Re: Eliminating the Cap on Social Security Taxes Would Solve the Problem


"El Castor" <No_One@xxxxxxxx> wrote in message
news:1gsn43lgu2nudccp1g2dejldnsirh16qbb@xxxxxxxxxx
On Wed, 16 May 2007 13:58:02 -1000, "Alvin E. Toda" <aet@xxxxxxxx>
wrote:

On Wed, 16 May 2007, El Castor wrote:

On 15 May 2007 22:54:27 -0700, mg <mgkelson@xxxxxxxxx> wrote:

On May 14, 12:48 pm, El Castor <No_...@xxxxxxxx> wrote:
On 13 May 2007 20:58:14 -0700, mg <mgkel...@xxxxxxxxx> wrote:



On May 13, 7:24 am, Alan Lichtenstein <a...@xxxxxxx> wrote:
Alvin E. Toda wrote:
On Thu, 10 May 2007, mg wrote:

There's an excellent report on the various options (as of 2005)
for
solving the future SS deficit at:
http://www.nasi.org/usr_doc/SS_Brief_18.pdf

For example, eliminating the cap but not compensating retirees for
the
extra earnings would provide enough revenue to remedy 116 percent
of
the financial shortfall for the next 75 years. (Page 3, Option #1)

On the other hand, eliminating the cap and compensating for the
extra
earnings would remedy 93% of the problem. (Page 4, Option #2)

Here are some other options:

Bring newly hired state and local employees into the SS system:
Remedy: 10% (Page 5, Option #4)

Change the retirement age to 68, etc: Remedy: 28% (Page 5, Option
#5)

Change the retirement age to 70, etc: Remedy: 36% (Page 6, Option
#6)

Increase SS taxes from 6.2% to 7.2%: Remedy: 104% (Page 7, Option
#13

Earmark "limited estate tax" for Social Security: Remedy: 27%
(Page 8,
Option #15)

Eliminate the 2001 and 2003 Tax cuts for top 1% and apply to SS:
Remedy: 100% (Page 9, Option #16

Allow SS to phase in 40% investment in equities: Remedy: 35% to
48%
(Page 9, Options #17 & #18)

http://www.nasi.org/usr_doc/SS_Brief_18.pdf

I like option #16

Alvin, why are you interested in punishing a group when there are
other
alternatives available that would do neither?

Are you THAT jealous?

I insist the rich pay their fair share in taxes, but they should NOT
be
soaked simply because they're rich. Do you think fairness is only
for
the middle and lower classes?

Whether one is arguing with his brother-in-law, or arguing on a floor
of congress, or posting to these newsgroups, the real issue is always
the same: Progressive taxation versus Regressive taxation or
Proportional taxation. If everyone would simply state which one they
prefer, the argument would be much simpler.

I, for example, favor Progressive taxation, where the wealthy pay at
a
higher rate, and I can't imagine anything that could change my mind.
Others prefer Regressive taxation (or proportional), where the
wealthy
pay at a lower rate or the same rate, and there's nothing that's
likely to change their mind.

Taxes on the top 1%, for instance, are undoubtedly Proportional or
Regressive. For, regular income, for example, a person earning $100
million pays at approximately the same rate as a couple making about
$300,000. In addition, they pay at a lower rate than a lot of upper-
middle income wage earners since they only pay 15% on dividends and
capital gains.

The top 1% of taxpayers pay 1/3rd of federal income taxes. The bottom
50% pay 4%. How would you adjust those percentages?

Jeff

As the Bible says, the poor will always be with us
and as my mother used to say, "You can't get blood
out of a turnip". The issue isn't how much taxes the
poor pay. Any politician smart enough to get elected
knows that if you try to squeeze the poor to hard,
you could wake up one morning with a revolution and
a new form of government.

The issue is who makes up the difference, the middle
class or the rich and the super rich, and right now
the upper-middle class, for instance, is paying
income taxes at almost the same rate as multi-
millionaires and almost double the rate of the idle
rich who only pay 15% on dividends and capital
gains.

