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Open thread 7/27
- By Phillip Brownlee
- Posted July 27, 2007 at 1:05 a.m.
- Filed under Open thread
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108 Comments
I know, I’m up a little early, worrying about the stock market crash and all.
Say, I wonder what the rate of return is on our Social Security investment?
Guess that depends on how long you live.
If you die young, you get nothing – so your ROI could actually be negative.
If you live long, you might see a decent return – as long as the Government continues to pay benefits and doesn’t MEANS test them away. And as long as the younger generations agree to keep playing the Social Security pyramid game.
How fair is it for Government to take money from us based on a false promise of a future return?
If we die young, all that money goes to someone else. The money I earned cannot be passed on down to my kids.
My kids and grandkids will need that extra money, because they are gonna see the 70% tax rates we saw in the Carter years, in order to pay for the retiring baby boomers.
Oh well, not much we can do about a Government that cannot be controlled by the People.
I didn’t believe Max but I was wrong: http://www.ctj.org/pdf/regcg.pdf
Read it and weep; it’s apparently what happened to the middle class.
Great but you missed the highest rates which were from Roosevelt and Eisenhower, at 94% and 91%.
Great but you missed the highest rates which were from Roosevelt and Eisenhower, at 94% and 91%.
Great but you missed the highest rates which were from Roosevelt and Eisenhower, at 94% and 91%.
“I know, I’m up a little early, worrying about the stock market crash and all.
Say, I wonder what the rate of return is on our Social Security investment?”
A “crash”?? Did I miss something? Yeah, it dropped a few hundred points and the week will probably be a downer. A good buying opportunity today. Lots of bargains! My prediction- the DJIA will regain ALL the losses by the end of next week and post a new record close by next Friday. The news keeps saying that it is due to the “crash” in the housing market but any fool knew that housing prices could not keep going up at a rate of 5 to 10 times inflation- and wages- forever. You had people speculating on property, flipping condos and houses month by month and madness for 2 years and just like the Gold Rush, it was going to stop sooner or later. As for Social Security, the return you get depends on how long you live. As a group, white females get the best return because they live the longest.
“My kids and grandkids will need that extra money, because they are gonna see the 70% tax rates we saw in the Carter years, in order to pay for the retiring baby boomers.”
Unless your kids are multi millionaires, they will never see a tax rate anywhere near that much. And if they are multi millionaires, why are you worried about Social Security?
I had forgotten about the inherent racism in SS. Black males get less returns than white females.
Must be one of those ‘it’s OK to be racist’ liberal moments.
You should be concerned when the head of an agency fears for it’s future. Yes her statement has the added political spin because she is a Bushy, but what would you think if the head of Dod, NASA, Dept of Education, or any other agency told they fear for their son?
“August 12, 2005, Social Security marks its 70th anniversary. When the program was created in 1935, America was a vastly different nation. We were in the midst of the Great Depression, and at least one-third of all older Americans were dependent upon others for their financial support. Retirement was something that happened when you could no longer work — not something you planned for in advance.When Franklin Roosevelt signed the legislation into law, I’m not sure even he realized the significant role the program would play in the next seven decades. I daresay no one foresaw Social Security becoming part of the fabric of society. Yet that is precisely what happened. And, with good reason. Since its inception, Social Security has paid approximately $8.4 trillion in benefits to nearly 200 million people.As Social Security established a prominent position helping ensure economic security for Americans, the passage of seven decades has brought substantial and unanticipated change, especially to the population the program was created to serve.The number of older Americans living now is greater than anyone could have imagined in 1935. Then, only 7.5 million people were age 65 or older. Today, approximately 36 million, or roughly one in eight people, are older Americans.These numbers are going to continue to grow even more rapidly in the coming decades. In less than three years, America’s 78 million baby boomers will begin to reach retirement age. By the middle of this century, about one of every five Americans will be 65 or older.This increase in life expectancy is a wonderful success story for our nation. More and more Americans are working longer and enjoying a lengthy retirement. But increases in life expectancy mean challenges for Social Security.The Social Security program is largely a pay-as-you-go system — with today’s workers paying for today’s beneficiaries. This system has worked well over the years — especially when there was a relatively large number of workers to support each individual receiving benefits. But today’s demographics are working against us.Our parents, grandparents and great-grandparents can feel confident about the promise of a secure future. Their benefits are secure and will be paid.Unfortunately, the same cannot be said for my teenage son and his friends. I believe Social Security’s 70th anniversary is the perfect opportunity for us to signal to younger generations of Americans that we, as a society, are committed to strengthening this important program — for them.In today’s rapidly developing world, it’s no surprise that government programs also will need to adjust to our changing circumstances.Under President Bush’s leadership, this issue is being discussed on Capitol Hill and in living rooms across the country. Looking ahead, the financing problems facing Social Security, coupled with the program’s complexity and scope, will be challenging to address. Reflecting back, our nation has a proud history of grappling with difficult issues. And we do it best when we work together. I believe Social Security — a program that touches the lives of almost every American — deserves nothing less.”
Jo Anne B. Barnhart is the Commissioner of Social Security.
