What Would You Be Willing to Do to Save SS?

[Anonymous]

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Anonymous wrote:I'd like the damn thing to earn some interest somehow for starters. Right now, it's just a transfer payment from young to old.

I don't like a cap increase. Are you also going to do a payout increase? Of course not. This just proves how mathematically unsound it is. It's a pyramid scheme and at the end, the noobies are going to get screwed, b/c it won't be there for them.

Forget this uppermost brackets stuff. It isn't a welfare system and it was never meant to be. It's a retirment system.

Additionally, why is SSDI (disability) dipping into SS? Becuase everyone who collected 99 weeks of unemployment decided the next best route was to go onto disability for (unprovable) aches and pains. The system is being abused and people need to be told to FO.

Finally, I want Obama to return the close to $1 Trillion he took from medicare to fund Obamacare. Enough of this robbing peter to pay paul for votes crap.

This. At what point are we going to stop robbing Peter to pay Paul? The tax the rich mantra is getting old.

It's not a retirement system. It's a retirement insurance system.

and yet insurance doesn't charge the rich more simply because they are rich...so no SS isn't functioning as insurance.

Neither does Social Security.

+1. The rich currently pay LESS than their housekeepers and lawn guys, because nobody pays the FICA tax on more than about $118,000. That's called a regressive tax. The proposal to raise the cap would just fix that.

How do you figure this? Let's say some rich person earns $1,000,000 a year. He (or she....don't want to be sexist!) pays 6% on the first ) $118,000 - or $7080. He oays his housekeeper $50,000, and she ( or he....don't want to be sexist!!) pays $3000. Under no circumstances would someone earning $118,000+ pay more than the working class people earning $40,000 or whatever.

Big oops, I meant under no circumstances would the richer person pay LESS.

PP meant that the rich person pays lower as a percentage of income and a marginal rate of zero.

PP here. That's exactly what I meant. In your example, $7,080 tax on $1,000,000 income is a tax rate of 0.7%. The housekeeper who pays $3,000 tax on $50,000 earnings has a tax rate of 6.0%. That's called a regressive tax.

You really don't understand the system at all


In this scenario, the 'rich' guy gets benefits proportional to the $118,000 he paid taxes on


The housekeeper gets benefits proportional to the $50K that he paid SS taxes on

Also, let's not forget that the the 'rich' guy also paid $3,000 as the employer


There is absolutely nothing regressive about it because benefits are capped.

Please look up the definition of "regressive tax" before you accuse other people of not understanding the system. You are embarrassing yourself.

http://www.economist.com/blogs/freeexchange/2009/04/are_payroll_taxes_regressive


Not regressive.

They are not arguing that it isn't regressive, they arguing the absurd position that it isn't a tax. Instead, it is "a contribution to a forced savings/social insurance scheme." If that's true, you don't pay income tax either because it is actually "a contribution to a forced scheme for the general welfare and the common defense." And all these years I've been grumbling about taxes, turned out it was perfectly ok, they were just "forced contributions."

[Anonymous]

Anonymous wrote:

Anonymous wrote:

http://www.economist.com/blogs/freeexchange/2009/04/are_payroll_taxes_regressive

Not regressive.

They are not arguing that it isn't regressive, they arguing the absurd position that it isn't a tax. Instead, it is "a contribution to a forced savings/social insurance scheme." If that's true, you don't pay income tax either because it is actually "a contribution to a forced scheme for the general welfare and the common defense." And all these years I've been grumbling about taxes, turned out it was perfectly ok, they were just "forced contributions."

+1. Did you read the article? The article clearly states that even the authors they cite are on the fence about progressivity/regressivityprograsivoty. Then they pull out, "well, maybe it would be progressive of you included disability benefits." Well great, it's nice to speculate and all that, but in the end you need to prove it.

[Anonymous]

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Anonymous wrote:"To make all of Social Security solvent for the next 75 years would require the equivalent of any of the following: immediately raising the Social Security payroll tax rate to 14.98% from 12.4% on the first $118,500 of wages; cutting benefits by 16%; or some combination of the two."

In other words, raise the percentage close to where it was just a few years ago.

Also, where in this article do they reference that it runs dry because what's owed to the trust fund, over 2.7 trillion, has run out in combination with the amounts being added in each year.

Hold the phone. They CUT the percentage that earners pay in a few years ago? (Retirees forget these things.) if so, I doubt that was supposed to be permanent - sounds like something to put more money back in Americans pockets. So....yeah.....first thing would be to restore it. And the 2.5 percent is shared by employer and employee, so it's barely a 1% increase. Spread over 150 million workers it makes a big difference.

