AARP's Tax Trap

WSJ ^ | November 1, 2006 | WSJ

[Peter W. Kessler]

I'm getting more and more AARP stuff in the mail. I guess it's a function of age.

Although I will never, never, NEVER join that socialist organization, I will continue to use their propaganda mailings to start fires in my fireplace.

[cherry]

I am not going to argue whether SS should be scraped totally or not......however.....

if the lowly secretary and lowly sales clerk is forced to fork over a good chunk of their hard earned money, why arent't the zillionaires facing the same percentage of taxation....

if Barbara Streisand and Warren Buffet had to pay THAT percentage, to be sure, SS would be scuttled in days, if not minutes...

the SS tax is regressive......if its good enough for people making $30,000 a year than it sure be good enough for those making $200,000 a year...

infact, maybe a SS tax that tapers down would be a little fairer....

[Vinnie]

Everyone should be given the option to receive a lump sum payment equivalent to his/her contributions, employer contributions, plus a nominal rate of interest. Most people under about 50 would bail out now.

I recently retired, have 'contributed' well over $150k into SS and would gladly take the lump sum right now.

I've said all my working years that a required payroll deduction into a private account would have been wonderful.
And the account would be mine, mine.

Imagine the money companies would have (via stocks and mutual funds) to expand and hire new employees.

[Vinnie]

BTW, there is another retiree organization, endorsed by Neal Boortz.
http://www.nascon.org/community/index.php

[Feverishb]

You wrote: "if the lowly secretary and lowly sales clerk is forced to fork over a good chunk of their hard earned money, why arent't the zillionaires facing the same percentage of taxation.... if Barbara Streisand and Warren Buffet had to pay THAT percentage, to be sure, SS would be scuttled in days, if not minutes... the SS tax is regressive......if its good enough for people making $30,000 a year than it sure be good enough for those making $200,000 a year..." Well, the historic reason is that the program was originally intended to provide a floor of income protection against poverty in old age. Benefits are linked to contributions, so the more you pay, the more you get. Beyond a certain point, it was thought that high-income people didn't need the additional benefits. If the cap on taxable wages is raised, then high-income people also would receive higher benefits (unless we changed the program to sever the link between taxable wages and benefits.) This is one reason why an increase in the cap on taxable wages accomplishes very little. It brings in more revenue in the near term, but it obligates more benefits in the long term. As for regressivity/progressivity -- the tax side could be thought of as regressive, but the benefit structure is progressive. Overall, the program is a little bit progressive, but not as much as some believe. If you go to Table 3 of the March 2006 run here, you'll see some of the trends (though others will be obscured. Generally: -- Rates of return are lower, the younger you are. -- Rates of return are lower, the higher your wages (to a first approximation). -- Rates of return are lower, the more equal the contributions of different members of the household (that is, two-earner couples do a lot worse than a couple with a non-working spouse.) -- Rates of return are lower, the shorter your life (that isn't really visible on these tables.) Overall, redistribution in the system is really chaotic. It's progressive by wage level, but there are pockets of regressivity also (because lower-income people are less likely to be married and to live a long time.) This is actually one reason why the left as well as the right should be clamoring to fix Social Security, as Sebastian Mallaby recently argued. As our society changes, the current program becomes less and less effective in targeting benefits on households who most need it, because the "one size fits all" benefit system was designed for the world of 1935. This is one important aspect of a personal account; it doesn't care what kind of household you are in, or whether you happen to be in a household structure anticipated by the crafters of the federal benefit formula.

[longtermmemmory]

the aarp has a "don't vote" commercial with a republican looking cantidate. IOW while male.

HOWEVER imagine the howinling if it was a black candidate? or a WOMAN candidate? How about a HILARY look alike?

AARP inflates their membership numbers with free memberships.

[Feverishb]

Sorry, I failed to properly post the link to the Carrie Lukas Town Hall article.

[Feverishb]

Here's a blog worth reading, about how even socialist Sweden has beaten us to the punch in reforming Social Security to include personal accounts. It's in the lead page today, but as time passes you'll have to locate it by its date of posting, November 2.

[Drango]

AARP is nothing more than a branch of the DNC

[LibertarianInExile]

"A massive tax increase, together with a massive benefit cut, can't really be described as a 'fix.'"

It's the only way Social Security WILL be 'fixed,' you can bet, short of the devaluation of the dollar to lire or peso-like levels, or the collapse of the American government.

Which are, of course, options.