Now we will hear from the liberals, “Don’t worry, be happy.” And about how SS is one of the governments most successful social programs. But if you look at the financials, it is not a pretty picture:
SOCIAL SECURITYNews ReleaseSocial Security Board of Trustees Issues Annual ReportLong-Range Financing Challenges ContinueThe Social Security Board of Trustees today released its annual report on the financial health of the Social Security Trust Funds. The 2007 Trustees Report shows slight improvement in the projected financial status of the Social Security program from last year.In the 2007 Annual Report to Congress, the Trustees announced:• The projected point at which tax revenues will fall below program costs comes in 2017 — the same as the estimate in last year’s report.• The projected point at which the Trust Funds will be exhausted comes in 2041 — one year later than the projection in last year’s report.• The cost of $5.3 billion to administer the program in 2006 was a very low 1.0 percent of total expenditures.• Over the 75-year period, the Trust Funds would require additional revenue equivalent to $4.7 trillion in today’s dollars to pay all scheduled benefits. This unfunded obligation is about $100 billion higher than the amount estimated last year.
http://www.ssa.gov/pressoffice/pr/trustee07-pr.htm
No reason to panic over the DowJones. It’s an old way of measuring stock and is just averaged stock indicators. It looks more at the high dollar stocks while the middle and lower performers although doing well, get averaged out and any fall appears to be worse than it is.
Standards & Poor, NASDAQ are better indicators.
Drink some relaxing tea tonight and rest well.
Median income folks in the 1970s didn’t pay that Tax rate of 70s percent. That was for high income earners. Adjusted for inflation that 200,000 year income that was taxed at 70 percent would be well over $500,000.
I doubt in the near future our children are going to average $500,000/year income as a median indicator for taxes.
Much ado about nothing.
So if I have this figured correctly, my payroll tax to fund SS (OASDI) is
6.2% of my pay6.2% my employers pay
for a total of 12.4% of my pay is sent to SS every payday. (total of 15.3% if you include medicare).This is up to the income limit, above that, I don’t pay.
I wonder how much this will cost babyboomers yet to retire, and their children, when the shortfall begins in 2017?
The only alternative that I see is to decrease benefits for future retirees. That could take several forms.
But from a fiscal point of view, is there another answer?
Or keep importing Mexicans to pay for our SS.
I thought of that Door King, but from what I’ve heard, they are taking out more in federal benefits than they are bringing in.
Remember most illegals have incomes well within the US poverty range. This means, their entitlements (handouts) exceed their tax liability. Take the Unearned Income Credit for an example. For a family of four under 25,000 a year, that could be 3,000 EIC payments.
If you allow for them to use someone else’s SS number, and allow for employers to hire them, and for employers to REPORT their real income, I don’t think the revenue generated will exceed the outlays.
Just a guess.
But from a fiscal point of view, is there another answer?Posted by: Hotdog1 | July 27, 2007 at 07:14 AM
A couple big issues I see with SS reform:
1) Bridge financing estimated for the transition from full transfer system (transfer payments only, paid from the general fund) to full private accounts system all are at $1 trillion and above. In other words, the US would add at least $1 trillion to the public debt by the time the process of transitioning Americans to private accounts was complete. Why? Because some OASDI inbound streams would be diverted away from payouts and sent instead to investment firms for investment. The bottom line is that the cost of moving from SS as we know it to a private accounts program are ENORMOUS. In fact, a couple years ago I argued here that we could choose then one or the other, but not both, of: (1) nationbuilding in Iraq, or (2) replacing SS with a private accounts system.
Americans have overwhelmingly chosen nationbuilding in Iraq, through their proxy President Bush and the last 3 US Congresses.
2) This cost could be mitigated, in the long run, by a national healthcare system. Note that I’m not arguing for public debt reduction in the short term. What I am arguing is that if the US were to institute a single-payer national healthcare plan first, and subsequently transition to private accounts, we could possibly mitigate the bridge financing needed for private accounts. What I’m saying is that the bridge financing amount might fall below $1 trillion.
If we do this right, it may still be possible to choose butter over guns (for Americans, anyway; I think that Iraqis will enjoy a gunpowder diet for some time to come).
We could get both SS reform and sane healthcare at a total cost less then the sum of either in isolation, IF we do it in the correct order and over the next decade or so.
Our “security” can only be found in the right “Foreign Policy.”
That also fights crime in America by example.
Which in turn loosens money for beneficial endeavors.
Lots of Right Wing concern trolling here about Social Security.
You want to get rid of it and free up the money for the stock market. We all know it. Duh.
SS is in no imminent danger, and minor fixes will keep the system tenable. Period.
Hotdog1, you forgot that there is no cap on the earnings subject to the Medicare tax.
Gee, either it’s just Friday, or else it seems like the Blog is talking to itself again…. LOL
VT,
You are absolutely correct.I really wasn’t referring to Medicare, except to demonstrate the total 15.3% payroll tax, as someone would have nickled/dimed me on that one, I’m afraid, had I said 12.4….?
Thanks.
