Should We Redesign Payroll Taxes? (1 Viewer)

[danielpalos]

Currently we have a bizarre tax system where workers and employers both contribute equally to payroll taxes to pay for social security and medicare. On its own, this isn't necessarily a bad thing. These are programs that do a lot of good and provide for people in retirement. Here's the problem: these payroll taxes do not apply to those who make a living off of investments, and they also do not apply to those who make more than a certain amount of money. Here's where it gets even worse, if you are self-employed, you are effectively playing twice the tax, since you are the employer and employee.

What we've set up is a tax scheme that effectively discourages labor, discourages entrepreneurship, and encourages only investment. On top of that, it's not solvent. So we need to change it. Here's my proposal?

Let's stop treating this like a savings account and treat it like it actually is: social welfare. Make the tax apply to high income earners, not just middle income earners. Make it apply not just to wage income, but to all sources of income. This does mean that yes, now the rich can collect social security, but we already a maximum benefit worked into the system, so on net we'll be collecting much more revenue.

This fix will treat all sources of income equally and fix the budget issues.

Thoughts?

What about a fifteen dollar an hour minimum wage and unemployment compensation for simply being unemployed in our at-will employment States.

We should be able to eventually eliminate payroll taxes in favor of market based products.

By solving for simple poverty, markets should operate at full employment. Better products at lower cost is what we should expect.

 

[Neomalthusian]

You failed to provide any evidence for your statement that states would be unable to pay public pension costs even if they raise taxes.

Of course I have. This is a very poor attempt at a debate tactic -- to ignore evidence provided and then claim no evidence has been provided.

 

[phattonez]

What about a fifteen dollar an hour minimum wage and unemployment compensation for simply being unemployed in our at-will employment States.

We should be able to eventually eliminate payroll taxes in favor of market based products.

By solving for simple poverty, markets should operate at full employment. Better products at lower cost is what we should expect.

What if we offer public works employing people at $15 per hour? I can live with that.

Sent from my HTC phone. Instaurare omnia in Christo.

 

[haymarket]

Of course I have. This is a very poor attempt at a debate tactic -- to ignore evidence provided and then claim no evidence has been provided.

In which post did you provide the evidence for the state of Illinois - the state YOU named and YOU claimed would not be able to pay its public pensions even if they raised taxes? you could not even name the year when this would happen when you were challenged.

 

[haymarket]

The only thing that can break Social Security is if we ignore the problems to the point where they quietly grow out of reach. GOPers will tell you that we are already there. I am not convinced of that, but I can tell you that we will eventually reach a point where workers just say no. Once we cross that Rubicon, I don't know where reform goes, but there will be a point where younger voters say no. We have a pile of people 25-45 who are struggling with student debt, and they are being asked to pay for a program which pays Bernie Sanders $50K. The politicians want to expand Social Security, and leave younger voter's debt alone. This doesn't end well.

So lets act now.

 

[Conservative]

It is frightening that you think the link confirms your statements. It says the exact opposite. It says that Social Security were taken off budget in 1990. Yet nothing happened. No money moved. The Trust Fund was entirely unaffected, so much so you aren't aware that it was moved off budget.

The budget has nothing to do with the bonds("IOUs"). It tells people where money went.

Can you explain what you mean by "Any idea how those IOU's are going to be funded? IOU's have to be funded, IOU's are Federal Obligations and IOU's are part of the unfunded SS and Medicare liability. "



Did you say that LBJ used Social Security to pay for Vietnam? That is completely denied here.

No one can shows you that payroll taxes are to be used to pay for other things - because it hasn't happened. You are telling me that there is a pot of gold at the end of the rainbow, and now you are asking me to show it to you. It is impossible. It is a figment of your imagination.

Not sure what your problem is but the reality is a different story, YES, LBJ put SS and Medicare on budget to fund the Vietnam War, that is reality and it is also reality that SS and Medicare funds were indeed used to fund other items, the money "BORROWED" and replaced with IOU's. Not sure where you got your education but suggest you go back for a refresher course. Not going to waste any more time with you on this issue. You are indeed a legend in your own mind

 

[Conservative]

The seashore is part of the real world..... and I strongly urge you to visit and learn the lesson most learn as children.

And I urge you to answer my question, how long will you fund your child for their lunches if they kept spending their money on donuts on the way to school?

