Social Security Can By Saved By Using A Republican Talking Point: Lower The Rates, Broaden The Base

[TrollBuster9090]

Or does that irritating talking point only apply to finding ways to get POOR people to pay more taxes?

It's very simple: REMOVE THE $106K CAP on Social Security payroll taxes, and lower the rates (to say, 3% or 4%), and you'll make Social Security solvent INDEFINITELY.


Imagine this:

Last year, the top 25 highest-earning hedge fund managers made in excess of $24,000,000,000, and paid $2,650,000 ($106,000 each) into Social Security. (http://www.forbes.com/sites/nathanvardi/2014/02/26/the-highest-earning-hedge-fund-managers-and-traders/)

Now, imagine lowering the rate to 4%, and removing the cap, and those same 25 managers would pay $960,000,000 into social security.

Hrm...$2.6million vs. $960million in contributions to Social Security from just 25 people.

Now imagine EVERYBODY who earns more than a million dollars per hear paying 4% of it to Social Security, and I think I can SEE why the robber baron class lobbies so hard to keep the payroll tax cap in place.

I've never understood the arguments for having a flat CAP on a tax, have you? A tax that literally gets SMALLER the more money you make. That's the polar opposite of a progressive tax. It's a REGRESSIVE tax.

The arguments against it usually sound something like this:

"If you remove the cap, the wealthy will never end up drawing as much out of SS as they put in." Um...since when has THAT been a determinant of tax rates? Most people NEVER make use of the tax money they kick in to the kitty.

"They're rich, so they don't really need the service, so why should they pay for it?" Again, that's never been a condition for paying taxes. I don't have any kids, but I happily pay taxes for schools every year. And, more importantly, wealthy people may END UP being poor someday, if they're unlucky. Plenty of people ended up that way.

Remove the payroll tax cap, and lower the rates, and it will be solvent forever. How about we start repeating that line as an alternative to this nonsense about fiddling with the SS payout rates. It will definitely have traction.

[JonLP24]

1. Corporations & millionaires will pay them to oppose lifting the cap

This is an excellent talking point, I never thought of it but it is true " And, more importantly, wealthy people may END UP being poor someday, if they're unlucky. Plenty of people ended up that way." Income changes over a course of a lifetime, sometimes drastically.

[unblock]

4. that's why it's called social security. it's not a subsidy for the poor, it's security for everyone.

[JonLP24]

5. I agree

I always supported lifting the cap because I want to keep it solvent, it seemed fair, but I did acknowledge that rich people probably wouldn't need it at the age but didn't think of it didn't mean I didn't know there would be rich people that wouldn't be rich down the road. Especially the income where it is caped, plenty of people over the line will fall under it.

In any case, the last thing I ever would have called it is a subsidy because it isn't a subsidy. I'd call it a ponzi scheme (it isn't but is more similar) before I called it a subsidy

[unblock]

6. not you or anyone else on du, of course, the "subsidy for the poor" is republican b.s.

but yeah, the point is a good one, that social security allowing for a secure retirement for everyone is in fact a big entrepreneurial incentive. it means once you've put in enough to ensure yourself a fair retirement, you can bet the farm on a new business idea if you're so inclined, knowing that even in the worst disaster you've still got social security to see you through your golden years.

this ought to be a popular argument with people who were once known as republicans, before the ultra-right wing took over.

[yeoman6987]

2. Currently the max amount of SS is 2400 dollars a month

Average is around 1500. We would have to raise the max a lot to lift the CAP. I don't think the rich are going to go for paying more without getting a bigger check. I doubt anything will happen until the Democratic Party is majority again.

[eridani]

20. No, we would not

Initial benefits are already allocated on a curve which gives greater proportional payout to those at lower incomes. "Raising the cap" can be done by adding a line with a very low slope, where payments increase without limit, but at a very low rate.

[unblock]

3. great idea, but trust me, those 25 will never pay anything near that amount.

because the vast majority of their income won't be subject to payroll taxes. they'll restructure their compensation packages if necessary. or just pay lobbyists to carve them out of it altogether.

i think the only way it could even be possibly politically feasible to remove, or at least phase out, the cap on the payroll tax, would be to remove, or at least phase out, the cap on benefits.

right now, there's a limit to how much you can draw out from social security, based on the same income cap that limits your taxes going in. if you have something of an unlimited amount you can draw out, then there's at least something so that the rich can feel like they're getting in exchange (besides social duty, which they clearly don't give a crap about).

keep in mind that the higher level payouts could be somewhat less proportionately, so that this proposal still improves overall solvency; alternatively, it might be enough to simply funnel the extra income tax on those extra benefits back into social security rather than the general fund.

mind you i don't think this should be necessary, i'm just thinking it's the only way removing the cap could even have a chance in practice of actually happening.

