The reason why SS has been an effective means for wealth extraction from the productive sector is threefold. Firstly, it is partially hidden. Most common folk do not know that half of the tax is levied on their employer. Secondly, withholding is effective because it extracts loot before it touches the hand of the common folk. The common folk have been conditioned to give Uncle Sam first dibs. It hurts less to give up something you never had. Lastly, SS is billed as insurance premiums. There is a popular ideological support for the program. The program is not an insurance program, but a standard wealth transfer program. Opposition to SS tax has been neutralized quite well. Your introduction of blatant, in-your-face tax increases will be noticed by the common folk, will come from money they have in their hands, and will be associated with politically charged “green” ideology. For these reasons, I don’t think the statist should support your proposal. For me, as I said, it is no more than a shuffling around of taxes, and I don’t take a particular interest either way.
The proposed scheme will reduce our tax bill by $4k, offset only minimally by carbon taxes due to a nuke-heavy grid mix and a public transit commute.
We do not need this. Oh, I’m happy to have more money in my pocket. But as far as people who need help are concerned, we’re pretty low on the list.
Schemes like EITC are more targeted at people who actually need help. EITC can more than offset payroll taxes for some people. The main problem is that EITC is only realized annually after filing, whereas the proposed is realized continuously over each paycheck.
Of course, people are dumb when it comes to tax refunds, see articles this spring about people being disappointed about their tax returns [sic] shrinking.
I disagree that it doesn’t matter where funding comes from. Social security is budgeted differently than general funds and the system can’t be changed via reconciliation like general funds can.
As far as higher gas prices, how much do higher prices lead to more fuel efficient vehicles? California gasoline is a dollar a gallon more than the Midwest but I don’t know how much lower demand is there. The average America uses about 500 gallons a year. That’s $1000 a year in taxes if they pay an extra two dollars a gallon. Will that extra grand a year cause them to go out and buy a $35,000 electric vehicle? I don’t know but fuel consumption tends to be inelastic.
I guess my point is that ss is already underfunded, so a ss tax cut isn’t a good idea. If anything we need higher ss taxes and to eliminate the cap to keep the system solvent.
As for renewable energy I think taxes on pollution are good but the taxes need to fund renewables. Ideally as demand grows for renewables they get cheaper and cheaper until you don’t need subsidies anymore. The first teslas were a hundred grand, now they’re a third of that price.
I believe the US only spends 40-50 billion a year on clean energy, and only about 5 billion on energy R&D (which I believe Includes dirty and clean research).
A tax of even 50 cents a gallon would raise about 80 billion a year which would cause massive increases in R&D as well as clean energy spending, especially when you consider public private partnerships. An extra 80 billion could lead to an additional 100-200 billion in private spending on top of those public funds. For technologies on the brink of being market priced, that extra subsidy could push a lot of private investors over the edge into investment.
So I guess to me subsidizing clean energy is more important than taxing dirty energy. Gas prices going up by fifty cents a gallon would barely change gasoline consumption, but if all that money went to clean energy we’d go from 40-50 billion a year on clean energy upto maybe 300 billion a year.
CA has the highest EV and HEV penetration of any state. No, people don’t change their miles driven overnight, but rational and informed consumers factor in transportation costs when purchasing vehicles, choosing housing, etc
No it wouldn’t.
No it wouldn’t? The tax alone is double our total renewable spending.
Do you have a better argument for why it wouldn’t.
Perhaps, having lived in DC for some time, I assume that Americans have a basic understanding of how government appropriations work when in fact they do not.
Unless of course you were suggesting that the increased taxes would change consumer behavior, which would in turn spur private sector R&D spending.
Or maybe you’re proposing a federal trust fund for earmarked receipts. Although as things stand now, that fund could just run a surplus.
But simply raising taxes on A does not cause spending on B. Our friends on the hill and their neighbor on PA Ave NW could double renewable energy research spending tomorrow, carbon tax or no carbon tax
SCHIP is funded in part by taxes on cigarettes. Medicare is funded in part by a dedicated payroll tax. I fail to see why a fuel tax, CO2 tax, cap and trade tax etc can’t be earmarked to fund subsides and tax credits for renewable energy.
My proposal: All wages gets taxed, no cap. The cap on how much you can get paid is slightly raised. This would get rid of any anticipated shortfall for many decades.
Also- Soc Sec would not taxable. Nor unemployment.