Ultimately, these tax arguments always lead to the
same place, i.e., whether or not you believe in a
progressive tax system.

I do believe in a progressive tax system, however the
financial difficulties which face Social Security
have nothing to do with federal income taxes,
progressive or otherwise, and everything to do with
increases in longevity and decreases in the birth
rate.

But, I do note that some of the assumptions behind
the post to which I am replying (your post, MG), are
simply false, so let me try to help you understand
who pays our federal income taxes, and how much they
pay.

1. The top 1% of federal income tax payers pay 36.89%
of income taxes, at an average tax rate 23.49%

2. The top 5% of federal income tax payers pay 57.13%
of income taxes, at an average tax rate of 16.95%.

3. The top 25% of federal income tax payers pay
84.86% of income taxes, at an average tax rate of
15.53%.

4. The bottom 50% of federal income tax payers pay
3.3% of income taxes, at an average tax rate of
2.97%.
http://www.taxfoundation.org/news/show/250.html

So, please don't argue that we don't have a
progressive income tax structure, but feel free to
argue, if you wish, that it should be more
progressive. At any rate, Social Security is not
funded from federal income taxes.

Lastly, let me point out that the majority of
economists would agree that we cannot tax ourselves
to prosperity, nor can we solve the Social Security
problem simply by raising taxes. France has the
highest progressive tax rates of any large developed
country -- much higher than the United States, and
yet they face similar old age pension problems.
Continued funding of Social Security at a high level
can only be accomplished by a strong growing economy.

Jeff

Actually, these figures argue for a regressive rather
than progessive tax structure.

Huh? No they don't. Goebbels could have taken lessons from you, Alvin.

And yes, the problem can
be solved by raising taxes.

Not in my opinion. If that was the case the French economy should be
booming and their old age pension system would be awash with money.
BTW -- Alan Greenspan agrees with me that Social Security can't tax
it's way to prosperity. I realize that nothing I say will faze you,
but don't expect me to become an admirer of the Emperor's new clothes.

In fact, Steve Forbes has
argued that a flat tax would solve all our problems,
and that's not even progressive according to a lot of
accountants.

We sort of have a flat now because a lot of people
are paying the AMT tax now. But it's not flat enough
when we compare the rich 1% to the bottom 50% of the
tax payers. For example, you quote about 25% of the tax
revenue to be from the top 1% while the bottom 50%
percent of the taxpayers pay about 3% of the revenue.
This means that the 1% taxpayer pays (25%/1%)/(3%/50%)
or about 417 times more taxes than the bottom 50%. But
the income disparity of the average CEO who belongs in
the 1% category is really more than 500 times the lower
paid workers. And this disparity is growing each year.

BTW this disparity gets even greater if we consider the
amounts of payroll taxes into the calculation. For
example, say the bottom 50% would pay 3 points more for
a total of 6%. But the top 1% for only the payroll tax
contribution would be much smaller-- ie 3%/50 because
of their smaller group. So this would mean that the 1%
taxpayer would only be paying only about 210 times more
tax than the bottom 50% while the 1% guy would earn
more than 500 times the income. What I'm assuming here
would be that the bottom 50% would pay 6% of the total
tax revenue including payroll taxes while the top 1%
would still pay about 25% of the total revenue.

Steve Forbes, a Republican, well knows these numbers.
That's why he has advocated for a flat tax to fix our
revenue problems. The rich have been taking advantage
of our tax system for too long.

I favor an elimination of ALL taxes and start over with just one. A
graduated flat tax with no deductions, exemptions or other facilities to
avoid paying. I think everyone should pay some tax regardless of their lot
in life. Start with a 1% tax on the bottom and graduate up to a 50% at the
top. AND THEN USE THAT MONEY FOR EVERYTHING instead of adding new taxes
everytime the government thinks we need something. Then require that the
states rely solely on a sales tax which would make them be more conscious of
making their decisions based on the economic viability of their populace.


--
Way Over The Hill


.

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