Chas,
I have tried to stay out of fights/arguing some people have on this blog.
But just the other day, someone jumped on board and you labelled them with the “T” word right off the bat.
Then, the blog was filled with your friends discussing the relative merits of the “T” and it went downhill from there.
For the above reason, I try to stick to the content of the writers post, rather than name-calling, or labeling. I guess I don’t see what the profit is in that.
However, if you are referring to my posts here today, as I happened to have time today to post, and saw an interesting topic which was near and dear to me – I posted.
Please ask your connections with the WEBLOG staff to verify that I am who I am and not anyone else here today (at least this far ;-)).
I myself recently found this blog,I’m from KS, and thought it was worth investing time on.
But I am really getting tired of your posts following people around with what could be taken as snide comments.
I’m only jumping here – because they may be directed at me. And not only do I believe I don’t deserve them, but I don’t believe any others do either.
Sorry if I offended you, but it’s TGIF and it’s been a long week.
Thanks
Hotdog1 — I dont believe I made a comment directed at anybody in particular… unless YOU are the Blog LOL
1) Bridge financing estimated for the transition from full transfer system (transfer payments only, paid from the general fund) to full private accounts system all are at $1 trillion and above.Flike.
What about a partial privatization? Is it not possible to have a portion (say the employers 6.2%) devoted to private accounts?(and thanks for the info.)
Let me use myself as an example.
I know from my annual statements what is “projected” today to be my SS entitlement.
I also know from my personal 401K what will be available to me (at age 59.5).
I know that even though I have contributed to SS all my life, but only to my 401K from when they became popular -
that in a much shorter amount of time, the monthly income from my 401K (5% annual withdrawal rate), will be MORE than my lifetime contribution to SS will yield.
There’s gotta be a better way.
It’s amazing to me there are still people who think Social Security is fiscally sound and will be there forever.
Sounds like a line from AARP and the over 55 crowd.
Was lookin for that CBS news report someone posted the other day – talkin about the Fiscal crisis coming within the next 10 years.
Maybe someone can find it?
Thank you Hotdog 1 for saying exactly what I was thinking. I too came on here last week, only to be instantly branded a possible troll, just because I was new. I guess some folks post first and think later. Not a very wise strategy, but one that seems all too “normal” here on the WE blog.
Don’t forget, Hotdog1, that your 401K withdrawals will be subject to income taxation in full, with only a part (up to a substantial part, to be sure) of your SS benefits subject to federal income taxation. Not quarreling with your investment returns, etc., but the real figure in your pocket is “after tax”.
How do you come up with 15.3% payroll tax? It isn’t really financially responsible to lump the Employee and Employer contributions together as they affect different individuals and/or entities.
blaidd,
It does if you’re self-employed.
Teacher,
I’m done with that discussion, and you are only promoting more of it.
I’m not sure you’re correct about this Tom. My wife is self employed and I’ve been doing her taxes for many years. Line 27 on form 1040 allows self-employed to deduct 1/2 of the “self employment tax (15.3%)”. You do the math instead of supporting the RW koolaid line.
Hotdog1, just ignore the troll.
blaidd_drwg,
I don’t really understand your question. But I will try to make myself more clear.
Employers are required to contribute the same amount to SS (and medicare) as is withheld from your salary payroll. Hence the percentages. Maybe not universal,but covers most Americans.
Some employers provide annual statements which display your “TOTAL COMPENSATION”. It is their way of showing you their good faith and how much it costs THEM to employ YOU.
In other words, even though you make X amount of money, just for SS, they are paying X + 6.2% (up to the income limit).
That is money, if paid to YOU instead of the GOVERNMENT, you could spend or invest.
Blaidd,
Your self-employed wife pays 15.3% of her income as Social Security/Medicare tax.
1/2 of the 15.3% is a DEDUCTION (not a credit)from gross earnings as a business expense. (Just as all Employers do for their employees)
She is still paying the 15.3% tax, which you should know if you are doing her taxes. (scary)
Deuction or credit………….it still means she’s not paying it on her earnings Talk about the right wing spin.
That 15.3% is what the GOVERNMENT collects in your name and in your Social Security number.
Regardless of whether your employer paid 1/2 (7.65%) or you are self-employed and pay all the 15.3%, THE GOVERNMENT IS STILL GETTING 15.3%.
And if you did not work, the GOVERNMENT would not get that money.
So, how is it some claim that only the 7.65% should be counted for your future benefit?
hotdog…………..spare me your RW diatribes. The employer share of the payroll taxes is just THEIR burden to bare as part of doing business.
Get this through your thick head: Social Security is here to stay, the Payroll Taxes are here to stay and Universal Healthcare WILL be a reality very soon.
No Blaidd, YOU are the one spinning this.
Quick, what’s the IRS Hotline number to report tax fraud?
How is anything I say FRAUD?
VT, don’t forget that Social Security income IS taxable if you continue working and earn more than a small amount of x. Not sure what x is today.
