Democrats Propose A Different Kind Of Social Security Overhaul (1 Viewer)

[WorldWatcher]

Time for my SS post...

I've come to believe that we need a re-evaluation of SS Taxes in general. The workforce and economy are very different than they were in 1935 when the system was created. Now I'm leaning more toward, making SS Tax applicable to all income the same way it is determined for Income Tax (wage, interest, dividends, short term stock commodities, and long term capital gains) as a new revenue source. As such:

• Current SS tax of 12.4% would remain (6.2% by the EE and 6.2% by the ER).
• Non-wage income would be taxed at a rate equal to 25% of the total FICA rate or another way to say it as 1/2 of the individual EE rate. That would currently be 3.1%.
• Financial institutions would be required to collect the 3.1% at the time of posting, just like employers (ERs) collect it at the time of payment.
• Because the non-wage rate is 25% of the wage rate (3.1% compared to the FICA total of 12.4%), then 25% of non-wage income would be credited to SS Income for that year.
• Current cap of 160K on wage income could remain the same.
• A cap of 40K would also apply to non-wage income. (25% taxed, so 25% of wage cap)
• The sum of the wage credit and non-wage credit is posted as the total SS Income for the year which is then used to determine SS benefit amounts.

Example:
A high wage earner makes $300K in wages, taxes are collected on wages up to $160K for a total of $19,840 in wage tax. Applicable income credited for the year for future benefits calculations is $160K. If the same person has in additional $100K of non-payroll investment income, the SS Tax would be $3,100 at 3.1%. Total SS Taxes would then be $22,940. 25% of the $100K passive income would be credited to SS Income for the year equaling $25K since the tax rate is 25% of the full FICA rate. So the individuals total SS Income credited for the year would be $160 + $25K = $185K.

A "Low Wage" earner making say $40K would pay 6.2% ($2,480) on wages. If they had $500 in interest than $3.1% = $15.50). Total SS Income for the year would then be credited as $40,125. $125 being 25% of the $500 in interest.

WW

 

[WorldWatcher]

No they aren’t.

Actually they are.

Property taxes are a wealth tax. The more you own the more you pay and you owe the tax year over year.

Income taxes are paid on income and are a one time tax that you pay once. The remainder is then not taxed as income again.

WW

 

[Fletch]

All I've ever asked is the promise the government made me will be kept. I never expected anyone else to pay my way through life. I worked for 52+ years paying into MY retirement and now realize there is a possibility those benefits could be reduced.

I agree with that. But the idea being put out here is that someone else is going to be forced to do with less because of your needs. The SS system can be fixed by simply raising the contribution rate on EVERYONE. Right now, that rate is .0765 of your income. Was that number sent down from Mt Olympus? No, it was set by law here and hasnt been raising since the 80's. If the system needs more money, then people will have to pay more into it

 

[Fletch]

Calling taxes "stealing" is the bullshit that only ideological extremists would regurgitate.

Your solution to this IS stealing. You just wont bring yourself to admit that. That blindness is due to either envy or ideological extremism. Or a combination.

 

[MamboDervish]

Time for my SS post...

I've come to believe that we need a re-evaluation of SS Taxes in general. The workforce and economy are very different than they were in 1935 when the system was created.

And SS itself if very different than it was when it was created.

1939 Amendments: Broader benefits for dependents and survivors.

1950s Amendments: First COLA, and adjustments to disability provisions.

1960s Amendments: Lowered retirement age, added Medicare, and further disability adjustments.

1970s Amendments: Made COLAs automatic and introduced Supplemental Security Income (SSI).

1980s Amendments: Changes to disability rules, taxation of benefits, and gradual increase in retirement age.

1990s and Beyond: Ongoing adjustments to the payroll tax and other aspects of the program.

etc., etc., etc ....
Social Security has been tweaked countless times since it was introduced, and will probably require countless more adjustments as conditions change.

 

[MamboDervish]

Your solution to this IS stealing.

No, it isn't.

You just wont bring yourself to admit that. That blindness is due to either envy or ideological extremism. Or a combination.

Horseshit.

 

[rahl]

Actually they are.

Property taxes are a wealth tax. The more you own the more you pay and you owe the tax year over year.

Income taxes are paid on income and are a one time tax that you pay once. The remainder is then not taxed as income again.

WW

It’s an annual tax. Whether it’s property tax or income tax.

 

[Fletch]

No, it isn't.

Horseshit.

It is. Robbing Peter to pay Paul is stealing from Peter. And that is precisely what you are suggesting. But your envy and extremism prevents you from seeing the obvious.

 

[ttwtt78640]

And SS itself if very different than it was when it was created.

1939 Amendments: Broader benefits for dependents and survivors.

1950s Amendments: First COLA, and adjustments to disability provisions.

1960s Amendments: Lowered retirement age, added Medicare, and further disability adjustments.