Capital gains is taxed just like any other income.
It can be, but the federal appropriations for none of those are “caused” (your verb, my tense) by current receipts of any of those taxes.
Let’s say a person earns $12k per year. If they never pay into the Social Security (“SS”) system, as per the OP, should they be allowed to collect SS benefits when they retire?
The SS system is a forced retirement system. It’s not a tax, per se. None of the money goes for highways, defense, or education. Let me show some numbers.
Single person A earns $10k, self employed, and pays $1500 in SS tax. He pays no income tax because his wages are so low, but he does qualify for a $401 earned income credit. Net payout = $1099.
Single person B earns $110k, self employed. He pays $16500 in SS tax, but $8250 of that is taxable forcing him to pay an additional $2062 in income taxes for a total of $18562. B earns 11 times as much as A, but pays 17 times as much in SS tax. This is just SS tax. B still has other income taxes to pay.
Now, fast forward to retirement. A would qualify for SS payout of $8350 per year, which is 84% of his working salary, all of which is tax free. B would qualify for $28350 in annual benefit, but $24097 of that is taxable. In the 15% bracket, that means that B nets $24376 per year.
To summarize: B pays 17 times as much as A while they are working, but B receives less than three times as much after retirement.
In addition, if both have one child, A gets $3400 in earned income credit which is $1900 more than his SS tax. B gets nothing.
If socialism is what you want, move to Cuba or North Korea and experience it first hand.
Person A is probably not going to make it to retirement. $10,000 per year isn’t enough to survive on in most places, especially if he’s paying $1,500 in social security taxes off the top.
In theory. In reality, Congress borrowed virtually all of the Social Security trust fund to pay for everything else, with no plan to pay it back. If the Social Security trust fund had not been raided, it would not be going broke.
This is flat-out wrong, and gross misinformation. The contents of the Trust Fund are guaranteed by the Constitution. In our legal system, there is literally no higher form of legal guarantee that can be provided.
The problem with the Trust Fund is that Social Security taxes have not been sufficient to replenish the fund at the rate needed to keep up with Baby Boomer retirements, which does NOT/NOT have anything at all to do with the misinformation you posted.
Your question was asked and answered in OP:
And … since it seems your idea of intelligent debate is to invoke the “Move to North Korea” card … Sklink!
Uh, whooshing? I’m not aware of any mention of this in the Constitution. Well, not our Constitution, anyway.
14th Amendment, section 4, clause 1.
If I take the sarcasm out of that remark, what I meant was that socialism doesn’t work as evidenced by Cuba and North Korea.
As I pointed out in my examples, the SS system is already heavily skewed towards low income earners. (You did not dispute any of my figures) You just want to make it more socialist.
FYI For a self-employed person with one child earning $20100, the SS tax is 15%, or $3015. The earned income credit is also $3015 which does come out of the general fund paid my taxpayers. Isn’t that enough socialism?
@ Bizerta — You have an unexplained aversion for what you call “socialism.” I’ll guess this is largely in response to the well-known bad incentives of Marxism.
However, my scheme increases the incentive, at least at the bottom, to work and earn, since the first $2000 of tax isn’t paid. (Yes, the rebate increases through another mechanism if you have a child.)
Over the past 40 years or so, the real incomes of average workers have increased very little relative to the huge income increases for the wealthiest 0.1%. Before we can proceed, ****, we need to understand your feelings about this huge increase in income and wealth inequality. Please pick one:
A. The inequality is bad, for whatever reason(s), and policy makers should look for solutions, e.g. in tax policies, or education funding etc. However the scheme in OP is bad because ___________.
B. It is natural for superior persons to get superior income. Deliver much of the excess to the low earners, and the money will soon be back in the hands of the high earners anyway.
C. Que será, será. Whatever income or wealth distribution is achieved through freedom, through the inexorable workings of an unregulated free market, is ipso facto optimal. Government meddling generally gives inferior results.
I’d agree to this because at the high end, the taxees get back less than they pay in due to Social Security’s progressive nature, but I see no reason to arbitrarily cap the collection beyond this. After a decade or so it would achieve buy-in from the middle aged and older wealthy who would not want to harm Social Security because it would hurt their payouts.
No, it is not and was never intended to be a retirement system.
It is what the rest of the developed world considers ‘social insurance’. It protects your dependents in case of your death, you from disability and from abject poverty in old age.