Quick Little Tax Reform

Would it Make a Difference?

Published on August 8, 2007 By Jythier In Politics

I think I may have a solution for the social security crisis.

First off, STOP SPENDING OUR SOCIAL SECURITY MONEY ON OTHER THINGS! Put it in a separate account that you cannot touch for anything but Social Security. Next, get rid of the employer's portion of social security tax. Lastly, remove the upper limit on it. Tax every dollar. Not only will it be simpler, there will also be a lot more money coming out of the rich's pockets, while no more comes out of anyone under $80k or whatever the limit is this year.

If, at some point, we start having a surplus in the social security bin, raise the amounts paid out for about half of it, and cut the tax for the other half. Either way, you're injecting money into the economy, either for the retired to spend or for the working class to spend.

The only flaw is getting someone to lift the limit. But, the real rich aren't working anyway - why would it bother them to lift it?

Comments

Dr Guy

on Aug 09, 2007

STOP SPENDING OUR SOCIAL SECURITY MONEY ON OTHER THINGS!

You do understand that money stuffed under a matress is useless. The money is loaned, not given to other things. The trust fund is not a lock box, it is a ledger.

Next, get rid of the employer's portion of social security tax.

never happen. That is the invisible part that the employee does not see, and does not realize they are actually paying. Hidden taxes are the life blood of politicians. The more they can hide, the more thay can charge.

Lastly, remove the upper limit on it. Tax every dollar. Not only will it be simpler, there will also be a lot more money coming out of the rich's pockets, while no more comes out of anyone under $80k or whatever the limit is this year.

That is probably the most common sensical proposal, and I have always averred that the SS tax was the most regressive. But it, like the others, will not be done. Not for any good reasons, but for perceptions. Right now the politicians want you to think that your contributions go into a "lock box" carefully guarded by your big brother to await you for your retirement. And that you will get out what you put in.

The reality is that it is a ponzi scheme, and that your money is paying your parents today. BUT, if you remove the upper limit (sitting at about $97k this year - it is indexed for inflation), then the idea that it is yoru money and you get it goes out the window, since the millionaires would never see what they put in (for the most part, unless you croak before 70, you will get all you put in - figured at a 0 percent return). If the public were to realize that it was a ponzi scheme, and that the politicians had no intention of keeping their promises, the system would collapse because of the loss of confidence.

A second reason that would not work is that the tax is only on Earned wages. If you are making a milion a year, do you think you would be so stupid as to tell your employer you want it in "wages"? no, you would get it as other compensation that is not subject to the tax. We often see politicians demonize those who make a lot as greedy. When the truth is that they are just smart, smarter than the stupid politicians.

If, at some point, we start having a surplus in the social security bin

That has already happened. It started from day one, went into the red for some years, but the reform (read tax increase) of 83 put it back into the black. Where it will stay until 2017, where again it will go into the red until it is bankrupt in about 2043.

No, this will not work. Partly because of misconceptions, but mostly due to the decption that the politicians have been playing on a public that does not want to really know about Social security. They just want to be told that all is ok, when in fact, that is the big lie. I will get my money out of it. You probably wont. Or you will be paying a rate (matched by your employer) of 25% for SS alone.

Jythier

on Aug 09, 2007

"You do understand that money stuffed under a matress is useless. The money is loaned, not given to other things."

I know that, but I thought they were actually SPENDING our SS, not just loaning it. Loan all you want.

"never happen. That is the invisible part that the employee does not see, and does not realize they are actually paying. Hidden taxes are the life blood of politicians. The more they can hide, the more thay can charge."

Accounting 1 teaches payroll taxes, and you learn how to make that entry, and that the employer is matching every dollar... But, you're right, it's still hidden. I just happen to know about it.

"That is probably the most common sensical proposal, and I have always averred that the SS tax was the most regressive. But it, like the others, will not be done. Not for any good reasons, but for perceptions. Right now the politicians want you to think that your contributions go into a "lock box" carefully guarded by your big brother to await you for your retirement. And that you will get out what you put in."

I lost that perception a while ago. If you want what you put in, put into a savings account or a 401k. There are people out there that think they're getting what they put in?

"A second reason that would not work is that the tax is only on Earned wages."

It would work, just not as well as I want it to. Like you said, the rich are smart.

"No, this will not work. Partly because of misconceptions, but mostly due to the decption that the politicians have been playing on a public that does not want to really know about Social security. They just want to be told that all is ok, when in fact, that is the big lie. I will get my money out of it. You probably wont. Or you will be paying a rate (matched by your employer) of 25% for SS alone."

You're definitely right.

Thanks for the commentary, Dr. Guy!

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