Gonna pick me a nit, here Tom; agreed that the law says a self-employed person pays 15.3% on self-employment income (up to the cap), but, in computing the amount of tax, there is a computation taking into account the adjustment to income resulting from the deductibility of one-half the SE tax paid, which reduces the amount upon with the 15.3% is paid. Then, there is the adjustment to income itself which, depending upon the marginal tax bracket in which the taxpayer is, further reduces the “out of pocket” payment of total taxes (income plus SE). Forgetting about the latter, the self-employed pay 15.3% on 92.35% of self-employment income (up to the cap) while the combination of employee deduction and employer contribution is 15.3% on total compensation subject to the FICA plus Medicare taxes. ‘Tis a bit better than previously where the person paying SE paid the combined rate on 100% of income subject to SE and didn’t get a deduction for one-half the taxes paid.
Hotdog1 already knows this, as I think many others do, but the 6.2% deduction for FICA (and the employer’s 6.2% matching contribution) funds OASDI (Old Age, Survivor’s and Disability Insurance), what generally most of us think of as “Social Security”. The 1.45% deduction, combined with the employer’s matching 1.45% contribution, funds Medicare.
your 401K withdrawals will be subject to income taxation in fullPosted by: Vaughn Tolle
Absolutely at whatever rate is appolicable to my income level at that time. Likely, my SS will be taxed also and there is discussion as part of the SS salvation of further “means testing” that too. Not sure if my AGI is the delta of total income minus SS or what portion thereof.
And admittedly, my 401K will run out at some point. SS would not.
But I’ve only been contributing to my 401K for ten years. I’ve contributed decades more to SS. But I’ll also grant these are my highest earnings years so my 401K built up faster.
But if my kids (20 something) were just forced to put something into private accounts – my goodness what would they have someday!!! Maybe not the full 15.3, but part of it. So we didn’t hit disaster with SS in 2017 (or somewhere around that year).
Vaughn,
Your headache-inducing post is Reason Number One why normal people should not do their own taxes.
And that’s sad…why can’t normal people do our own taxes? Why do we have to pay accountants and lawyers to do this?
What ever happened to tax reform? So much for promises from politicians…
A tax deduction is not the same as “not paying” the tax.
A deduction reduces your income. Then you multiply that reduced income by the tax rate and pay tax. So a deduction saves some money that would have gone towards taxes.
But a tax credit is different. For a credit, you compute your tax, then subtract the credit.
It’s a huge difference!
Ever heard of Turbo-Tax Tom?
You’re splitting hairs anon. Deal with the fact that you WILL be paying taxes, it makes life much easier.
“What ever happened to tax reform? So much for promises from politicians…”
God help me but I agree with Joe Williams on this one. I support a national sales tax, with food and drugs exempt. Collected at the cash register. Eliminate the IRS or pare it down to enforcement at the cash register. Pay as you go. Mostly a tax on consumption, not earnings.
The other benefit of the national sales tax is that when your taxes go up, say for an ill advised spending spree for a war, you will notice it immediately and forcefully. It cant be hidden.
I would suggest, blaidd_drwg, that you do the arithmetic sometime, and tell us the difference.
If you don’t agree it is a huge difference, well. I guess arithmetic has no meaning for you.
And no, I shall not get used to paying taxes.
Max, it may also be taxable in part (maximum part of SS benefits subject to Federal Income Tax is 75%) even if the person is no longer working. The threshold level of income for determining income taxation of the benefit takes into account “passive” income, including tax-exempt interest, capital gains, 401k and traditional IRA distributions, etc., as well as any earned income from employment. There’s a worksheet in the 1040 instructions to complete to determine the taxable amount, if any, of the benefit received.There are other computations needed if the person drawing the benefit is still employed and contributes to an IRA, etc. It (computation of the taxable benefit amount) can become complicated.
Actually VT nailed it EXACTLY right.
I was using round numbers to say that 15.3% is paid for self-employed filers, when actually it’s closer to 92.35% of the 15.3% or 14.13%.
14.13% is still a lot higher than the 7.65% claimed by blaidd.
My bad.
I’ve asked this before here, and I don’t think I got a response, so here it is again:
The excess FICA contributions, that is, the money collected that isn’t needed to pay current benefits, what happens to that money?
The answer is that it is left to other government agencies, which spend it. Perhaps the Department of Agriculture uses it to pay suger subsidies, for example.
So in the future, when these funds are needed to pay benefits, where will that money come from?
When SSA asks the Department of Agriculture to pay back its bond, where will it get the money?
Just curious.
Anonymous, I could accept that statement better if you said you will never get used to paying outrageous taxes or some such.
We need roads, law enforcement, etc.
And we need good people to do good management and oversight. Not K street or the topeka equivalent pushing for a bigger pie and a different way to divide the pie.
We need to have good elected officials. That means good people have to run.
And then we have to vote for them.
anon, if you don’t learn to deal with it you will eventually die a cold, bitter person. Oh wait, that is exactly how most if not all republicans end up in the long run. LOL
Wow! VT, I bow down to you!
Nice to have some expertise on the board!
My point was that it isn’t absolutely correct to say that SS benefits are not taxable, though 401k beneifts certainly are.