1970s Amendments: Made COLAs automatic and introduced Supplemental Security Income (SSI).

1980s Amendments: Changes to disability rules, taxation of benefits, and gradual increase in retirement age.

1990s and Beyond: Ongoing adjustments to the payroll tax and other aspects of the program.

etc., etc., etc ....
Social Security has been tweaked countless times since it was introduced, and will probably require countless more adjustments as conditions change.

A very simple ‘fix’ for SS would be to raise the SS FICA ‘payroll’ tax rate(s) from 6.2% to 7.75%. Using liberal math, that’s only a 1.55% tax rate increase.

 

[ClaraD]

The bicameral bill, the Medicare and Social Security Fair Share Act, was reintroduced by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Brendan Boyle (D-Pa.), with the aim of requiring people with yearly incomes of more than $400,000 to contribute a fairer share of their wealth to the two programs. It would also increase the Medicare tax rate for income above $400,000 by 1.2% and include a provision ensuring owners of hedge funds and private equity firms can no longer avoid Medicare taxes.

'Rigged for the rich': Dems propose a different kind of Social Security overhaul

Social Security and Medicare protect tens of millions of American senior citizens from poverty and medical bankruptcy each year, but economic justice advocates have long said the programs would be strengthened and remain fully solvent for as long as possible if the richest Americans contributed...

www.alternet.org

This is good and I believe that SS should be multilevel payments..if you have a retirement fund you should get a percentage amount and if you are above an income level none…I do believe SS should be at a certain level means tested, but it should be much higher than benefits. So if uou have one million a year income you don’t need me to subsidize you with $3000 a month more

 

[WorldWatcher]

It’s an annual tax. Whether it’s property tax or income tax.

However with property you get taxed on the same thing over and over.

Income is only taxed once and you're done. (Only NEW income is taxed, not the income that was taxed last year.)

WW

 

[MamboDervish]

It is. Robbing Peter to pay Paul is stealing from Peter. And that is precisely what you are suggesting. But your envy and extremism prevents you from seeing the obvious.

See my post #56

 

[MamboDervish]

A very simple ‘fix’ for SS would be to raise the SS FICA ‘payroll’ tax rate(s) from 6.2% to 7.75%. Using liberal math, that’s only a 1.55% tax rate increase.

Okay ..

 

[Fletch]

See my post #56

See my post #58. Then try and sell your Robinhood bullshit to someone else.

 

[WorldWatcher]

This is good and I believe that SS should be multilevel payments..if you have a retirement fund you should get a percentage amount and if you are above an income level none…I do believe SS should be at a certain level means tested, but it should be much higher than benefits. So if uou have one million a year income you don’t need me to subsidize you with $3000 a month more

A good person (which of course is subjective) with over a million a year in income, wouldn't even apply for SS. It doesn't start automatically.

WW

 

[cpwill]

The bicameral bill, the Medicare and Social Security Fair Share Act, was reintroduced by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Brendan Boyle (D-Pa.), with the aim of requiring people with yearly incomes of more than $400,000 to contribute a fairer share of their wealth to the two programs. It would also increase the Medicare tax rate for income above $400,000 by 1.2% and include a provision ensuring owners of hedge funds and private equity firms can no longer avoid Medicare taxes.

'Rigged for the rich': Dems propose a different kind of Social Security overhaul

Social Security and Medicare protect tens of millions of American senior citizens from poverty and medical bankruptcy each year, but economic justice advocates have long said the programs would be strengthened and remain fully solvent for as long as possible if the richest Americans contributed...

www.alternet.org

The idea that the structure of OASI or Medicare are "rigged for the rich" indicates to me from the get-go that these individuals either do not understand the programs, or, (more likely) they think that we don't.

This is just another "super-hike taxes on the rich, static-score the results, and then blame others when it doesn't work out like we claimed it would" scheme.

Even back when we taxed high incomes at 90%, we never brought in enough of GDP in Revenue to pay for the promises we have made with those programs. If we want European levels of expenditures, we are going to have to pay for it the way Europeans do - high taxes on the middle class.

 

[MamboDervish]

See my post #58. Then try and sell your Robinhood bullshit to someone else.

meh ....

 

[cpwill]

* Also: I continue to argue that, if we are going to make changes to Social Security, we should start changing it in such a way that it actually ensures financial independence for lower-income Americans upon retirement, instead of the dumpster-fire "returns" that we get now.

 

[rahl]

However with property you get taxed on the same thing over and over.

Right. Just like your income.

Income is only taxed once and you're done.

Nope. Nits taxed every year, just like property taxes.

(Only NEW income is taxed, not the income that was taxed last year.)

WW

Just like property taxes. Your property value is determined each year and your annual property tax based off that.

 

[WorldWatcher]

* Also: I continue to argue that, if we are going to make changes to Social Security, we should start changing it in such a way that it actually ensures financial independence for lower-income Americans upon retirement, instead of the dumpster-fire "returns" that we get now.