 

[Conservative]

It is frightening that you think the link confirms your statements. It says the exact opposite. It says that Social Security were taken off budget in 1990. Yet nothing happened. No money moved. The Trust Fund was entirely unaffected, so much so you aren't aware that it was moved off budget.

The budget has nothing to do with the bonds("IOUs"). It tells people where money went.

Can you explain what you mean by "Any idea how those IOU's are going to be funded? IOU's have to be funded, IOU's are Federal Obligations and IOU's are part of the unfunded SS and Medicare liability. "



Did you say that LBJ used Social Security to pay for Vietnam? That is completely denied here.

No one can shows you that payroll taxes are to be used to pay for other things - because it hasn't happened. You are telling me that there is a pot of gold at the end of the rainbow, and now you are asking me to show it to you. It is impossible. It is a figment of your imagination.

Let's see if I understand this, SS was put on budget and made part of the General Revenue fund but wasn't used to fund anything and yet IOU's were put to secure the money, so tell me why IOU's since the money hasn't been used?

Since no one can show that Payroll taxes weren't used to fund other items, wonder if you can show why IOU's are in place of SS contributions?

 

[haymarket]

And I urge you to answer my question, how long will you fund your child for their lunches if they kept spending their money on donuts on the way to school?

I do like donuts ... the kind with chocolate on top and filled with custard. Also in apple cider season the old fashioned plain ones really can hit the spot.

What do you have against donuts?

 

[JoeTheEconomist]

Not sure what your problem is but the reality is a different story, YES, LBJ put SS and Medicare on budget to fund the Vietnam War, that is reality and it is also reality that SS and Medicare funds were indeed used to fund other items, the money "BORROWED" and replaced with IOU's. Not sure where you got your education but suggest you go back for a refresher course. Not going to waste any more time with you on this issue. You are indeed a legend in your own mind

The place I got my information was the SSA. It says that Johnson was gone before Social Security was part of the "unified budget". That is over 4 years. At the time, it was a pay-as-you-go system, generating a total of $8 billion in excess cash flow while LBJ was in office. If he took every penny of excess cash, it generated $8 billion.

So you believe the SSA is lying about it. It isn't just the absurdity of your belief, nor the persistence of it that amazes me. It is the arrogance to talk down to people question it. LBJ took the money is academically up there with the flat earth society.

 

[JoeTheEconomist]

Let's see if I understand this, SS was put on budget and made part of the General Revenue fund

The SSA says no. No. I don't know how to spell it differently. Read the link. The Social Security Trust Fund was never put in the General Fund. It isn't general revenue. Maybe the SSA is lying. Maybe the earth is flat.

In a pay as you go system, pretty much every dollar in is distributed out in benefits. If $100 is paid in, and $99.5 is paid out. What do you do with the $0.50. By law Social Security has to buy government bonds. The transaction is the same as it is for a private pension. $s go to the Treasury Bonds or IOUs go to the Trust Fund. Over 4 years, $8 billion was generated, some of that was interest payments that Johnson couldn't spend. So how much of Vietnam did SS pay for?

 

[Conservative]

The SSA says no. No. I don't know how to spell it differently. Read the link. The Social Security Trust Fund was never put in the General Fund. It isn't general revenue. Maybe the SSA is lying. Maybe the earth is flat.

In a pay as you go system, pretty much every dollar in is distributed out in benefits. If $100 is paid in, and $99.5 is paid out. What do you do with the $0.50. By law Social Security has to buy government bonds. The transaction is the same as it is for a private pension. $s go to the Treasury Bonds or IOUs go to the Trust Fund. Over 4 years, $8 billion was generated, some of that was interest payments that Johnson couldn't spend. So how much of Vietnam did SS pay for?

So then why are their IOU's in Inter Government Holdings since no money was used for anything other than SS and Medicare?

https://moneymorning.com/2017/03/31...ck-of-ious-in-a-west-virginia-filing-cabinet/

you are confusing the funding of SS and Medicare and the use of the money

 

[Neomalthusian]

In which post did you provide the evidence for the state of Illinois - the state YOU named and YOU claimed would not be able to pay its public pensions even if they raised taxes?

You were here throughout the discussion quoting every single one of my posts, so don't act like you just missed the ones where all the supporting material was referenced. You can use the search feature to find any post you want. Plenty of supporting material for my prediction was provided in links. You responded to none of the content.

you could not even name the year when this would happen when you were challenged.

No one in the world can answer a question like that, because it's based on numerous complex variables or operating assumptions, which I invited you to specify and you dodged.

