Obama Floats Social Security Tax Hike [Taxing Those Who Make More Than $97,000 Per Year...]

ABC news ^

[Sub-Driver]

Obama Floats Social Security Tax Hike Democratic Presidential Candidate Suggests Taxing Those Who Make More Than $97,000 Per Year By TEDDY DAVIS

Sept. 22, 2007 —

Sen. Barack Obama, D-Ill., is considering a major tax hike on the rich to shore up the nation's Social Security system.

"If we kept the payroll tax rate exactly the same but applied it to all earnings and not just the first $97,000," Obama wrote this week in an Iowa newspaper, "we could eliminate the entire Social Security shortfall."

Obama's idea, which he described on the op-ed page of Friday's Quad City Times as being "one possible option" and not a formal plan, would raise more than $1 trillion over 10 years by subjecting income of more than $97,000 to a 12.4 percent tax. Half of the tax would be paid by employees and half would be paid by employers.

Obama is floating the idea of a tax hike on the rich as a way of assuring lower- and middle-income voters that he sees an option for ensuring Social Security's solvency that would not burden them. Obama has been indirectly criticized by Sen. Hillary Clinton, D-N.Y., for suggesting on ABC News' "This Week with George Stephanopoulos" that a higher retirement age should be "on the table."

By suggesting the elimination of the Social Security tax cap, Obama has distinguished himself as the presidential candidate most willing to touch the "third rail" of American politics. No other major candidate has come close to offering a specific idea with the potential of generating as much revenue.

Obama's idea, however, also carries considerable political risk.

Eliminating the Social Security tax cap without changing the benefit formula could undermine support for the program among the roughly five percent of Americans who earn more than $97,000 per year.

[RC2]

I agree..........stop spending the SS money, pay back what has been borrowed and never borrow it again and SS should be just fine.

[businessprofessor]

What nonsense you speak: “Go get the rich.”

The difference in benefits between a low wage worker and a high wage worker is very small in social security. However, the high wage worker will pay much more in taxes over his lifetime than the low wage worker.

You want to make social security even more of an income transfer program than it is now. Why don’t we just surrender all of our income and let the dims redistribute it?

[Sub-Driver]

Boy is that not the truth.......

[kabar]

Since July 2, 1991, most State and local government employees, who are not covered under a qualifying public retirement system or a Section 218 Agreement, must be covered under Social Security.

[RatsDawg]

Haha, nice! bumper sticker quality there!

[MissouriConservative]

Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman, yeah, I’m the taxman

Should five per cent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman, yeah I’m the taxman

If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat.
If you get too cold I’ll tax the heat,
If you take a walk, I’ll tax your feet
[ Lyrics provided by www.mp3lyrics.org ]

Don’t ask me what I want it for
If you don’t want to pay some more
‘Cause I’m the taxman, yeah, I’m the taxman

Now my advice for those who die
Declare the pennies on your eyes
‘Cause I’m the taxman, yeah, I’m the taxman
And you’re working for no one but me

Courtesy of Mr. Stevie Ray Vaughn

[ought-six]

The guy is a confirmed marxist.

[indianrightwinger]

If this puke ever becomes President and succeeds in enacting such a stupid law that punishes work, I need to move to France. :-)

[kabar]

he never tells the whole story that the middleclass pays the lions share of social security and FICA. This is 15 percent on gross income with no opportunity to offset with deductions.

They also get the lion's share of the benefits. Moreover, the "rich" pay the same SS contributions up to the earnings cap and more HI contributions, which are uncapped. There are no offset deductions when it comes to paying your SS/HI contributions.

Social Security & Medicare Tax Rates

Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or “indexed” to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount” (PIA). This is how much you would receive at your full retirement age—65 or older, depending on your date of birth.

Your benefits are not based on your total contributions.

[kabar]

he never tells the whole story that the middleclass pays the lions share of social security and FICA. This is 15 percent on gross income with no opportunity to offset with deductions.

They also get the lion's share of the benefits. Moreover, the "rich" pay the same SS contributions up to the earnings cap and more HI contributions, which are uncapped. There are no offset deductions when it comes to paying your SS/HI contributions.

Social Security & Medicare Tax Rates

Social Security benefits are based on your lifetime earnings. Your actual earnings are adjusted or “indexed” to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount” (PIA). This is how much you would receive at your full retirement age—65 or older, depending on your date of birth.

