[LoneRangerMassachusetts]

Every time I hear Rush talk about how the rich contribute a disproportionate share of income taxes, 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.

I say to Obama, go get the rich elite who rigged this system. Maybe then we will get some serious discussion about eliminating SS.

[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?

[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.

[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.

[Kellis91789]

You do understand that the SS benefits are not proportionate to the taxes paid, right ? So the guy that hit the cap gets back much less per dollar in SS taxes than somebody below the cap ?

What Obama is talking about is raising taxes on those people currently above the cap, even though they will get no additional SS benefits at all. That means the high earner will just ge screwed even worse than he is now. The middle-wage earner gets a pretty good rate of return out of SS — about equal to a 7% investment. The high-wage earner can expect a return of less than 2%. Remove or raise the cap and the high-wage earner will have a negative rate of return.