And at some point, certainly before I retire, I expect a Means Test to be in place, that will more severely cut any SS benefits that might be calculated for me.
Also, the tax treatement given to SS by the states varies from state to state.
Government can’t get enough tax, can they?
Tom, I agree with you. Where a system of income taxation is based upon voluntary compliance (I hear the laughter now), the preparation and filing of tax returns should not become so complex that a taxpayer, without reliance upon anything but the instructions and a calculator, cannot prepare his/her own returns.
kfg, a consumption tax has its attractions, to be sure. I could sit here and discuss this, pros and cons, for quite a while, but let me say that one major issue which likely avoids adoption at this point in the U.S. is defining what consumption is subject to the tax. For example, should basic foods be exempted from the tax; should a consumption tax be imposed upon the transfer, by sale, of real estate, new and used; etc., etc.
Get this through your thick head: Social Security is here to stay, the Payroll Taxes are here to stay and Universal Healthcare WILL be a reality very soon.
Posted by: blaidd_drwg | July 27, 2007 at 10:28 AM
You ignore the financial information available to you today from many, many websources. Some have been provided above, but there are many others. There NEVER should be harm in looking at your investments and the federal fiscal situation and questioning the government. There is enough public information available that people should at least question the SS situation. It is not financially prudent to “wait” until it is too late to make corrections (which could be very minor if enacted now).
I have tried to avoid taking a political side on this, as I believe the fiscal facts should speak to all of us.
I do however, loose respect for any political party which refuses to even investigate the problem, or ask questions. You cannot reach solutions without that. I am independent, but comments like yours help push people like me away from you.
Your post attacking and labeling, instead of asking questions or providing factual information reminds me of a famous quote:
“If any man be ignorant, let him be ignorant.”
Similarly, there is an appeal to a “flat tax” on income. Now, first, let’s define income….
Hotdog, I wouldn’t need to “Attack and Label” if you didn’t put the RW spin on things.
Look at the total mess the RW has made of this country.
:::sigh:::
The personal attacks are off and running.
Good discussion on flat taxes from 7/13: http://blogs.kansas.com/weblog/2007/07/numbers-that-ma.html
My plan, would have a flat rate of X (X being calculated as described by Brian above)on ALL income above $20,000 per person who earns income.
Say for the sake of argument 15% of everything above $20,000.
..No more deductions (except for the $20,000 deduction per)
Gone is the mortgage interest deduction.Gone is tax exempt interest (eg. Municipal bonds)Gone are the itemized deduction and the standard deduction.Gone is the Unearned Income Credit.Gone is the Child and Child care Credits.Gone is the Cow/Calf credit, etc….Gone are any new 401k savings or IRAs. (Existing funds would be taxed when withdrawn)
..Doesn’t matter whether you are married, single, divorced, living by yourself or 10 people. What business is it of government what your status is? Why should your status determine your tax rate?
All income will be taxed.All the rich living off of tax free municipal investments will now have this income taxed.Social Security? Well, hate to see it, but at some point it will be means tested anyway, so might as well tax that too. (Remember there’s still the $20,000 living allowance per person who earns income.
That’s it. Simple. Flat, yet allows $20,000 to live on, and that makes this tax less regressive then just a flat tax.
Welfare for the very poor will continue. No one starves in this country (far from it most are obese) and no one will starve in the future.
Hotdog~~ Your complaints are well founded. This blog has very little to do with actual discourse, as it always descends into sniping, accusations, etc.I applaud your effort at meaning discussion, but it ain’t gonna happen here. Which is why, you, like I and many, many others, get tired of it and stop visiting this site.
Yes, when this board can’t even have a discussion over the difference in the arithmetic between a tax deduction and credit, it isn’t even worth trying.
What about a partial privatization? Is it not possible to have a portion (say the employers 6.2%) devoted to private accountsPosted by: Hotdog1 | July 27, 2007 at 10:09 AM
Right now, sure. I believe OASDI inflows still outweigh SS outflows, so whatever’s in excess of the breakeven amount could be directed to private accounts without increasing the public debt.
But how does that solve the problem we face down the road when OASDI inflows are exceeded by total SS outflows? At that time we’ll need to either redirect the 6.2% previously sent to private accounts back to SS recipients or – more likely – borrow the difference (bridge financing).
anon, I think YOU are the one who is beating that particular dead horse. The bottom line is that the word “tax” infuriates you and your RW brethren. Whether you call it a “credit” or deduction, that’s money not owed to the government.
“OWED to the government”????!!!!!Owed??? How ’bout ‘taken by the Gov’t’.They take our money, we don’t owe it to them
But how does that solve the problem we face down the road when OASDI inflows are exceeded by total SS outflows? At that time we’ll need to either redirect the 6.2% previously sent to private accounts back to SS recipients or – more likely – borrow the difference (bridge financing).
Posted by: flike | July 27, 2007 at 10:59 AM
Requiring partial private ownership of SS funds (say 6.2% or whatever) for the younger workers (say those born after 1972) would mean this younger generation would have some guaranteed reserves. **
Then, the reduction in the public SS payount for this group, when the reduction is forced to happen, will not have as severe of an impact on them.
