Why should anything have changed?
Thanks Iron Munro:
Posted on 11/19/2019 7:17:13 AM PST by karpov
...
This year, American workers and their employers owe a combined 12.4 percent on Social Security payroll taxes for income up to $132,900 (rising to $137,700 in 2020). They owe nothing on earnings above that level.
Some Democrats in the thick of the presidential race and on Capitol Hill now seek to change or eliminate that cap — potentially placing a new double-digit tax on high earners, with several plans focusing on earnings above $250,000.
...
The result would be a large tax increase on high earners, even before other changes a Democratic administration might contemplate, such as increasing income tax rates or taxes on investment income.
In the Obama administration, for example, the top income tax rate was increased by 4.6 percentage points, and a Medicare tax of 0.9 percentage points was placed on high earners to help pay for expanded health coverage. Depending on the details, applying Social Security taxes to high incomes would increase the combined tax owed on each additional dollar of income for top earners by two to three times as much.
And it would eliminate a feature of the Social Security system that has made it politically untouchable through the decades — that the taxes Americans pay in are closely related to the benefits they eventually receive, assuming they live long enough. The top earners facing new Social Security taxes would not see their future benefits rise commensurately; rather it would amount to a transfer from high earners to low- and middle-income Social Security recipients.
“The traditional argument has always been that Social Security is very popular because it’s not seen like a traditional welfare program,” said Kyle Pomerleau, a resident fellow at the conservative-leaning American Enterprise Institute. “What you pay in roughly corresponds to what you get.”
(Excerpt) Read more at nytimes.com ...
Neil Irwin is an NYT writer worth reading. He earlier stated the obvious, that a steep wealth tax would result in their being less wealth to tax: How Is a Wealth Tax Like a Cigarette Tax? It tries to make things disappear.
The Dems plan to take all the money and hand allowances to Loyal Democrats
That’s socialism, no surprise here.
Next time they get the chance that cap WILL be eliminated.
Only way to prop-up a failing Social Security system.
And it will be popular with the vast majority who don’t earn high incomes and don’t understand why every penny should be taxed like theirs is.
This is not a tax, it is plain and simple income redistribution. Taxes fund defense, infrastructure, and other things that all benefit from, at least in theory. This does not.
I think that they will tinker with tax rates and caps on income, as noted here, in order to make incremental increases in taxes paid.
I think the next time we have a Democrat president and Democrat congress, we will see tax increases in many ways, but the increases will be spread out, so that no individual type of tax will increase enough to get people aroused about taxes going up.
And everything will be justified by liberal theology. For example, an increase in federal gas taxes will allegedly be used to fight “global warming”.
Given the long term problems of Social Security, and the trillions of dollars of assets held by many middle income people in 401K type assets, I can envision future Democrats wanting to “borrow” our retirement assets, to allegedly prop up Social Security. In reality, if that ever happens, money will be drained away to be spent on other socialist schemes.
“The traditional argument has always been that Social Security is very popular because it’s not seen like a traditional welfare program,”
SS may not be “seen” as welfare but it is. It is already a wealth transfer program and this proposal just pulls the curtain back. It transfers wealth from current workers to current retirees. Now it will also explicitly transfer wealth from “rich” to “poor”.
It was a long time ago, but I seem to remember Jimma’ Carter
got himself elected by promising to ‘get the rich’.
When pushed to define what ‘rich’ meant, he, off the cuff, stated something like 13K a year income. After, his handlers got control, he had boosted that to 19K. (mid-seventies dollars, remember) The press was happy to spin things nicely for him. When he got in, everybody paid more.
Say what they need to say to get elected. After that, all bets are off.
How long before they start taxing keywords?
Yep, I remember tax increases during the Carter years.
I recall that Carter pushed through an increase in Social Security taxes. Carter declared at the time that Social Security was now on a sound financial footing for the next 75 years.
The only problem was, his prediction was about 70 years off, because early in the Reagan administration, we saw Social Security becoming insolvent. Under Reagan, we saw a sharp series of tax increases and retirement age increases being legislated, to “save” Social Security for the future. And this got us to where we are now with Social Security.
Why should anything have changed?
Thanks Iron Munro:
“The traditional argument has always been that Social Security is very popular because it’s not seen like a traditional welfare program,” said Kyle Pomerleau, a resident fellow at the conservative-leaning American Enterprise Institute. “What you pay in roughly corresponds to what you get.”
And this -- the old man notes for the benefit of the young'uns here -- is why liberals traditionally opposed general revenue financing of Social Security.
Eliminate the earnings cap and the Social Security tax becomes merely an income tax surcharge, half of it concealed by being withheld separately by employers before it ever shows up in a pay stub. The Social Security tax would become the lowest tax bracket in a highly progressive tax code. Social Security would be stripped of its camouflage and exposed as the welfare system that it really is.
The Social Security benefit formula is already heavily means tested via the bend points; lower income beneficiaries receive a much higher implicit ROI, and benefits get poorer as you move up the income ladder. Defenders of the current system very much don't want you to know this. Eliminating the earning cap on taxes without increasing high end benefits puts explicit and open means testing on the table. As the system continues to slide towards bankruptcy, ever more aggressive means testing would be the inevitable next step.
The end game will be a Social Security System that only pays benefits to low-income retirees; the middle and upper middle classes will be progressively squeezed out. The fact that the democrats don't think this matters is mainly a reflection of the fact that they've gone full socialist and the very idea of an earned benefit no longer resonates with them.
This hit the nail on the head.
The liberals want liberal overseers to make decisions about our lives. Conservatives want the people to be able to make their own decisions about where to live, how to live, what car to drive, whether to eat meat, whether we want a Big Gulp drink, etc. etc. Liberals want to decide for us whether we can have any of these things in our lives.
And as we know, somewhere about 47% of people don’t pay any federal income tax at all. So for those people, they won’t complain if the income taxes they don’t pay in the first place, are increased for those who do pay them.
And that young ding ding who is the Pied Piper of global warming: She’s scaring the kids for when they become adults. The left plays the long game for those of you in Rio Linda.
Everybody who earns an income pays FICA taxes.
If you work at a fast food joint and earn $15K per year you are paying that on every last penny of your income.
If someone comes to you with the argument that amounts above $124K shouldn’t pay the FICA it falls on deaf ears.
Democrats will win this one by the numbers. That’s all I’m saying.
Congress to exempt themselves from this thievery.
Wouldn’t it just be more honest to strike armed robbery from the criminal statutes?
Near perfect post except for the use of “bankruptcy”. SS is pay as you go despite the shell game called “Trust Fund”. It cannot go bankrupt because it has no debts or even the simple obligation to pay benefits.
And vote themselves a big fat raise. Because they deserve it.
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