An easy fix for Social Security
Step 1: A flat tax on all income: eliminate the current tax exclusion for income in excess of $106,800.
Problem solved: the projected deficit would be completely eliminated.
Also, it is the only solution with broad public support (67%).
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August 8th, 2010 at 5:59 am
But those figures are before a serious debate even starts. Once the debate starts, it will be pointed out how this would change Social Security from an insurance program into a welfare program for the elderly and that will be enough to change the opinion of quite a few voters. Now I am not personally opposed to this, seeing as how I do have some socialist blood flowing through my veins, however I do not think the solution will be that simple.
What do I predict? I believe in the end we’ll see some combination of tax increases (targeting the wealthy), benefit cuts and raising the age of eligibility at least slightly.
August 8th, 2010 at 7:48 am
Some might say that Social Security has always been “a welfare program for the elderly.” Conservatives would prefer phasing it out completely. However, it is a very popular and successful government program. It has virtually eliminated the extreme poverty of old age that was common prior to its existence. Everybody who is eligible receives benefits — even the rich. That wouldn’t change. The current tax is regressive. What is wrong with taxing the rich on all their income at the same rate that the working poor are taxed on all their income?
August 8th, 2010 at 1:24 pm
I find it very sad that everything you write seems to be eaten up with jealousy for rich people. I am far from rich, but am happy with my lot, and if others have been more successful, good for them. So why don’t you get busy and become rich yourself if it is so important to you? I don’t think Bill gates inherited his money. I fear the experiment for this Republic is failing now that so many people sit with their hand out waiting for someone else to support them. What ever happened to the pioneer spirit? They must be turning in their graves listening to you whining and feeling sorry for yourselves all the time. We really have become a nanny state with a bunch of useless babies. Why can you not pull up your socks and do something for yourself?
As for the Social Security, it is a good thing, but obviously needs shaking up and the funds invested rather than spent as they have been for some years. I think we may all need to pay more money in to see an improvement because we are moving towards a situation where there will be more people on the receiving end than paying in.
What exactly do you mean by your last sentence? The working poor don’t pay any tax.
August 8th, 2010 at 4:16 pm
@Molly
The Social Security funds are invested, they are invested in US Treasury Bonds which many investors consider to be the safest, albeit conservative, investment in the world. What would you invest the money in instead? The stock market? Where would the Social Security Trust Fund be right now if that money had been invested in the stock market before the down turn?
The working poor don’t pay any tax? Well they do pay 7.62% payroll (SSI) taxes on 100% of their wages. If they are WORKING poor they are earning wages so they are paying the tax. Now we can get into complications that they also might receive the EITC (Earned Income Tax Credit) meaning they actually get more of a refund then the amount they had with-held from their earnings, but I love the EITC. It rewards those who at least get a job and try to do as much as they can for themselves before assistance is provided.
@David Campbell
OK, you are going to force me to argue against my personal leanings to illustrate a point.
As Social Security is currently constructed, benefits are paid out according to how much you paid in. The link you provided explains that the maximum income level at which taxes would be levied would be raised but benefits for those affected would not be increased. This means they would pay more for less and it stops being insurance.
I understand that many conservatives are trying to destroy Social Security which is one of the reasons why I find it so hard to vote for Republicans anymore. I’m thinking of switching from being an independent and becoming a Democrat, although I would then describe myself as one of them Blue Dogs. I once often voted for quite a few Republicans but as the old guys are retiring, I can not in good conscience vote for most of the new breed. John Warner always had my vote but now he is gone. Bob Tata still gets my vote, but I have heard he is considering hanging it up too. Once Bob is gone, and seeing where the Republican Party is now heading, well… ??? If all of my votes are going for the Democrats, perhaps I might just as well throw in with them.
August 9th, 2010 at 12:21 pm
Molly: As LittleDavid said, Social Security funds are invested in U.S. Treasury Bonds, the most secure investment on earth. It is a good thing it wasn’t invested in the stock market as President Bush proposed, or Social Security would be bankrupt today.
It is not true that “the working poor don’t pay any tax.” They may not pay federal income taxes, but they do pay the more regressive Social Security/Medicare payroll taxes and they sales taxes whenever they buy anything.
As LittleDavid correctly points out, they “pay 7.62% payroll (SSI) taxes on 100% of their wages.”
Meanwhile, someone making $1 million would only pay 7.62% on the first $106,800. The other $893,200 isn’t subject to the Social Security tax. Instead of being taxed on 100% of their income, they are only taxed on 10.7% of their income. Instead of paying 7.62% on 100% of their income, they only pay 0.8% on 100% of their income (and their investment income is completely excluded).