 

[rickc]

discussion of how we got here does nothing to solve the problem for now and the future.

everyone knows how to fix it. Republicans just refuse to be a part of it. like ACA they want it to fail.

 

[haymarket]

You were here throughout the discussion quoting every single one of my posts, so don't act like you just missed the ones where all the supporting material was referenced. You can use the search feature to find any post you want. Plenty of supporting material for my prediction was provided in links. You responded to none of the content.



No one in the world can answer a question like that, because it's based on numerous complex variables or operating assumptions, which I invited you to specify and you dodged.

You cannot answer the question because you built a box and then placed yourself in it and had it nailed shut. You overreached - you over did it - you went too far. And now you are trying to break out of the box by claiming it unfair to put you in it in the first place.


I do NOT have any variables to present because it all comes down to one variable: the willingness of the peoples government to honor its commitment to those who have fulfilled their end of the deal.

And apparently you want to create an environment where you want the peoples government to renege on their commitments and you do so under the phony cover of sweeping statements like you made saying that some states will not be able to pay public pensions even if they raise taxes.

You overreached. I did not place you in that box. You built it and placed yourself in it.

 

[Neomalthusian]

You cannot answer the question because you built a box and then placed yourself in it and had it nailed shut. You overreached - you over did it - you went too far. And now you are trying to break out of the box by claiming it unfair to put you in it in the first place.

Total nonsense. The discussion of state pensions is complex. I predicted something based on the totality of the situation, and provided ample analysis to support why I would make a prediction like that. States are unable to raise taxes sufficiently to climb out of their problem, as evidenced by... the fact that they have chronically not raised taxes sufficiently to climb out of their problem. This inability is both political and economic in nature. There lacks the political will to raise contributions high enough to fix the problem, but even if there were the political will to hike the contributions that drastically, there'd still be the economic effect of taxpayers fleeing the area to avoid the additional tax burden. There is analysis of these difficult factors to grapple with which I linked in my previous posts. It's not my fault you didn't pay attention to the supporting evidence, but ignoring it doesn't mean you get to claim it wasn't provided.

I do NOT have any variables to present because it all comes down to one variable: the willingness of the peoples government to honor its commitment to those who have fulfilled their end of the deal.

I've explained why your attempt to oversimplify the state's pension problem doesn't work. It's clear you cannot wrap your mind around the important variables that determine the fate of state pensions.

And apparently you want to create an environment where you want the peoples government to renege on their commitments

It has nothing to do with "wanting them to." They will have to attempt to raise the tax burden on their citizens to pay whatever pension benefits were initially/originally offered. That's already mandatory by law. Unless they completely rewrite their laws (despite the fact the State Constitution forbade them to do so), then they already have to do that. You act as though this debate is about "should government raise the tax burden to pay for pensions, or not?" That's not even the issue, because they're already required by law to try to do this. The increases to taxpayers to pay for pensions has already dramatically outpaced increases to employee contributions over the last 15-20 years and it is required to continue to accelerate, by law. Law already mandates it.

So why is that not enough? Because 1) if or when the tax base becomes sufficiently battered, and enough people and businesses with money move out, there becomes a diminishing return of revenue from subsequent tax increases and 2) thus a positive feedback loop of more exodus as taxes are increased further. When a non-monetarily-sovereign government ends up in this kind of trap, there is no way to not reduce benefits, because it is a default scenario by definition. When the bank account hits $0, there is no remaining choice to default or not to default. It is default.

 

[rickc]

fixing state pensions has nothing to do with payroll taxes.

get back on topic or start your own thread

 

[haymarket]

Total nonsense. The discussion of state pensions is complex. I predicted something based on the totality of the situation, and provided ample analysis to support why I would make a prediction like that.

You attempted to do something intellectually dishonest: wrap your own speculative opinion amidst all your information and pretend that it was a statement of fact having the same weight as your numbers and statistics.

When I questioned you about it you attempted to try and present some facts - after all you named Illinois as one such state - but when I pushed you further, you had nothing beyond your own speculative opinion.

The fact is simple: You have no idea if raising taxes in the future in some state would allow states to pay public pensions or not.

But you dishonestly tried to pass off your speculative opinion as a statement of fact and did not get away with it.

When the bank account hits $0, there is no remaining choice to default or not to default. It is default.

Again, just like before, you go way too far, and box yourself in. Government has the power of taxation - which means their "bank account" can always be replenished unless the state ceases to exist. And as long as the power of taxation exists, states can use it to make up any shortfalls in public pension funds.