Your benefits are not based on your total contributions.

[businessprofessor]

So what!

Give the rest of us the opportunity to opt out. That is all that Bush asked for in his social security privatization plan. Social security is privatized for state and government workers (clergy also). If it is good enough for state and government workers, it is good enough for the rest of us.

Are you a protected government employee who can opt out? Maybe you are protecting your turf here. Please be honest and indicate the stake that you have in the current unfair situation.

I am a state employee who is the social security mess. I just want out. I will even give up my benefits now just so I can start saving on my own.

[quikdrw]

That would make a good bumper sticker here in Maryland.

[RightWhale]

• we could eliminate the entire Social Security shortfall

  Amazing. Who knew it would be so simple?

[kabar]

Give the rest of us the opportunity to opt out. That is all that Bush asked for in his social security privatization plan. Social security is privatized for state and government workers (clergy also). If it is good enough for state and government workers, it is good enough for the rest of us.

My reference was pointing out that many state and local govenment employees must now join SS. In 1983, all new federal employees were required to join SS. Regardless, SS is structurally flawed and cannot be sustained in its current form. I support Bush's and others plan to privatize SS. It is a Ponzi scheme. Someone could pay into SS for 50 years and not collect a dime except for a small burial allowance. It is not a pension scheme, but rather insurance. As SCOTUS ruled in Nestor vs Flemming an individual's SS contributions don't belong to him.

Are you a protected government employee who can opt out? Maybe you are protecting your turf here. Please be honest and indicate the stake that you have in the current unfair situation.

I am a retired Federal employee with 36 years of credited service [including military] who didn't join SS or the new system. I did qualify barely for SS from prior employment and so I draw both, now around 100K a year, which increases annually with the COLA. I retired at age 56. I am getting far more out of the system than I paid in.

[magellan]

" ... go get the rich elite who rigged this system."

If the system is rigged, it is rigged for those who get more out of it than they put in, not those who put more into it than they get out.

Back when Bush was promoting his reform of Social Security, I did the math, and it is surprising how bad Social Security is. I think I was using 2003 data. I used all SSA data, constant year dollars, and 2% as the risk-free interest rate, which I validated against the 30 year treasury and the average inflation rate.

If you made minimum wage, you would get back 28% more than you put in.

The break even wage for Social Security was $16,600/year. If you earned more than that, you were losing money in Social Security.

Those earning the average salary lost 22% of their contributions.

If you made right at the withholding cap, you basically would get back 50 cents on the dollar.

It is quite possible Social Security is horribly inefficient, and increasing the cap would allow those in the middle class to get back what they pay in, or pay in less.

But those who argue for increasing the cap under some concept of "fairness", that those who basically donate half of their Social Security payments to others should donate even more of their contributions to others, are basically arguing for a wealth transfer welfare system, not a government managed retirement annuity.

[businessprofessor]

Thanks for your honesty. I wish that most government employees would support privatization. Most government employees want to protect their deal and stick the rest of us with this mess.

Social security is a wet dream for the dims. The government collects outrageous amounts of taxes and gets to control everyone’s retirement (except of course for the privileged government class). In communist countries, the party members were treated well above the remainder of society. We are near that point now. Government workers are getting privileges and the rest of us are getting the shaft. The dims want to exacerbate this situation by adding a whopper of a tax increase that they will then redistribute according to their sense of fairness and political influence.

[magellan]

I fully expect the lifting of the Social Security cap to happen at some point. If not with the next Demonrat government, then when Social Security hits its liquidity crisis.

As a "pay as you go" system, where current contributions pay for current outlays, it is inevitable that current contributions would have to be dramatically increased at some point.

Of course, right now current contributions exceed current outlays, and the Congress just spends it like drunken sailors.

[traditional1]

"tax hike on the rich"

I've said it before and I'll repeat it again: how is this not discrimination and un-equal treatment when you PENALIZE certain Citizens disproportionately to others?

How would Obama and the ACLU respond if we implemented a tax on "rich blacks", but not "rich whites"? Or, what if certain ethnic people were to pay a greater tax rate than whites?

How is this different from singling out successful people to pay a higher rate than others, to accomplish un-fair wealth-redistribution?

[woofer]

Your benefits are not based on your total contributions.

And they're capped, too.

[LoneRangerMassachusetts]

What nonsense you speak: “Go get the rich.”

Apparently, you did not read my last sentence.