With the reduction in public SS payout, comes part of the savings in expense that’s required to offset the loss of contributions due to the private 6.2% share.
**In response to those who fear people are not able to invest wisely in private SS options (similar to private 401k options today)I would say offer as one investment option guaranteed US Savings Bonds at whatever the market interest rate is when the bonds are purchased.
You may have a lower return (3 to 5%) but it would be guaranteed and you would not lose principal.
I guess it depends how you look at it sanford. When a tax liability is legislated, then yes we “owe” that money. This is what we call democracy. You know, providing for the common good……….
Do yourself a favor and GET OVER IT.
“one major issue which likely avoids adoption at this point in the U.S. is defining what consumption is subject to the tax.”
Well of course, VT :) Just like you said about defining “income”.
The questions about real estate, etc. are also part of the capital gains tax debate. I’d rather have the consumption taxed than the capital gains.
But not filing tax forms and downsizing the IRS are BIG in the plus column for most people.
I think another danger is the possible encouragement to further drive taxes down to the local level. Just like sebelius did when she drove the pain of abolishing the equipment tax cut down to the local level.
People seem to forget that when the feds and the states dont tax or spend enough to cover basic services and costs, it shows up on your local tax bill, either sales or property.
In bigger communities that are sales tax “draws”, it shows up there. If they are smaller communites that “send” sales tax dollars to other counties, it shows up on your property tax bill.
Either way, there’s no free lunch.
But it sure lets the feds and the states look good and the local entities look bad.
What’s everybody worried about the fed can just print more money for ss. The shortfalls don’t occur for 75 years. Considering we can’t forecast quarterly gdp numbers that’s pretty good insight,
I thought of that Door King, but from what I’ve heard, they are taking out more in federal benefits than they are bringing in. — hot dog
You heard wrong. Of all those mentioned as presidental candidates, Bloomburg is the only one to point out that the only hope of keeping SS afloat is to import 750,000 immigrants per year. That one little bit of truth telling put me solidly behind him.
Bloomburg is like Perot, except he’s sane.
Remember Perot’s “sucking sound?”
Say Vaughn, does the Federal government currently have the Constitutional authority to collect a national sales tax?
Personally I favor the national sales tax vs a flat tax.
I see 2 big roadblocks for the sales tax:
1. Constitutional authority.2. Many would see the sales tax as too regressive for the poor.
Thus, my plan would be a modified flat tax, giving a generous $20,000 per tax filer deduction would be a big tax break for those with lower incomes.
Two people living together that each earn $18,000, would not pay any Federal Tax on their combined income of $36,000.
Requiring partial private ownership of SS funds (say 6.2% or whatever) for the younger workers (say those born after 1972) would mean this younger generation would have some guaranteed reserves. **
Then, the reduction in the public SS payount for this group, when the reduction is forced to happen, will not have as severe of an impact on them.
With the reduction in public SS payout, comes part of the savings in expense that’s required to offset the loss of contributions due to the private 6.2% share.Posted by: Max | July 27, 2007 at 11:09 AM
But you won’t see the reduction in expense until the wrong demograph presents itself (the youngest, hence the furthest out in time with respect to eligibility). That’s because it’s the older SS recipients who’ll be less likely to switch to private accounts.
Note that these older SS recepients do have an incentive to switch to private accounts, though. Assuming such private accounts could pass to an estate, that is. Even those within a day, theoreticaly, of eligibility would have a strong incentive to dump an annuity stream that ends at their death for one that can be passed to their heirs.
I still think the biggest hurdle from a public finance standpoint occurs just as OASDI inflows become less than total SS outflows (roughly 2017, by Max’s calculation; note that the year is debatable). This is when you need cash for outflows the most, and it’ll likely have to be financed. The amount of the financing is debatable, of course, since the devil’s in the details.
Max, a national sales tax would be constitutional IMHO, under the original language thereof. This is from the top of my head, but the reason the 16th Amendment was needed was the wording of the Constitution itself.
The inflows from diverted ss payments would inflate stock prices, companies could then sell more treasury stock (and pay their CEO’s mega bonuses and salaries) diluting the individuals ownership of the company. After looking at the current correction going on, I’m not sure privitazation of ss would be for the individuals benefit. People would either be trapped into selling into a down market (to buy their retirement annuity), or have to keep on deferring their retirement until times got better (a Republican wet dream).
It’s a train wreck for sure Flike, no easy answers today.
I think a combination of solutions will be needed, including:
1. Means testing to reduce some benefits for all generations.2. Some privatization of SS3. Some increase in SS tax
In the great “Social Security reforms” of the 1970’s, we were promised that doubling of Social Security tax rates would solve the problem. That obviously didn’t work, so how much more than DOUBLE will the SS tax rates have to go up now?
Instead of making One Generation pay the price for this problem (leading to an Economic Generation War?), I think All Generations should sacrifice something to pay for a solution.
1) ALL generations including existing retirees, should have a MEANS test to reduce your SS benefits.