[Thinkingabout]

7. Raising the cap and the full retirement age to 70 would give some more years of solvency to SS.

Dropping the rate is not going to help the solvency, we need more money in not lower the amount received. Social Security is a backup system to give support to underage children and spouses. It also is really nice to have the benefit when you retire. Doing away with the cap is a little over board since those on the really high salaries would take a really large amount out when they start drawing their benefits. Having means testing would root out those in the position of not really needing the benefit but then you can't have them paying the FICA on their total salary. Raising the full retirement age has helped SS to be solvent for a few more years and could also do this again.

[Doctor_J]

8. lower the age, not raise it.

You accidentally pasted a freeperville/turd way talking point here. Lower the age, lots of sixty year olds retire, young people take the jobs and start paying in. Then raise the cap to 150k, no more problem. Your idea of forcing people to work to 70 is right from the heritage foundation playbook

[whathehell]

9. Thank you! n/t

[Doctor_J]

11. you're welcome. too many duers lap up hate radio and upchuck it here

It's been a problem since we went live

[karynnj]

13. Not to mention, there are many jobs where people really have a tough time physically doing them

- even at 65. Not to mention, many people above a certain age have a very hard time getting a new job when they lose theirs.

[Thinkingabout]

21. Perhaps you should do some research on SS, in 1935 the life expectancy for men was 59.9 for

women 63.9. Now the life expectancy for men is 75.6 and women 80.8. In 1935 retirement age was 65. Since that time the age has been lifted to 67 for full retirement. Raising the max wage cap would provide more money into the fund and raising the age would perhaps leave more money in the fund.

You want to complain about the turd way, if we went by your plan the fund would be depleted much earlier since you want to lower the retirement age and the available workers to put back into the fund would be less and I doubt if those already receiving funds would be able to do so for the rest of their lives. I don't know where you got your idea from of lowering the retirement age so young people would take the jobs you need to do a reality check. The fund would have been depleted by 2012 had the retirement age not been raised to 67 and the wage max cap raised. Do the numbers, this reform brought about about 26 years more. It is going to run out if there is not some more reforms. When was the last reforms, in 1983. Bush wanted to privatize SS, it would have totally killed it. Perhaps you should keep in mind the Reforms proposed by the Third Way unless you already have enough funds to provide your needs from 60 to the end of your life expectancy.

[hollysmom]

26. remember lies, damn lies and statistics - here is where you are wrong

these life expectancy figures are averages. More people are not living that much longer, but babies are not dying so young.

Yes, many people look young for their age, but they are the ones who had money for medical care all their lives, the people who had nothing and could save nothing probably did not get medical care and dental care and are not physically better. Those who did physical labor all their lives are less likely to survive to 70 so they can retire. And they are less capable to work until they are 70.

It is a rich guy boon swaggle lying statistic.

I was laid off at 59 and never worked again. I lived on savings until I could collect my social security at 62. Yeah if I held off, I could have received more, but paying for insurance at 10 K a year was draining me, I had to wait 3 more years for medicare. I am not saying I could not have gotten another jobs, but it was the start of the closing down of data, and I had been in management for a long time, my skills were getting dated. I hated management, but there must be a dearth of managers because no matter how good my technical skills were, I was always promoted into management. And when I was 50 I noticed when I walked into an interview that I was not going to get the job when they looked at me. I was told by one girl who basically had to hire me for a while because I was the only one who applied with the entire rare combo of skill set that she did not want to hire me because it would be like giving orders to her mother when she had to correct something I was doing, but then she said I was a really good worker and she never had to correct me. But she really had not wanted to hire me, really would not have done it if she could have avoided it - and she said that would have been a mistake. but still wouldn't have hired me. This girl was not born when I graduated from college. Heck she was not born after I had 10 years of experience at work.

So if you raise the age, you will have old people starving again - that what you want?

[ND-Dem]

35. Yes, the poster and those like her/him want exactly that, or don't care about it.

They're ideologues and 'me firsters".

[Thinkingabout]

39. Me first, am I the one complaining about the reforms in 1983 which allowed benefits to be received

after 2012? Full retirement for me was extended, I do care about the future generations, I enjoy receiving my benefits. These benefits are possible by the FICA taxes withheld from paychecks and a matching amount paid by the employer. Get the picture right, without reforms in 1983 there would not be any benefits paid to anyone because there would not be any fund to pay it, would this be a me firster?