Both the working poor and the rich are eligible for Social Security benefits. All I am proposing is a “flat tax.”
August 9th, 2010 at 1:35 pm
Both Davids
I was referring to income tax.
Just how much do you think “the rich” should pay to you, so that you can improve your lifestyle?
Furthermore, how much are you offering to pay to the guy down the street earning half your income, so that he can live better too? Put your money where your mouth is.
August 10th, 2010 at 5:07 am
Molly: The topic of this post and all previous comments here was Social Security. Referring specifically to the Social Security/Medicare payroll taxes, I said “What is wrong with taxing the rich on all their income at the same rate that the working poor are taxed on all their income?” You responded “What exactly do you mean by your last sentence? The working poor don’t pay any tax.” Of course, the working poor do pay Social Security/Medicare taxes. Now you say you were “referring to income tax.”
Since you brought it up, let’s talk about the federal income tax:
President Obama’s economic stimulus package included one of the biggest tax cuts in history –$282 billion benefiting 95% of working Americans (without the support of a single House Republican).
Taxes are at their lowest levels in 60 years.
The Bush tax cuts will expire on schedule at the end of this year, just as they were designed to do by President Bush. If Congress does nothing, that is what will happen.
President Obama proposes a new tax cut for everybody with taxable income less than $200,000 ($250,000 for couples filing jointly).
Personally, I don’t have a problem with the amount of federal income tax I pay. Most Americans agree with me: 62% of Americans said the income tax they have to pay is fair, including about 66% of Democrats, about 60% of Republicans and independents, and even 52% of Tea Party supporters.
August 10th, 2010 at 3:25 pm
You don’t expect me to believe anything the New York slimes have to say do you? Give me a break. You will be quoting Media Matters next.
bush’s tax cuts would not have gone through if he had not agreed to them being temporary and they need to be made permanent, we have enough other taxes coming our way come January, and are still in a depression.
August 10th, 2010 at 4:50 pm
Molly: President Obama plans to extend the Bush tax cuts for 98% of us. What “other taxes [are] coming our way come January?”
August 11th, 2010 at 11:34 am
Health care related.
Also, did you know that hidden in the Health care bill is a new 3.8% tax on all home sales, regardless of any profit incurred?
August 11th, 2010 at 12:28 pm
From my post #3 “So why don’t you get busy and become rich yourself if it is so important to you?”
A response is requested.
August 11th, 2010 at 12:47 pm
The only immediate “health care related” tax that I am aware of is a 10% excise tax on indoor tanning services that took effect 07/01/2010. You’ll be healthier without them – they cause skin cancer.
Your statement that there “is a new 3.8% tax on all home sales, regardless of any profit incurred” is absolutely false. There will be a 3.8% tax on the profit (not sales price) in excess of $250,000 ($500,000 married filing jointly) from the sale of a personal residence beginning in 2013.
In response to your question: I am already pretty busy, but I am generally comfortable and happy in my present middle class lifestyle and becoming rich is not so important to me. Thank you for your concern.
August 11th, 2010 at 1:29 pm
David,
Home sales already have Capital gains tax to be paid when exceeding the allowance of $250k per individual/$500k per couple profit on main residence, and all profit on investment property.
“I am already busy, and becoming rich is not so important to me.” So why are you so eaten up with jealousy of others who are?
August 11th, 2010 at 3:47 pm
Molly: That’s correct. This new tax would only apply to a small fraction of sales of second homes or a principal residence generating a profit more than $250,000 ($500,000 for a couple). Specific examples were listed in the link I provided.
I’m not jealous of anyone.
Here’s a question for you: Assuming that your taxable income (after exemptions and deductions) is less than $200,000, why are you so emotionally invested in protecting the extreme wealth of people you don’t know?
August 12th, 2010 at 3:06 am
If someone takes a chance and develops a product that others want to buy and is successful, it should be encouraged, or what is the incentive? That is why the USSR fell apart. Remember they had to pull in the military for harvest because the farmers had no interest in gathering more than his immediate needs.?Have you read “Animal Farm”? Look at the recent successes that began with an idea in a garage-Microsoft, Dell, to name just two. Bill Gates gives billions to charity each year, so who are the Government to come along and demand more to give out to others for nothing, who have the same opportunity as he did to be a great success. Government is way to big, and way too expensive.
Whist I agree, those with huge income can afford to contribute more to the necessities of the nation, as in the military, border security and basic infrastructure, it is not Government’s place to provide for those who think they deserve more. A safety net for those temporarily down on their luck is one thing, but Government handouts will never foster creativity, which is what this nation was founded on.
Not everyone can be super rich, so why do you want to make us all poor?