Let me correct myself. When I looked it showed it without the additional they add in for the medicare. I remembered them cutting it for a time but I will have to go back. I am self employed, pay the maximum at 15.3% and it doesn't separate it as fica and medicare. I am also paying additional medicare tax beyond the max.

Now, what I have been for is holding the employer contribution the same, lower incomes pay a smaller percentage and higher incomes pay more.

Current social security tax rate is 12.4%, with 6.2% paid by employee and 6.2% paid by employer. In 2011 and 2012, the employee portion was cut to 4.2%. Medicare tax is 2.9%, with 1.45% paid by employee and 1.45% paid by employer. The additional medicare tax is on incomes over $250,000 for married couples and is 3.8%.

The additional you mention is an added amount. As a self employed individual I pay at least the 2.9% on all of my income.

[Anonymous]

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Anonymous wrote:If social security is not a pyramid scheme then you should have no issues with people opting to invest 6% elsewhere

That doesn't follow. Social Security isn't a pyramid, but it is a pay-as-you-go scheme, meaning that cash out = cash in. Take away half the revenues by letting people put 6% somewhere else, and suddenly the system can't pay promised benefits to current retirees, let alone to future retirees.

Correct, but it also has a pre-paid fund for baby boomers that will run out just as baby busters start to retire.

You mean the trust funds. We can thank Reagan and Greenspan for that. Yes, it runs out in 2034. But as others here have pointed out, SS will still be able to pay 75% of benefits from incoming FICA taxes. That's how a pay-as-you-go system works, or at least works 3/4 of the way. As others starting with OP have also pointed out, it doesn't take all that much in the way of reforms to taxes or benefits (a balanced package would be nice) to make the system 100% funded after 2034.

[Anonymous]

For all of you advocating killing SS and let everyone choose their own avenues etc., well, y'all don't know how it works in the real world. America is one of the worst in the world at saving money.

In fact, we would have a whole hell of a lot more assets in the hands of common people if they had saved over the years. Wouldn't have taken much. But no, we are nation of over consumers with little to no discipline. If it weren't for SS those people would have almost nothing to live on.

[Anonymous]

Anonymous wrote:

http://www.economist.com/blogs/freeexchange/2009/04/are_payroll_taxes_regressive

Not regressive.

Well I suggest you run over to your buddies at AEI and Heritage, wave that article in front of them, and tell them that the multiple papers each has published on Social Security's regressivity are wrong. (Well in the case of Heritage the methodology was so bad that SSA issued a rare memo ripping it apart, but I digress, because in any case Heritage was still arguing that the system is regressive.) With luck the researchers at these two institutions will be nice to you as they explain that the silly semantics of "forced contributions" and how the article doesn't make the case you think it does.

Heh

[Anonymous]

The SS funding mechanism is a total mess. SS is so much more expensive than anybody ever anticipated and I really doubt it would have made it past congress if anybody would have had an inkling about what SS taxes would have turned into.

Hell, people in this thread basically abandon any pretense about SS being anything other than a welfare program. The reality is that every 10-15 years SS needs some massive patch that amazingly (!) always involves more revenue from higher taxes.

Rather than be humbled by its incompetence in predicting future demographic trends and its inability to design a sustainable program, the political left just doubles down and wants even more money for the program.

Since 1970 alone, SS revenue and benefits have spiked from below 3% of yearly GDP to 5%. I'm sure this thing looks even worse if you track back to inception. Data suggests SS cost 2.2% of GDP in 1960.

[Anonymous]

Anonymous wrote:The SS funding mechanism is a total mess. SS is so much more expensive than anybody ever anticipated and I really doubt it would have made it past congress if anybody would have had an inkling about what SS taxes would have turned into.

Hell, people in this thread basically abandon any pretense about SS being anything other than a welfare program. The reality is that every 10-15 years SS needs some massive patch that amazingly (!) always involves more revenue from higher taxes.

Rather than be humbled by its incompetence in predicting future demographic trends and its inability to design a sustainable program, the political left just doubles down and wants even more money for the program.

Since 1970 alone, SS revenue and benefits have spiked from below 3% of yearly GDP to 5%. I'm sure this thing looks even worse if you track back to inception. Data suggests SS cost 2.2% of GDP in 1960.

Huh? Nobody here has "abandoned any pretense" about it being a welfare program. In fact several of us have argued that it's *not* welfare and gave clear reasons why not. Either you didn't read those comments or it serves your purpose to make things up.