[ND-Dem]

48. You realize that those trillions in the trust fund need to be paid back out of the general fund,

right? and who do you think is going to pay them back? unless we raise taxes on capital, it will be the same workers who paid the SS taxes paying back what they supposedly already paid for.

You don't know what you're talking about. The Reagan 'reforms' didn't fix anything, they just built up a huge surplus to fund tax cuts for rich people.

[Thinkingabout]

38. First, you did not deliver any facts. You must not get out very often. The senior population has

grown in the past years and still grows. I see and live around lots of those over 65.

The older population--persons 65 years or older--numbered 39.6 million in 2009 (the latest year for which data is available). They represented 12.9% of the U.S. population, about one in every eight Americans. By 2030, there will be about 72.1 million older persons, more than twice their number in 2000. People 65+ represented 12.4% of the population in the year 2000 but are expected to grow to be 19% of the population by 2030. The information in this section of the AoA website brings together a wide variety of statistical information about this growing population.

http://www.aoa.gov/Aging_Statistics/

I am in the over 65 group and BTW, I am currently working on a low wage job, it was not what I did in my working career but it is a job. You want to complain about SS, if the reforms would not have happened in 1983 the trust fund would have been depleted by 2012 which means you would not be getting anything so if you want to talk about starving seniors this is what you and others would like to see by complaining about reforms in SS. You should thank those who realized the reforms was needed in 1983 and realize reforms needs to be made again.

[ND-Dem]

37. Your "research" is full of shit. I'd say worse but I'd probably get booted. Suffice to say you

don't have a clue at best & are catapulting the propaganda at worst, and in a nasty way to boot.

*The wage cap is raised every fucking year practically.

*Not only was the retirement age raised, FICA was raised about 2 points and several benefits were dropped completely, by a bipartisan majority under REAGAN.

*Life expectancy: let me quote the social security admin:

If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.

As Table 1 shows, the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).

Also, it should be noted that there were already 7.8 million Americans age 65 or older in 1935 (cf. Table 2), so there was a large and growing population of people who could receive Social Security. Indeed, the actuarial estimates used by the Committee on Economic Security (CES) in designing the Social Security program projected that there would be 8.3 million Americans age 65 or older by 1940 (when monthly benefits started). So Social Security was not designed in such a way that few people would collect the benefits.

http://www.ssa.gov/history/lifeexpect.html

I could go on, but I think it's clear you're not worth listening to.

[Thinkingabout]

40. Oh, Yea, why do you think there is a trust fund to pay benefits today?

you can swim in your research and remember this , without the reforms in 1983 there would not be any benefits paid after 2012, now sleep on this information.

The older population--persons 65 years or older--numbered 39.6 million in 2009 (the latest year for which data is available). They represented 12.9% of the U.S. population, about one in every eight Americans. By 2030, there will be about 72.1 million older persons, more than twice their number in 2000. People 65+ represented 12.4% of the population in the year 2000 but are expected to grow to be 19% of the population by 2030. The information in this section of the AoA website brings together a wide variety of statistical information about this growing population.

http://www.aoa.gov/Aging_Statistics/

[ND-Dem]

47. There's a 'trust fund' because Reagan wanted to destroy the principal of pay-go and give

tax breaks to the rich. duh. Now the bill's coming due and those same rich people don't want to pay back the handout they got. Duh.

Gee, 19% of the population. Yet the dependency ratio is lower than it was in 1960 and the per capita GDP is much higher, higher than ever in history. It's just being distributed mostly to the superrich.

You can take your phoney 'research' and stick it.

[Boreal]

27. Thank you!

I couldn't believe I just read that. Hell, raise it to 80 then it will be even more solvent may as well be that argument.

[Thinkingabout]

41. Good, it was reformed in 1983 to make benefits payable after 2012, don't like getting benefits after

2012, just stick to your thoughts, I happen to like my benefits, the reforms did not fatally injure me.

[ND-Dem]

49. Funny that if the purpose of the reagan changes was to "pay benefits after 2012" it's just

when they supposedly start to pay out that the hype to "fix" SS starts up louder than before.

I thought it was fixed already. according even to you.

[jmowreader]

10. No...get rid of the cap but leave rates where they are

If you want to play with rates, how about...