Several posts have told both of us that we are off topic. Let us both respect that and simply agree to disagree on this matter.

 

[Neomalthusian]

fixing state pensions has nothing to do with payroll taxes.

Sure it does. State pensions are funded by employee contributions and employer contributions. Employer contributions are the taxpayer's burden. State pensions are effectively public sector payroll taxes.

Social Security is a universal public pension administered by the Federal Government. State pensions are public pensions for state and municipal employees. Both are relevant as both involve analyzing the predicament of unfunded pension liabilities and what will end up needing to be done about them. Of the two types of government-administered pensions (federal and non-federal), the non-federal pensions have a greater near-term potential to create significant economic devastation than the federal kind. Making a big deal about SS and Medicare ignores the more immediate problem.

get back on topic or start your own thread

I already did, actually. Here: https://www.debatepolitics.com/government-spending-and-debt/322253-public-pension-crisis-two-options-remain-implosion-reform-61.html

 

[Conservative]

discussion of how we got here does nothing to solve the problem for now and the future.

everyone knows how to fix it. Republicans just refuse to be a part of it. like ACA they want it to fail.

So what assurance do you have when you raise taxes that the Federal bureaucrats will use that money to shore up SS and Medicare vs. spending it to keep their jobs? Everyone does know how to fix it, term limits getting rid of bureaucrats that created the problem, BOTH PARTIES. Where exactly did those SS and Medicare contributions go and why are there trillions in IOU's taking the place of those contributions?

 

[Neomalthusian]

You attempted to do something intellectually dishonest: wrap your own speculative opinion amidst all your information and pretend that it was a statement of fact having the same weight as your numbers and statistics.

The fact that you latched onto one little statement and were autistic about your inability to understand it in the broader scope of my argument shows you were looking for any opportunity to shy away from the amount of evidence that supports my overall position that state pensions are disastrous policy.

When I questioned you about it you attempted to try and present some facts - after all you named Illinois as one such state - but when I pushed you further, you had nothing beyond your own speculative opinion.

You're still lying. Just because you ignored the litany of material I provided doesn't mean you get to pretend I provided nothing.

Again, just like before, you go way too far, and box yourself in. Government has the power of taxation - which means their "bank account" can always be replenished unless the state ceases to exist. And as long as the power of taxation exists, states can use it to make up any shortfalls in public pension funds.

Several posts have told both of us that we are off topic. Let us both respect that and simply agree to disagree on this matter.

I explained how states can fail, as their ability to tax their citizens depends on the ones with money to tax not leaving the state.

But ok. Note the thread linked in the previous post, the topic of which specifically concerns state and local pension liabilities.

 

[haymarket]

The fact that you latched onto one little statement .......

Its not "one little statement". It is the bottom line of your case.

I explained how states can fail

Which state has failed like you describe?

Just because you ignored the litany of material I provided doesn't mean you get to pretend I provided nothing.

It does not matter if you think the material you presented would fill a library. You have FAILED to back up your claim that states cannot pay public pensions even if they raise taxes.

 

[Neomalthusian]

Its not "one little statement". It is the bottom line of your case.

Which state has failed like you describe?

It does not matter if you think the material you presented would fill a library. You have FAILED to back up your claim that states cannot pay public pensions even if they raise taxes.

You said we should agree to disagree out of respect of others' wishes that this thread be limited to SS and Medicare, and then you return to auto-repeat mode and continue banging the drum despite the fact I've exhaustively refuted your obsessive and silly little question.

 

[haymarket]

You said we should agree to disagree out of respect of others' wishes that this thread be limited to SS and Medicare, and then you return to auto-repeat mode and continue banging the drum despite the fact I've exhaustively refuted your obsessive and silly little question.

Resorting to petty insults while you pretend wear a judges robes is a pathetic substitute for you being able to back up your bottom line claim that states will not be able to pay public pensions even if they raise taxes.

 

[Neomalthusian]

Resorting to petty insults while you pretend wear a judges robes is a pathetic substitute for you being able to back up your bottom line claim that states will not be able to pay public pensions even if they raise taxes.

I backed up my views on this issue with plenty of material. You've provided zero material, as well as completely ignored all the material I shared, and then accused me of providing no material support for my position. Laughably unimpressive showing from you. There was also no petty insult in that post you quoted.

Do you want to drop it and let the thread police keep this topic exclusive to SS and Medicare now?