This is a misleading point in the context of this discussion. A good chunk (maybe most) of those "half of Americans" are invested in the stock market through deferred-taxation plans like IRAs, 401(k) plans, etc. I suspect very few of them even understand the financial statements they receive every quarter or every years, and even few of them understand the implications on their assets of changes in capital gains tax rates.
The primary beneficiaries of reduced capital gains tax rates were people invested in things that reported capital gains outside tax-deferred investments -- like real estate, stock market investments, etc. By and large, these tend to be more sophisticated investors who are dealing with larger sums of money than your ordinary investor.
Not really. The cap on OASDI increases automatically every year. In 2000 the cap was $76,200. In 2007, it will be $97,200. The Dems are talking about raising it to $200,000 as part of an immediate fix. Contribution and Benefit Base. There is no cap on Medicare contributions. I agree that OASDI and Medicare are really income taxes. Most people don't realize that the taxes increase automatically each year.
The cap increases with the rate of inflation every year, so this would tend to mean that it would roughly correlate with increases in incomes people earn. And there may not be a cap on Medicare contributions, but there are some creative mechanisms by which a savvy person who owns a company can reduce Medicare taxation entirely -- by converting income from "salary" to "dividends" and paying both a reduced dividend tax rate and by eliminating payroll taxes on those dividends entirely.
No, the cap does not increase with the rate of inflation. It is based on National Average Wage Index, which is actually going up faster than the rate of inflation. The result is that more and more of people's salaries are falling under the cap. For example, the cap in 2005 was $90,000. Two years later, it will be $97,500. That increase in the cap is more than the rate of inflation.
Some "saavy" person who owns a company can use a way to reduce his own Medicare taxes and some of the stockholders in the company who are paid in dividends in lieu of salary, but anyone who receives an income, which encompasses the vast majority of people, must pay into medicare at the rate of 1.45% for the employee and 1.45% for the employer's share [or 2.9% for the self-employed] with no cap. It is also interesting to note that the Medicare tax started out at .35% in 1966 and is now 2.9%. In addition, Medicare Part B costs are increasing almost every year for recipients. You can see how OASDI and HI costs have increased from 1% in 1937 on a cap of $3,000 to the current 15.3% today. You can bet that the costs will continue to go higher as will the salary caps.
Also, remember that SS benefits are based on contributions and those at the lower end of contribution scale actually get more in benefits than those at the higher end. The calculation of benefits formula weights the contributions to give slightly more benefits to those who contributed less. And the sad reality is that you really don't own anything. A single person who started paying into SS at 18 and died at 61 with no dependents would have his estate receive nothing except a small burial allowance. It is all a Ponzi scheme, which is unsustainable. In 1950, there were 15 workers for every retiree, today there are 3.3, and in 2030, there will be 2. Couple that with indexing benefits to COLAs and you have a trainwreck ahead.