It can’t be pushed through. Raising the cap is a massive tax hike on the well off that will dwarf the 3-4% tax hike Obama wanted on income taxes. Means testing is a backdoor method of turning medicare into a ‘program that white middle class people pay into and blacks, latinos and poor people take out of’, which will make it easier to destroy down the road.
reforming our social safety net is not hard to do on paper. If you raise the tax rate for SS from 12.4% to about 13.2% and eliminate (or raise) the cap that keeps SS solvent until the 22nd century. If you reform health care to make it as efficient as every other wealthy nation that eliminates most of the debt from medicare and medicaid. Neither is politically possible anytime soon, but that would fix it.
SS is a progressive system, the less you make the more of a ROI you get. Plus you only pay 7.45% of the taxes, your employer pays the other half.
Find me an investment vehicle where 7.45% of (because lets be honest, employers are not going to match SS and medicare unless the government forces them too. Look at the absence of pensions and matching 401ks for most workers to see what happens when government force is taken out of the equation) your 40k a year income can lead to a stable pension and health insurance for your 60s, 70s and 80s and beyond if need be (something like 20% of people live to be 90 nowadays). Find a way to fund that on 3-4k a year of savings w/o relying on assumptions like 'the market will grow at 8% a year indefinitely.
Buffet and Gates pay a thousandth of a percent and someone flipping burgers pays almost 15%. Then Buffet and Gates get more out at the end. Sounds regressive to me.
But it does, over a long enough time period.
That’s like saying “Find me a plane that flies without relying on gravity being 9.8 m/s”.
I trust the market to continue to perform a lot more than I do the government to continue to honor SS payments at current levels.
It’s an accounting gimmick. You could change the law tomorrow that the entire 15% came out of the employer before showing up in the employees check. Or you could change it to show all in the employees check and have the entire amount come out there. It wouldn’t matter. The end result is the same. The check is reduced by 15%.
The republicans have tried a few times to pass legislation that would accurately show what people really made before this hidden tax, but it really doesn’t matter.
The next post that implies that the target of the post is stupid or heartless or is expressing a stupid or heartless view is going to collect a Warning.
If you can’t play nice, open a parallel thread in The BBQ Pit.
The whole premise of means testing is sadly disingenuous. I’m open to correction but it seems that a lot of people on the same side support both means testing (as budget hawks) and regressive taxation (as laissez-faire conservatives). To me the way it seems to add up is that they do like the idea of taxing the rich, but only if they’re over retirement age.
On the other hand, asking high earners to pay more while they’re actually earning seems reasonable, and politically feasible too.
If you removed the cap, the benefits would increase as well. So someone who makes 10 million dollars a year would for 30 years would get a social security check in the tens of thousands of dollars but would have to live to be 125 just to break even. The final admission would be mean testing social security so that the guy who continues to earn 10 million dollars after he is eligible doesn’t get to see any money at all.
Thats why lifting the cap is OK (and would cover virtually all the extra money money that will be going out once the boomers start collecting).
Means testing will not raise a lot of money. Almost by definition. Its not ever worth pursuing for the violence it will do to the program.
It depends on your goals.
If you want to get rid of social security and medicare then means testing is progress because it will undermine these program creating a permanent constituency that will be in favor of eliminating it. You will also have turned these programs into a form of welfare, further undermining their popularity.
If you want to make ends meet, then raising the cap and raising taxes and reforming medicare benefits is the painful but probably necessary path.
If raising taxes are a non-starter, then I think means testing is also a non-start, politically at least.
Buffetts ROI (return on investment) is probably positive but most of the people like him are probably not breaking even. Bill Gates would probably have to live to 100 to break even.
The markets only perform that way if you get very selective about how you measure the market and the time frame during which you measure that market.
Look at this chart and tell me that you have any confidence where the market will be in 20 years?
The meme that (S&P-500) stocks held for any 20-year period show a gain is still intact however. (Though records will be broken, with those who bought in the late 1990’s and held soon underperforming those who bought at the 1929 top.) That meme shows lack of perspective, however. To demonstrate the point, I’ve pointed out that, for most of the 20th-century, a portfolio of German stocks would lose over any 20-year period.
Disclaimer: This post is neither an offer of advice for any investment other than American common stocks, nor is it a solicitation for such an offer.
Let’s assume that you are correct and that these business would not do that. But you are very knowledgeable in your field and think that you can do it better than the next guy and go out and start your own business. You just got hit with a 6.2% tax increase. Also the greedy business who spends 6.2% of his employee’s pay on whiskey and cigars is less competitive than the business down the road who would reinvest that money back into salaries. There’s no free lunch even for businesses.
In any event, the tax is there in the system, just hidden from most workers. As others have said, this would be an insidious tax increase. I know that the left would love to tax the rich, but because it isn’t politically feasible for a 9 or 15 percent tax increase (however you want to characterize it) on the wealthy, it is dishonest to do it with a hidden tax increase.
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