Yep the program has gotten bigger. It's driven by population growth and population aging. More workers are paying in, the average age of the population has increased, and the share of the population that's retired is much larger because of the boomers. None of this is the program's fault--it's providing security to many more retirees. Expenses as a share of GDP will level out in the early 2020s as the youngest boomers retire.

[Anonymous]

Anonymous wrote:I'd go for increasing the taxable cap and decreasing the benefits for upper incomes. But I also think we should increase benefits for people with lower incomes. If your parents have $150K in retirement income, they've done a lot more than just save responsibly, they've also earned good income most of their lives and probably live in a home that's paid for. Some people depend solely or primarily on Social Security and don't have any money left over.

I am not in favor of raising retirement age at this time. While middle and upper class people are living longer, life expectancy for working class whites is going down, and many of them do physical labor that is really tough on a 67-year old body.

agree 1000% People with lots of assets should get a reduction in SS until they spend down their assets. And I believe everyones payments should be less divergent, so that low earners arent left to live off half the SS income of someone well off who doesnt even need it so much.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If social security is not a pyramid scheme then you should have no issues with people opting to invest 6% elsewhere

That doesn't follow. Social Security isn't a pyramid, but it is a pay-as-you-go scheme, meaning that cash out = cash in. Take away half the revenues by letting people put 6% somewhere else, and suddenly the system can't pay promised benefits to current retirees, let alone to future retirees.

Correct, but it also has a pre-paid fund for baby boomers that will run out just as baby busters start to retire.

You mean the trust funds. We can thank Reagan and Greenspan for that. Yes, it runs out in 2034. But as others here have pointed out, SS will still be able to pay 75% of benefits from incoming FICA taxes. That's how a pay-as-you-go system works, or at least works 3/4 of the way. As others starting with OP have also pointed out, it doesn't take all that much in the way of reforms to taxes or benefits (a balanced package would be nice) to make the system 100% funded after 2034.

That is right - if there is no cap on income subject to SSA taxes, there should be no deficit for the program. It is a tax, not a piggy bank.

[Anonymous]

Anonymous wrote:The SS funding mechanism is a total mess. SS is so much more expensive than anybody ever anticipated and I really doubt it would have made it past congress if anybody would have had an inkling about what SS taxes would have turned into.

SS is providing retirement security to 50 million Americans, most of whom have very little other savings. If there were no Social Security, these millions of retirees would be begging the government for help. And in that scenario the government wouldn't be able to draw on payroll taxes to help these people. That sounds much, much worse.

[Anonymous]

OP here. Does anyone know how high up the income ladder we need to move the cap to keep the program solvent for the next 75 years? An increase to $200k would be around an extra $5000 - manageable at that level, and perhaps it could even be viewed as a wise " investment"' to ensure the program is solvent when it's time to claim. (The other "half" would have to be paid by the employer, but again, not a deal-killer at that level.)

While I like the idea of raising the cap, for political purposes it would be easier to get through if changes are seen as a "shared burden." How high would the cap have to be raised if we ALSO moved the retirement age up by one year, gradually over time?

I ask because we seem to have some very knowledgeable people responding. Anyone know the numbers?

[Anonymous]

Anonymous wrote:I'd go for increasing the taxable cap and decreasing the benefits for upper incomes. But I also think we should increase benefits for people with lower incomes. If your parents have $150K in retirement income, they've done a lot more than just save responsibly, they've also earned good income most of their lives and probably live in a home that's paid for. Some people depend solely or primarily on Social Security and don't have any money left over.

I am not in favor of raising retirement age at this time. While middle and upper class people are living longer, life expectancy for working class whites is going down, and many of them do physical labor that is really tough on a 67-year old body.

thats lovely but SS is not a charity/welfare scheme. White Middle class and working class ppl are dying quicker than before, everyone else's life expectancy has grown by quite a bit. there are a lot of jobs that aren't that tough- secretaries, cashiers etc. the problem is the health gap- we should be funding better food and medicine for all b/c frankly it is disgusting nah tin this day and age being rich buys you decades more of a good healthy life. the problem isn't the labor- its the fact that they cannot eat or don't know to eat a better diet. Also raising the cap actually hurts middle class people b/c the truly rich get off scot-free while people who's kids make in the 200 grand scheme of things usually are being helped by their kids direct. ppl who make that kind of money are earning it through a salary and usually come from less privileged backgrounds. I have heard a 'donut hole' strategy where very high income earners- 400,000 plus are added after the present cap. I know that we use the $ after SS is maxed out to pay off student loans- my husband comes from a totally working class family, single mother and worked 3 jobs to get through college and 1 job to get through a top 10law school whilst staying in the top ten in his class. Why should we be punished while ppl like Mitt Romney pay an effective tax rate of 11% to pay for other peoples retirement when no-one helped us when we were poor youth? If you are in poverty you should be given help regardless and that should come out of fed/state income taxes, SS isn't a venue to alleviate poverty.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'd go for increasing the taxable cap and decreasing the benefits for upper incomes. But I also think we should increase benefits for people with lower incomes. If your parents have $150K in retirement income, they've done a lot more than just save responsibly, they've also earned good income most of their lives and probably live in a home that's paid for. Some people depend solely or primarily on Social Security and don't have any money left over.