Eg. if your gross income after retirement is >$50,000, then reduce SS benefits by 10%.
Eg. if your gross income after retirement is >$100,000 then reduce SS benefits by 25%.
2) Those not yet retired but over age 40 would have 6.2% of their income mandated to privately owned savings with 401k type investment options – plus US Savings Bonds and one of the options. This group would still get public SS benefits – subject to the Means Test.
3) Those 40 and younger would have an additional mandated private savings rate 3.8% (plus the 6.2%)or 10% total (but still pay the 7.65%/15.3% tax) for a total tax. Public SS benefits would not be paid to them at retirement, but they would be paid benefits if they become disabled. This group will not get public SS benefits, but will not see a public SS rate increase.
3. Increase the SS tax by 2% for those over age 40 to 9.65%/19.3%. Remember, this group will still get public SS benefits though they will be means tested. (So they pay an increased SS tax rate)
I did not participate in the ‘flat tax’ discussion from the other day. So some of this may have been said before.
Our current income tax system started as a flat tax on only the wealthy. As long as you leave the ability to change the tax in the hands of the Congress they will move it to benefit their supporters. That is how we got the mess we have today.
The best solution in my opinion is the national retail sales tax (www.fairtax.org). The plan in Congress today includes a rebate on all spending up to the poverty level to allow those in poverty to live tax-free.
It also only taxes retail purchases. So the great anguish over the perceived regressive nature of the tax is over-blown. If you buy a used car—no tax. If you buy a new car—pay taxes. So a wise man could certainly avoid the retail tax, especially for large purchases.
I bet the ss fund would be solvent, if the money collected had been used to only fund ss, and the remainder invested. Since the ss fund is used to pay other govt. expenses it has basically functioned as another income tax, with the payee being given a promisory note. Wonder is our ss dollars aren’t going to Haliburton as we speak, since the war is off budget.
Also,
Is it just me or is KFG not herself today?
See, Proudman, your comments about no tax on used cars is one of my problems with the “fair tax” idea. I think that all purchases of property, new or used, must be subject to the tax or it doesn’t live up to its name as “fair”. Yes, I’d deviate therefrom a bit and exclude certain basic foodstuffs and pharmaceuticals from the imposition of the tax, but otherwise, I’d tax all purchases of property and services equally.
How can anyone of you know anything about SS, taxation and financing if you do not take in the facts that money has no real values?Thirty years ago it was backed by gold, now it is only representational.
Fit that one into your scheme of things.
An appropriate resolution of the controversy over the San Diego schools allowance of class time for Muslim students to pray, IMHO:
http://www.10news.com/news/13767699/detail.html
I’m likely the victim of a faulty memory, but I thought U.S. Currency was decoupled from Gold in 1933 or so, Wiseman.
It was somewhere around there, Vaughn
HA! Best spoof headline of the day:
“Cheney to have heart surgery, Bush to briefly be President”
Yes, this really is me!
Hogwash KFG!
No, this really is not me!
Cheney doesn’t have a heart! That’s the spoof isn’t it?
Must leave the discussion for now, but there were some possible solutions to the SS fiscal crisis that I hope we can push our fearless leaders to finally address.
Our Congressmen have ignored solving this problem for 30+ years.
I am not sure either VT, but I think you are thinking about Fort Knox, that was when somewhere in that period that they transported all the gold.
I agree VT. I know that I commonly would see kids praying at lunch at my son’s school – they were NOT Muslim – and nobody had any problem with that.
Rather than looking for confrontation it is good to see them seek a solution.
“How can anyone of you know anything about SS, taxation and financing if you do not take in the facts that money has no real values?Thirty years ago it was backed by gold, now it is only representational.Fit that one into your scheme of things.Posted by: Wiseman | July 27, 2007 at 01:29 PM ”
Huh? Yes, the gold standard is gone. What does that have to do with anything?The value of the money is the representation. Even with the gold standard, money had no value – it represented gold!Anything you are willing to trade for something eles has value. As long as someone is willing to give me something in exchange for a piece of green paper printed by the government, that green paper has tangible value.
There’s a defacto oil standard in place right now. The global oil market does its business in dollars. This explains (in part) why trade imbalances with nations like China can continue to exist. China needs US dollars to import oil for its growing economy.
I still see that the Left on the board are still being childish by trolling and then denying it.
The dems. have already accomplished what the repub. congress could not during their majority rule.Congress approves September 11 legislation By Donna Smith2 hours, 45 minutes ago
WASHINGTON (Reuters) – The U.S. Congress on Friday approved and sent to President George W. Bush a bill requiring screening of all cargo bound for the United States and other measures aimed at preventing another September 11-type attack.
ADVERTISEMENTThe House of Representatives voted 371-40 for the bill that would allocate a greater share of federal anti-terrorism grants to high-risk cities, while ensuring that all states get some money for basic preparedness. The House acted a day after the Senate voted 85-8 for the bill.
“With this bill, we will be keeping our promises to the families of 9/11, we’ll be honoring the work of the 9/11 commission and we will be making the American people safer,” said House Speaker Nancy Pelosi, a California Democrat.