Form 1040 Line 22 (total income) $1 million or less: Social Security tax is 6 percent of Line 22
Form 1040 Line 22 $1,000,001 to $5 million: Social Security tax is 5 percent of Line 22
Form 1040 Line 22 $5,000,001 and above: Social Security tax is 4 percent of Line 22

You start screwing with the overall rate and my least favorite saying, "revenue neutrality," will rear its ugly head. In other words, in exchange for getting rid of the cap we will have to cut the rate to the point where, theoretically, the same amount of money comes in with the cap gone as it did with the cap in place. Because Oh My God the government can NEVER take in MORE money, now can it? The problem with revenue neutrality is it hasn't worked in practice: the rich people whose hobby is legally evading taxes continue to do it, and real revenues decline.

[Doctor_J]

12. lowering the rate would enable us to call it a tax cut

[jmowreader]

18. We can't compete against the Republicans by trying to out-tax cut them

Nor should we try. The United States has been on a pretty steady diet of tax cuts since 1981, and we're past the point where there's enough to cut to make them do what you want them to do - IF what you want them to do is to stimulate activity in the private sector.

[SheilaT]

14. Social Security was always intended to

be only one part of a person's retirement, although for far too many it's the largest, or only source of income in retirement. Which is all the more reason raising the cap would keep it solvent and allow for more generous Social Security checks for all of us.

What worries me a lot is that younger people really do believe that it won't be around for them, and so they think they have no reason to bother to save it.

[Trillo]

15. We have a progressive income tax

There are so many other taxes that are regressive, and fines and fees and Social Security among others, that are not defined as taxes. I wish someone would do a massive study on the real tax rate including fines and fees and SS and all the rest.

I'm sure the total taxation is quite regressive. If it wasn't, the very wealthy wouldn't be spurting ahead like they have been for the last 40 years or so, while everyone else stays pretty much in the place they were in.

[ND-Dem]

34. Those who make >$117K pay a lower percent of their income in SS taxes, but that group of

taxpayers still pays a disproportionate share of aggregate SS taxes and receives proportionally less back, while those who pay less receive proportionally more back.

Capital pays NO SS taxes; that's the regressive part. Workers pay ALL SS taxes. And capital takes more income share than workers.

[ErikJ]

16. OP misprint: Each PAID $106,000? No, $106K is the cap

Last edited Wed Jan 14, 2015, 09:08 PM - Edit history (1)

After that its not taxed at all for SS. As Yeoman said the top AMOUNT paid is only $2400. It should be a flat tax no matter how much you make.

[cojoel]

25. $106K was a few years ago

in 2014 the maximum taxable earnings was $117,000. For 2015 it is $118,500.

[ND-Dem]

33. what's 12.4% of $117K? I get $14,508, but my math's not as advanced as yours.

Half of that, the employee's portion only, would be $7254.

yeoman seems to repeat a lot of winger talking points.

[ErikJ]

36. Thanks. I got it mixed up with the max monthly check.

which upon 2nd reading is what Yeoman was talking about too. I myself pay a lot more than $2400/year in SS tax. Too spaced out today.

[REP]

17. I know plenty of people who oppose the cap whose salary is over the cap

Now a sampling of people I know is limited (and limited to sane people), but I can't help think that they're not the only ones who realize that removing the cap is good for everyone.

[ND-Dem]

32. Then why didn't FDR and the new dealers set it up like that in the first place? Because it

would have shitcanned it from the start. and shitcanning SS is the goal here.

[4dsc]

19. They would want a bigger payout though

I've had this argument with them before. I say OK.

[Thinkingabout]

22. The SS benefit is paid based on the highest 35 years of paying into FICA. If a person only works

for 30 years the total earnings divided by 35. If a person pays higher amounts into the system then yes they will receive higher benefits. One of the things proposals is means testing, to be honest there are some folks getting SS benefits are not really in need of the benefit.

[ND-Dem]

30. Who cares if they don't 'need' the benefit? It isn't welfare. And there's a cap on benefits

regardless of how much you paid in. The current limit is a little over $2600/mo, or about $31K a year.

And if you have income from all sources over about $16K, it will be taxed. "One dollar in benefits will be withheld for every $2 in earnings above the limit."

http://www.ssa.gov/pressoffice/factsheets/colafacts2014.pdf

Thanks to the folks who want to turn SS into welfare so they can get rid of it altogether.

Stupid people don't get that they're being played.

[Thinkingabout]

42. SS is not a welfare, it is a trust fund supported by workers and employers, it is not an entitlement

ergo it has to be supported by FICA taxes and can not allow the trust fund to run dry.