I am not in favor of raising retirement age at this time. While middle and upper class people are living longer, life expectancy for working class whites is going down, and many of them do physical labor that is really tough on a 67-year old body.

thats lovely but SS is not a charity/welfare scheme. White Middle class and working class ppl are dying quicker than before, everyone else's life expectancy has grown by quite a bit. there are a lot of jobs that aren't that tough- secretaries, cashiers etc. the problem is the health gap- we should be funding better food and medicine for all b/c frankly it is disgusting nah tin this day and age being rich buys you decades more of a good healthy life. the problem isn't the labor- its the fact that they cannot eat or don't know to eat a better diet. Also raising the cap actually hurts middle class people b/c the truly rich get off scot-free while people who's kids make in the 200 grand scheme of things usually are being helped by their kids direct. ppl who make that kind of money are earning it through a salary and usually come from less privileged backgrounds. I have heard a 'donut hole' strategy where very high income earners- 400,000 plus are added after the present cap. I know that we use the $ after SS is maxed out to pay off student loans- my husband comes from a totally working class family, single mother and worked 3 jobs to get through college and 1 job to get through a top 10law school whilst staying in the top ten in his class. Why should we be punished while ppl like Mitt Romney pay an effective tax rate of 11% to pay for other peoples retirement when no-one helped us when we were poor youth? If you are in poverty you should be given help regardless and that should come out of fed/state income taxes, SS isn't a venue to alleviate poverty.

It absolutely is a social welfare program to alleviate poverty for the elderly. The problem is, well off people are receiving checks too, and defend it saying it is a savings, not welfare.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'd go for increasing the taxable cap and decreasing the benefits for upper incomes. But I also think we should increase benefits for people with lower incomes. If your parents have $150K in retirement income, they've done a lot more than just save responsibly, they've also earned good income most of their lives and probably live in a home that's paid for. Some people depend solely or primarily on Social Security and don't have any money left over.

I am not in favor of raising retirement age at this time. While middle and upper class people are living longer, life expectancy for working class whites is going down, and many of them do physical labor that is really tough on a 67-year old body.

thats lovely but SS is not a charity/welfare scheme. White Middle class and working class ppl are dying quicker than before, everyone else's life expectancy has grown by quite a bit. there are a lot of jobs that aren't that tough- secretaries, cashiers etc. the problem is the health gap- we should be funding better food and medicine for all b/c frankly it is disgusting nah tin this day and age being rich buys you decades more of a good healthy life. the problem isn't the labor- its the fact that they cannot eat or don't know to eat a better diet. Also raising the cap actually hurts middle class people b/c the truly rich get off scot-free while people who's kids make in the 200 grand scheme of things usually are being helped by their kids direct. ppl who make that kind of money are earning it through a salary and usually come from less privileged backgrounds. I have heard a 'donut hole' strategy where very high income earners- 400,000 plus are added after the present cap. I know that we use the $ after SS is maxed out to pay off student loans- my husband comes from a totally working class family, single mother and worked 3 jobs to get through college and 1 job to get through a top 10law school whilst staying in the top ten in his class. Why should we be punished while ppl like Mitt Romney pay an effective tax rate of 11% to pay for other peoples retirement when no-one helped us when we were poor youth? If you are in poverty you should be given help regardless and that should come out of fed/state income taxes, SS isn't a venue to alleviate poverty.

Sure, I'd be fine if Mitt Romney paid more tax and I paid less tax. But SS is set up the way it is for political reasons that are still valid. I don't think the politics will allow what you are proposing. People like the system the way it is. Tweaks to improve it are fine, but a total restructuring isn't going to fly.

But if you want to catch the truly rich, then forget about taxing salary. Tax investment income. That's how Mitt Romney and Donald Trump get the really big bucks. Cue the trickle down economics groupies in 3, 2, 1...