The bill, which would implement many of the remaining recommendations of the commission that investigated the September 11 attacks, was a high priority for Democrats since they took control of Congress in January and will help them fight Republican taunts of a “do-nothing Congress.”
Bush had earlier threatened to veto the legislation over a provision that would have allowed union rights for some 45,000 airport workers. Democrats backed away from that demand and the White House said on Friday that Bush would sign the bill.
Republicans also won a provision that would give lawsuit protection to people who report suspicious activity near transportation systems.
The bill also aims to enable state and local governments to better share information with federal authorities and provide money to help communities upgrade their communications.
It requires that within five years all U.S.-bound cargo be inspected before it is loaded on ships. Democrats have pushed the cargo screening requirement for years, arguing it would guard against terrorists slipping explosives into the United States. But opponents said 100 percent screening was costly and unnecessary.
The bill also requires that all cargo carried on passenger airplanes be screened within three years and authorizes more than $4 billion in grants for rail, transit and bus security.
Congress has been suffering from low public approval ratings and Democrats are hoping to win a few more accomplishments before starting a month-long recess at the end of next week. The September 11 bill helped Democrats fulfill the third of six major campaign vows they made last year in winning control of the House and Senate.
The two others passed and sent to Bush were to increase the federal minimum wage and legislation to expand federally funded embryonic stem cell research, which backers say could help combat debilitating diseases.
Bush signed the wage increase, the first in a decade. But he vetoed the stem-cell bill because the procedure requires the destruction of human embryos to derive stem cells.
Democrats’ other pending campaign promises, all involving domestic matters, involve efforts to reduce the cost of prescription drugs and college and to move toward energy independence.
Much of the voter anger at the new Democratic-led Congress, however, stems from its inability to keep another promise to begin withdrawing U.S. combat troops from Iraq, polls show.
(Additional reporting by Thomas Ferraro)
Except, dear brian, the government has control over the supply of that green paper, and by creating more and more of it, beyond what the market demands on its own, the government creates inflation, and profits by doing it.
That’s why we need to take control of the money supply out of the hands of politicians.
Hmmm I dont see any trolling….
http://blogs.kansas.com/weblog/2007/07/open-thread-7-2.html#comment-77394898
http://blogs.kansas.com/weblog/2007/07/open-thread-7-2.html#comment-77395020
Those posts aren’t me.
I made a comment earlier in the day that it looked almost like the Blog was talking to itself… LOL
The threat about Social Security is way overblown. Yes, the fact is that an age bubble is coming when a large amount of folks will reach 65 years old. And yes, if they all walk off the job at 65 and apply for SS and go fishing, it would be a problem. But what these folks MISS is this fact: This ain’t your dad’s economy! Yes, in the 1950’s and 1960’s America was largely an industrial nation. Men toiled on factory floors at jobs they hated and counted the days until they hit that magical retirement age- and the walked out and never looked back. But the baby boomers are not factory workers. These are professional people that LOVE their jobs as much as they LOVE themselves. 65 to most of these folks is just another birthday. Most of them will retire much later in life- working well into their 70s and many of them will never retire at all! This means that most of these people will be paying into SS for many more years which should keep the system up and running fine.
http://blogs.kansas.com/weblog/2007/07/open-thread-7-2.html#comment-77394898
http://blogs.kansas.com/weblog/2007/07/open-thread-7-2.html#comment-77395020
Those posts aren’t me.
Posted by: Kansas | July 27, 2007 at 07:01 PMOf course that depends on how you define “me”.
http://blogs.kansas.com/weblog/2007/07/open-thread-7-2.html#c77430338
This really isn’t the me that I think that I am but I have so many nics that I’m not sure anymore who the me is that I was.
I suppose Mr. Troll thinks that will bother me.
A waste of time. I would advise who ever is doing it to be careful though.
Perhaps CapnAmerica could give the troll some advice. :)
Kev, how come there are no factory workers?
China has the factory jobs.
http://www.vanityfair.com/politics/features/2007/07/torture200707
Yes, the fact is that an age bubble is coming when a large amount of folks will reach 65 years old. And yes, if they all walk off the job at 65 and apply for SS and go fishing, it would be a problem.Kev
Well if they walk off at age 65 they are not eligible for the same SS retirement their dads did. Because you have to be 67.months old before you will qualify for what your dad got.
As a sign that SS was in trouble once before, congress RAISE the social security max retirement age, which screws millions of Americans – to keep the system solvent for another ten years or so.
Financially, this is a loss in benfits, a CUT in an entitlement to babyboomers.
So much for the great social experiment.
PS: you generalize people not working in factories anymore and wanting to work longer. When was the last time you tried climbing a ladder as a house painter, telephone line man, or other real blue collar work? I’m sure these old men will appreciate your willingness to work longer.
I don’t want to. I want the same thing my folks got. I want to enjoy a long retirement.
The income of the Social Security recipients just doesn’t vanish from the face of the earth. It is recirculated and mostly likely to the service industry that caters to those in that age category, which of course means more jobs.