[ND-Dem]

45. I didn't say it was welfare: you implied it was. It's supported by taxes to such a degree that

it's got trillions in surplus and 15% of working people's pay is devoted to it. Yet our ruling class tells us that's still not enough.

[ND-Dem]

31. Lifting the cap doesn't fix the supposed problem. Not according to the CBO or the WSJ.

And making the benefit bigger makes it worse. Especially when you consider that benefits over $16K are taxed already.

You're being played. 6 ways to sunday.

[adieu]

23. I don't think you did the math right

Currently, it's 12.5% or so (split 50-50 between employer and employee) on the first $106K of salary, so approximately $13,000 would be taken out, not $106K taken out. And that $13,000 is split 50-50 between employer and employee, so those hedge fund guys are currently paying $6,500 or so annually.

I agree that the cap should be removed. Then lower the rate to 3% each (i.e., 6%, split 50-50 between employer and employee). Even then, 3% of $1B is $30M, which is a lot of money to put into the SS, compared to $6,500.

[ND-Dem]

29. No.

1. The cap was $117K in 2014 and will be $118K in 2015.

2. SS tax for employees and employers combined is 12.4%; including Medicare, which is part of OASDI, it's 15.3%.

3. According to "very important people," removing the cap won't fix the supposed problem. But these are the same important people who design the forecasts to produce the supposed problem in the first place.

http://www.wsj.com/articles/william-galston-the-hard-numbers-on-social-security-1405468518


4. "Hedge fund guys" are typically paid partly in salary and partly in capital (percent of profit or something similar). Since capital (capital gains, profits, etc.) isn't taxed for Social Security, you don't know what those rich people are paying into SS unless you know how they're paid.

[Elmer S. E. Dump]

24. I absolutley agree.

But how can it be effected, seeing how both parties, in varying degrees, would be fighting it. Greed, Sociopathy, and did I say greed?

[ND-Dem]

28. completely removing the cap doesn't fix the supposed problem.

"The Hard Numbers on Social Security: Jettisoning the cap on taxable earnings wouldn't get us even halfway to a solution."

http://www.wsj.com/articles/william-galston-the-hard-numbers-on-social-security-1405468518


* and I say 'supposed' problem for a reason. I've come to the conclusion that it's just one more bullshit fear tactic sponsored by the ptb.


* "Most people NEVER make use of the tax money they kick in to the kitty."

= What are you talking about? We all get a cut in one way or another. To start with, we drive or walk on roads built by government.


* "the top 25 highest-earning hedge fund managers made in excess of $24,000,000,000"

= did they make it in wages? iow, did somebody pay them a salary to manage the funds, or did they get a cut of the profits? because you know capital doesn't pay social security taxes.


* $106,000

= you're a bit out of date. in 2014 the cap was $117K and in 2015 it will be $118K.


* "regressive"

= richer workers pay less as an individual percentage, but they pay more of the total taxes paid into the system. They also receive less back as a percentage of what they paid, while poorer workers get more. But richer workers are more likely to live longer than poorer workers. I've never seen any studies teasing out all these factors to decide whether the sum effect is regressive, progressive, or neutral.

[mopinko]

43. there is a cap because it is NOT A TAX.

it is an insurance premium, and it offers only basic policies.
if you scrap the cap, you have to do one of 2 things-
either stiff the upper income people who will pay more but still get the max payout, or you increase the payout to the top earners according to the same equations used to figure everyone elses'.

the first is unlikely to go down well, and will put even more pressure on congress to gut the system.

the second doesnt really help the system, as it just obligates it to pay out according to the same plan.

if you want to actually do something, start applying it to capital gains. treat them like the 1099 workers that are likely cutting their grass and walking their dogs for them.

ted kennedy told me this, and i am gonna keep throwing that into these conversations.

[ND-Dem]

46. Yes, having capitalists pay for it would be a big help, no doubt. More pressure to kill it

from our ruling class.

[mopinko]

51. which is why it isnt set up that way.

but believe me, scrapping the cap is not gonna happen.

[ND-Dem]

53. they're going to scrap the cap on labor's wages quicker than they're going to put capital

gains in the mix.

[jwirr]

44. Excellent plan. I like the idea of the lower cap but had never thought about lowering the rates.That

would help workers also.

[J_J_]

50. exactly right!

And THANK YOU! for the post

It is so refreshing to see a post providing a positive solution that the country so desperately needs.

Providing solutions to pressing national problems is exactly what a democratic underground message board should be focused on in my opinion.

[J_J_]

52. kick

nt