August 12th, 2010 at 5:10 am
Molly: Bill Gates was born into an upper middle class family. He attended an exclusive prep school and then Harvard. Not all Americans “have the same opportunity as he did to be a great success.” He is also gifted with rare intelligence that many do not possess. His brilliance and hard work earned his success.
Gates made his fortune in the 70’s and 80’s. Apparently, the top marginal tax rates of 70% (1975-1981) and 50% (1982-1986) did not stifle his creativity and entrepreneurial spirit.
I doubt that increasing the top marginal rate from 35% back to 39.6% (1993-2000) will destroy the incentive to create wealth.
By the way, billionaires Bill Gates, Bill Gates Sr., Warren Buffett, and David Rockefeller Sr. all support the estate tax. Bill Gates Sr. is currently leading a ballot initiative in November to increase Washington state taxes on the wealthy (which the public favors 66%-27%). It was modeled after Oregon’s ballot measure to increase taxes that the voters approved in January 54%-46%.
I agree with you that “those with huge income can afford to contribute more to the necessities of the nation” including a “safety net.” I do not “want to make us all poor.”
August 12th, 2010 at 5:23 am
The discussion has roamed far afield. The original topic of this post was Social Security, one of the most successful and popular government programs. Applying the existing 7.62% flat tax to all income equally would completely eliminate the projected future deficit and it is supported by 67% of the public.
August 16th, 2010 at 7:31 pm
I wish to point out that the success of America includes a portion of our time when the income tax was confiscatory. Such a high rate was necessary at the time to keep public unrest to a minimum and defeat communist influences which preached revolution.
Now, during these trying times, Republicans are preaching that we need to keep decreasing taxes on the wealthy so that they will provide the rest of us with jobs. OK, but where in this bargain is there that the jobs will appear here in America instead of in China? They can only employ a select few to clean their pool. If America can not provide good paying jobs for her own citizens while some of her citizens become fantastically wealthy exporting their jobs? Why do you expect some other other result then voters will vote that the wealth be shared? I love America! No need for communist revolutions, capitalism just needs to provide for everybody and when it is not successful in doing so, the revolutions happen at the voting booth.
August 18th, 2010 at 10:51 am
Social Security has been a successful government program in eliminating extreme poverty due to old age and disability. Basically, it is (and has always been) a transfer of money from businesses and employees to the elderly (Molly would call it “stealing her money and giving it to someone else”).
Some conservatives opposed it from the start and have been trying to kill it for 75 years since. They haven’t been able to because the program is enormously popular and a high proportion of senior citizens vote. Social Security has also enjoyed broad bipartisan support:
In a new AARP poll, 85% of Americans oppose cutting Social Security to pay off the deficit, with 72% strongly opposing it. Social Security has been called “the third rail of politics” because touching it is political suicide.
Please feel free to run candidates for public office on a platform of eliminating Social Security.
September 13th, 2011 at 3:25 pm
Hey folks, I have read with great interest all the comments posted, I in the past was a very strong supporter of the republican party, but in the last 10 years or so have really given up on these guys. The last time i voted republican was the first term of Bush # 2 and I have regreted it ever since!. I think personally when it comes to how much certain income groups pay in to anything we have to look at it as a percentage of income and not in a $ amount. I have read here in this forum that the working poor don’t pay any taxes? Really! Every time they walk in to a grocey store to buy something they pay taxes! anytime they buy ANYTHING at all they pay a tax on the product that they purchase, and I dare say that the tax they pay as a percentage of their income is far more then me or any wealthy person pays! Molly! you are wrong!! period!! Why when Warren Buffet says he pays less then his secretary in taxes won’t you believe him? As a percentage of income his secretary pays more then he does period!!. yet people like you continue to defend the rich as if they need defending? I don’t get it. Yes they pay more in a $ amount, but as a percentage of income me and the working poor pay far more. How in the world can you be so blind as to not see that? If 2 people walk into a cafe and 1 persons income is $50,000.00 a year and his friends income is $250,000.00 a year and they both order the same meal and both pay the same price for the meal and they both leave a 10% tip for the meal, who paid more as a percentage of their income for the tip? It isn’t hard to figure out!! get a calculator and learn to use it Molly, no one here is suggesting the rich pay any more then I do or the poor just pay the same percentage as I do . One other comment, why on Gods green earth did General Electric get a huge check from the tax payers? Talk about welfare!! corporate welfare is out of control!! And yet the Republican party believes that if we just give them more money they will hire us poppers!! How much do they need before they start hiring? I guess for G.E. something on the order of 3.5 billion in a tax refund isn’t enough!! Wake up people!!