed for the employer?

Then remove the cap?

That way everyone in the country benefits rather than just the rich?

Why not set that minimum at $25K? So after that first $25K you start paying FICA?

the political popularity of ss is due to the perception that benefits are paid for by the recipients.

6.2 + 6.2.