Why not have everyone pay Social Security and Medicare taxes on ALL income?

[independentusa]

Right now, you only pay Social Security and Medicare taxes on wages. that means that anyone who receives only other types of income pay nothing into the Social Security or Medicare systems. That income, which the Trump tax cuts, cut the income tax rate for, actually is worth over 7% more in disposable income than wages due to the fact that no Social Security or Medicare taxes are paid on this type of income. So why not have everyone pay Social Security and Medicare taxes on all types of income.

 

[Southern Dad]

Actually, wage earners only pay social security taxes on the first $128,400. This means the maximum taken out for social security is $7,960.08 per year. (Of course this matched by the employer also contributing $7960.08 per year).


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[ttwtt78640]

Right now, you only pay Social Security and Medicare taxes on wages. that means that anyone who receives only other types of income pay nothing into the Social Security or Medicare systems. That income, which the Trump tax cuts, cut the income tax rate for, actually is worth over 7% more in disposable income than wages due to the fact that no Social Security or Medicare taxes are paid on this type of income. So why not have everyone pay Social Security and Medicare taxes on all types of income.

Two reasons come to mind.

1) One's SS (retirement supplement) benefit level is based on their (highest 35 years of) contributions which are currently capped. Removing that cap would mean giving even more SS (retirement supplement) benefits to those who presumably need them the least.

2) Since not all income sources are currently FICA taxable that (bolded above) would appear to mean taxing the SS (and other publicly funded?) benefits themselves - unless you made similar exceptions and exemptions to prevent that.

 

[independentusa]

Two reasons come to mind.

1) One's SS (retirement supplement) benefit level is based on their (highest 35 years of) contributions which are currently capped. Removing that cap would mean giving even more SS (retirement supplement) benefits to those who presumably need them the least.

2) Since not all income sources are currently FICA taxable that (bolded above) would appear to mean taxing the SS (and other publicly funded?) benefits themselves - unless you made similar exceptions and exemptions to prevent that.

Ah, but if we go to Medicare for all, should not all income at least be taxed for Medicare as all will get the benefit?

 

[ttwtt78640]

Ah, but if we go to Medicare for all, should not all income at least be taxed for Medicare as all will get the benefit?

I seriously doubt whether M4A proposals would be funded by a flat rate (regressive?) tax or will have additional fixed premiums. Unlike SS, Medicare benefits are not likely to be capped or (generally) based on ones's past contribution level.

 

[independentusa]

I seriously doubt whether M4A proposals would be funded by a flat rate (regressive?) tax or will have additional fixed premiums. Unlike SS, Medicare benefits are not likely to be capped or (generally) based on ones's past contribution level.

But the Medicare for all will be available to all and all should pay. And the Medicare tax of course will have to change. And Medicare does not pay for everything. It pays about 80% of ones cost. Most Medicare people buy supplements. Such supplements for poor people are paid for by Medicaid. I do not see that changing unless the GOP does away with Medicaid altogether which seems to be their goal. In fact to me it seems they are trying to reduce the people who have any kind of insurance.

 

[ttwtt78640]

But the Medicare for all will be available to all and all should pay. And the Medicare tax of course will have to change. And Medicare does not pay for everything. It pays about 80% of ones cost. Most Medicare people buy supplements. Such supplements for poor people are paid for by Medicaid. I do not see that changing unless the GOP does away with Medicaid altogether which seems to be their goal. In fact to me it seems they are trying to reduce the people who have any kind of insurance.

Those (bolded above) contradictions are exactly why I doubt that Medicare for all will ever come to be. Taking away a currently "free" benefit (Medicaid) and requiring everyone to pay either some fixed amount or percentage of their income as Medicare now does is very unlikely.

If faced with the need for medical treatment which cost $400K it would make little difference if I was expected to pay $400K or $80K - since I would be able to do neither. When folks talk about Medicare for all they seem to have all sorts of warm and fuzzy programs in mind yet funding them is totally ignored and/or said to be a non-issue due the total projected cost savings.