Nine hard but necessary steps to fix our broken Social Security system.

American Thinker ^ | 05/26/24

[SeekAndFind]

Social Security is a giant Ponzi scheme and, like all Ponzi schemes, it will eventually fail when the cohort paying in becomes smaller and poorer than the cohort receiving the money. It’s going to take a sea change to remedy the problem, which means re-thinking the government’s role. Here’s what could be done:

(1) The Constitution has the federal government’s job description, so we must defund any federal spending that is not within that description, and the projects, whatever they are, need to be kicked down to the state level where they either belong or taxpayer money shouldn’t be spent on them at all. As an aside, this wouldn’t affect only Social Security.

It includes banning all earmarks, making congresspeople liable to the same laws everybody else obeys, and ending both so-called “monster bills” and continuing resolutions.

(2) The federal government must balance the budget and pay its debts, including the worthless Treasure Notes that Social Security holds.

The above two steps sound like the end of Social Security, but they’re not. There’s still a way out to protect Americans, especially those who have paid into the system (money that they could have invested for their own benefit) and are now dependent on its returns.

(3) Social Security needs to create the world’s biggest index fund which sees it investing only in the stocks and bonds of profitable companies. Its planned investments, of course, would have to closely kept secrets, with Social Security insider trading resulting in serious prison sentences (including for congresspeople).

(4) In terms of the fund itself, the the criterion for whether it’s profitable needs to be specific, e.g., “profitable over “X” years or “X” years within as specific time window...perhaps ten years.

[riverdawg]

And, in any case, the “little folks” (workers) bear most of the economic incidence of corporate tax as well.

From the Tax Foundation:

“Recent empirical evidence seems to support earlier theoretical analysis that domestic U.S. labor bears the largest portion of the burden of the U.S. corporate income tax. The share of the burden falling on labor is routinely found to be between 50 percent and 100 percent, with 70 percent or higher the most likely outcome. As the tax reduces investment, productivity, and wages, the dollar amount of the cost to labor may exceed the revenue raised by the tax by a wide margin.

This evidence squares with the bulk of the theoretical discussions of earlier decades predicting that capital flight would shift the burden of the corporate income tax to labor. The increasing integration of the world economy in the production of traded goods and services and in the integration of financial markets reinforces the assumptions of these early analysts.

According to the empirical work, capital is a highly mobile and sensitive input; it can be located in the United States or overseas, or it might not be formed at all. Labor is less free to move from one country to another than is capital, and workers have limited freedom to set their own hours, or skip work entirely, if they want to earn income. Capital can and will flee high-tax jurisdictions, leaving labor behind to suffer the consequences. Capital can and will grow in jurisdictions that lower the tax burden, benefiting labor more than any other group.

An alternative Treasury and TPC approach to assigning the tax incidence is based on speculation that most capital income consists of super-normal returns due to pricing power and successful risk-taking, that the underlying economic activities are insensitive to tax, and that taxes on such activities cannot be shifted to labor. This suggests that a huge portion of the corporate tax falls on capital. Their method of calculating super-normal returns includes earnings of entire sectors of the economy and large amounts of economic activity that are clearly sensitive to tax, and ought to be excluded. This approach is invalid.

Even if one were to credit the concept behind the super-normal returns limitation on the amount of tax that could fall on labor, it appears that the result is very sensitive to which business costs are allowed as deductions. We tried to replicate their numbers using national income account data, and found a much lower level of “excess” returns. This suggests that even on their own terms, the result should have allowed for a 50-50 split between labor and capital. This would have brought the results more into line with the empirical work, although we still doubt that the resulting statistic measures anything truly related to the question.”