tag:blogger.com,1999:blog-15405788.post2770352947059480233..comments2024-01-04T07:33:10.137-05:00Comments on Seldom Wrong, Never in Doubt: Let's Actually Discuss This!Jon A. Alfred E. Michael J. Wile E. SWNIDhttp://www.blogger.com/profile/04595651777890086293noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-15405788.post-66271018685054423292010-11-12T23:20:01.633-05:002010-11-12T23:20:01.633-05:00SWIND is correct. The current SS scheme provides ...SWIND is correct. The current SS scheme provides for linkage between taxes paid and benefits received. The maximum taxable income thus prevents high-income earners from collecting very large social security benefits in retirement. Preventing that particular outcome was important because the SS system was always intended to benefit the elderly poor, not the elderly rich. The same outcome could have been accomplished through means-testing, but that would have been impolitic because means-testing is associated with welfare.<br /><br />One should note that as a side benefit, the cap also limited the growth of the trust fund, which is not really a trust fund, simply a way for congress to fund current operations. <br /><br />Now that the end of the social security surplus is in sight, congress <i>must</i> pass reforms that 1) attenuate SS benefit growth and 2) balance annual SS expenditures with revenue. The Bowles-Simpson proposal would do the first through a modest increase in the retirement age coupled with means-testing for benefits, and the second through a phased increase in the maximum taxable income. Failure to accomplish both of these goals would be catastrophic, but implementing them will reveal SS for what it is: a means to protect the welfare of the elderly poor through income transfer from the working young. It is what it is.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-15405788.post-25314122516521860012010-11-11T23:24:49.382-05:002010-11-11T23:24:49.382-05:00As we understand it, the cap on SS and Medicare ta...As we understand it, the cap on SS and Medicare taxes is to preserve the (false) notion that one "pays into" the system and then gets paid back later. Since there's a cap on benefits, there's a cap on the payment.<br /><br />Of course, these programs have never been about individual savings/investment/insurance accounts, so it's all a political fiction, which is also a redundancy. They're redistributive taxes that shift wealth from younger to older people.<br /><br />But oddly, many on the left scorn the idea of lifting the cap on taxes, inasmuch as it amounts to admission that the program isn't what it claims to be.Jon A. Alfred E. Michael J. Wile E. SWNIDhttps://www.blogger.com/profile/04595651777890086293noreply@blogger.comtag:blogger.com,1999:blog-15405788.post-60049458042639972602010-11-11T14:54:08.955-05:002010-11-11T14:54:08.955-05:00What I don't get is why the social security ta...What I don't get is why the social security tax rate is flat but applies to only the first $106,800 of one's taxable income. If a flat tax rate for social security is considered fair, then why not remove the upper limit on the amount of income that can be taxed at that rate? In other words, why would a flat tax rate be considered fair up to a point but unfair thereafter?JB in CAnoreply@blogger.comtag:blogger.com,1999:blog-15405788.post-45367148134036211872010-11-10T21:35:23.409-05:002010-11-10T21:35:23.409-05:00This is certainly an excellent starting point for ...This is certainly an excellent starting point for a discussion that must begin soon. <br /><br />The proposed reforms to Social Security may be the best part of the plan. The proposal increases the maximum taxable income for social security in phases and "will prevent [a] rapid buildup of the trust fund." I suspect (and hope) that the draft report leaves unsaid that a phased increase would also likely prevent a drawdown of the trust fund. This is important because a drawdown must be funded from the general operating budget and would require significant additional taxes or savings elsewhere in the budget. By phasing in the increase in maximum taxable income and implementing the other reforms to the entitlement, the plan could essentially balance social security revenues with expenditures. If that were done, the so-called trust fund could be simply written off, eliminating $2.58 trillion in debt along with the interest payments (currently 4.486%).Anonymousnoreply@blogger.com