You ever looked at - IIRC - Sweden?

• Lock box accounts by individual.
• Last time I looked there were over 100 investment options from Aggressive - Moderate - Conservative. If one was not chosen by the individual the government would select a portfolio on the conservative end of the spectrum.
• If the money runs out there is a still an income minimum and housing assistance.

Problem is their retirement safety net is rolled into other safety nets (like disability, child care, etc.) which causes scary tax rates (30-35%?).

WW

 

[WorldWatcher]

Right. Just like your income.

Nope. $XXX of income is only taxed once. Then it's done. Only NEW income is taxed.

Nope. Nits taxed every year, just like property taxes.

Just like property taxes. Your property value is determined each year and your annual property tax based off that.

If I have Property A I'm taxed for it in 2024, 2025, 2026, etc. The same property year after year.

For income if I make $50K in 2024 that is taxed and it's done.

If I have $55K income in 2025, then that is taxed but he 2024 income is not as it was already taxed.

If I have no income in 2026, there is not tax. But if I owned the Property A, it's still taxed.

WW

 

[rahl]

Nope. $XXX of income is only taxed once. Then it's done. Only NEW income is taxed.

Yep. Just like the property value that is taxed once.

If I have Property A I'm taxed for it in 2024, 2025, 2026, etc. The same property year after year.

Nope. different values year after year. Just like income.

For income if I make $50K in 2024 that is taxed and it's done.

Right. Just like property taxes

If I have $55K income in 2025, then that is taxed but he 2024 income is not as it was already taxed.

Right. Just like property taxes

If I have no income in 2026, there is not tax. But if I owned the Property A, it's still taxed.

Right. If you don’t own property, it isn’t taxed. If you don’t have an income , it isn’t taxed

WW

 

[WorldWatcher]

Yep. Just like the property value that is taxed once.

The property isn't taxed once. The same property every year.

WW

 

[Moderate Right]

The bicameral bill, the Medicare and Social Security Fair Share Act, was reintroduced by Sen. Sheldon Whitehouse (D-R.I.) and Rep. Brendan Boyle (D-Pa.), with the aim of requiring people with yearly incomes of more than $400,000 to contribute a fairer share of their wealth to the two programs. It would also increase the Medicare tax rate for income above $400,000 by 1.2% and include a provision ensuring owners of hedge funds and private equity firms can no longer avoid Medicare taxes.

'Rigged for the rich': Dems propose a different kind of Social Security overhaul

Social Security and Medicare protect tens of millions of American senior citizens from poverty and medical bankruptcy each year, but economic justice advocates have long said the programs would be strengthened and remain fully solvent for as long as possible if the richest Americans contributed...

www.alternet.org

The rich already are paying the lions share of taxes, which arleady is a fairer share than everyone else pays.

 

[cpwill]

You ever looked at - IIRC - Sweden?

• Lock box accounts by individual.
• Last time I looked there were over 100 investment options from Aggressive - Moderate - Conservative. If one was not chosen by the individual the government would select a portfolio on the conservative end of the spectrum.
• If the money runs out there is a still an income minimum and housing assistance.

Problem is their retirement safety net is rolled into other safety nets (like disability, child care, etc.) which causes scary tax rates (30-35%?).

WW

That was interesting reading -thank you

...Sweden faced the same problem in the early 1990s. The old pay-as-you-go pension system had promised too much. With fewer births and longer lives, projections showed the system would be insolvent a decade later....​

That sounds tragically familiar.

Unfortunately....

...Its politicians chose not to deceive the voters. The center-left Social Democrats acknowledged that the system “would not withstand the stresses that can be foreseen.”...​

that sounds less so.

Sweden introduced partial privatization of the kind the American left derides as a Republican plot to gamble our money away on the stock market. The Swedish government withholds roughly 2.3% of wages and puts it into individual pension accounts. Workers are allowed to choose up to five different funds in which to invest this money, according to their own risk preference, and can change them at any time free.​

​

Commentators claim partial privatization would mean that pensions could be lost in a financial crash. That ignores that the money isn’t all invested or withdrawn at the same time, meaning that the performance in a single year isn’t crucial. The returns from the normal income pension is around 2% per year, but from the private accounts the average Swede has made an impressive average return of roughly 10% a year since its inception in 1995, despite the dot-com crash, the financial crisis and the pandemic.​

​

Swedish social security isn’t perfect and doesn’t satisfy everyone, but it has the obvious advantage that it actually works and is sustainable in the long run.​

That's pretty solid, and definitely worth exploring.

...The Swedish far left and far right never accepted the reform and have demanded and sometimes won higher payouts. But most of the system remains intact after almost 30 years. No doubt, part of the explanation is that Swedish politicians prepared their citizens with an adult conversation about costs, benefits and what was possible, instead of merely rehearsing slogans and ignoring the inevitable crash....​

I wish we had politicians capable and willing to do this