So, tell me. What's all this negative hype about "regressive" taxes? Why do you consider it bad? More of that "ability to pay" crap? More of that "from each according to his abilities, to each according to his needs" crap?
Unfortunately the word "regressive" has been high-jacked and misapplied by "progressives" to connote a bad thing. A truly regressive tax would be one where the tax rate was INVERSELY related to the quantity taxed (high income tax rates for low income, lower income tax rates for high income.) A FLAT tax (like the payroll tax) is neither progressive or regressive ... it's flat ... it's equitable.
... and SSI only taxes up to $90,000 in earned wage income while Medicare taxes all earned income ...
As You Nightmare pointed out, that is because SS benefits are capped, Medicare benefits are not. You seem to be advocating for high earners to pay more for each dollar of SS benefit they will receive than a low earner. Nothing "fair" about that. That would be like charging a high earner more for the same loaf of bread that a low earner would be charged simply because of his ability to pay. Not very "fair" of you.
Maybe you're advocating for uncapping SS benefits AND contributions. While that might be fair, it would not be very smart.
Dimples, nightmare, yur nightmare.
I thank you for your responses and though they may be repeats for you, i was interested in your alternatives and why.
I focused in part on the "Regressive" issue not knowing where you were coming from. In some discussions, I find this a big issue for many people. It does not seem to be a concern for you.
To get most Democrats to agree to any kind of reform, something that offsets what many call"regressive" has to be addressed. Payroll taxes are the most Agressive unless you take the argument that EITC is the offset for that. I believe it is an offset for income tax - hence its name.
I beleive Payroll tax is still greater as a percentage on the average family than excise taxes.
2nd point on SS/MC issue;
The Fair Tax doesn't solve it but it puts us on a track to better funding of it by broadening the tax base. With stronger economic growth we have more revenue going to the programs. If x % goes to SSI and Y% goes to MC, as GDP grows revenue increases. I also like the "fairness" of the idea of everyone supporting these important programs with every penny they spend. The burden can not be placed solely on 2 younger workers for every retiree.
My problem so far with your Flat Tax solutions is if we exempt all Retirement income from any taxation or very limited taxation. Than with longer life expectancies we will have generational warfare.
People retiring at 65 and living to 95 will have 30 years of great benefit with little to no taxation.
Because the payroll tax is flat that is why it is Regressive. That is the definiton that most Democrts have used. Because it is Flat, those that can least afford the essentials have a flat 7.65% taken out of every paycheck.
If you have a Flat Income tax and propose NO exemptions than you fit into the traditional Democratic view of Regressive taxation on the working poor and middle class.
Dimples Posted: You seem to be advocating for high earners to pay more for each dollar of SS benefit they will receive than a low earner. Nothing "fair" about that. That would be like charging a high earner more for the same loaf of bread that a low earner would be charged simply because of his ability to pay. Not very "fair" of you.
But that is exactly what we do with the flat income tax. The more you make the more you pay for a loaf of bread. The bread is all the services Government provides its citizens. If you make $100,000 you pay a flat 17% and pay 17,000 for the same amount of Government the FAmily earning $50,000 that pays only $8500.
You must admit SS/MC taxes are just that taxes. You are not buying or investing at all. They are taxes that go into the general fund in a "pay as you go system" just like everything else goes into and out of the federal budget.
In Social Security, I believe and have written about the "Tier 2 Soultion" Whether you ae a maid or a millionaire , you should receive a flat payment for SS that covers up to the poverty line. ($9,570/individual). Keeping Seniors out of poverty was the original goal of SS and we should return to it.
Read Article: New deal for a New Century – Fair Tax plus the Tier 2 Solution.
http://fairtaxreform.blogspot.com/2005/05/new-deal-for-new-century-fair-tax-plus.html