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I think this is a case of seeing what you want to see. According to the Trustees Report, SS is only in deficit if you don't factor in interest income. [1] It's

I think this is a case of seeing what you want to see. According to the Trustees Report, SS is only in deficit if you don't factor in interest income. [1] It's projected to deplete its trust fund in 2034. Please resist the urge to argue that the trust fund doesn't exist. That 2034 date can easily be extended through minor tweaks, check out any of the ideas from the late Robert M. Ball. The flat tax is regressive. Regressive is bad because the value of money is roughly logarithmic as it increases. Any plans to make the flat tax "less regressive" is an argument against a flat tax. A simplified tax code is a good idea. It is quite possible to have a simpler tax code that is more progressive. Yet I find that flat tax proponents tend not to be in favor of that. [1] https://www.ssa.gov/oact/trsum/ https://www.ssa.gov/oact/trsum/

schoen 10y ago
> The flat tax is regressive. Strictly speaking, a flat tax is the border between progressive and regressive taxation and is neither progressive nor regressive.
- abeyer 10y ago
  I think that's only true in a very academic sense. Ideally you would want to exclude the expenses incurred to sustain a reasonable minimum quality of life and only consider taxation on income in excess of that. A truly flat tax rate is still regressive in the sense that it is a significantly higher burden on that expendable income at the lower end of the scale.
  - dragonwriter 10y ago
    Even ignoring the disposal income question, it's regressive in utilitarian terms because money, like most commodities, has declining marginal utility, so taking 20% of $1,000,000 takes a lower percentage of the utility of that $1,000,000 than taking 20% of $100,000 does of the $100,000. (A lot of analysis gets based on the misuse of $ as a flat measure of utility, which is deeply flawed.) EDIT: more accurately, this subsumes and generalizes the disposable income issue, rather than ignoring it, since the concept of "necessities" that come out before income is "disposable" is really a simplification of the "low hanging fruit" of high-utility spending to a binary category, rather than a continuum.
  - hackuser 10y ago
    > Ideally you would want to exclude the expenses incurred to sustain a reasonable minimum quality of life and only consider taxation on income in excess of that I don't agree that is ideal. Ideally, everyone makes an equal sacrifice. What is an equal sacrifice? * Everyone could pay the exact same amount of tax, let's say $15K. But that is not equal sacrifice; some people can afford $15K much more easily than others (especially those who don't have $15K). * Everyone could pay the same percentage of their income, let's say 17%. That also is not equal sacrifice: If you earn $1 million, you can afford to give up 17% of it much more easily than if you earn $10,000. * Tiered progressive tax rates: These can be equal, if calibrated effectively. It will never be perfect and always up for debate, but it can be done pretty well.
    - tunesmith 10y ago
      It's generally accepted that the value of money is roughly logarithmic as it increases. A logarithmic flat tax could look something like this: 1) Figure how many times poverty rate you make in revenue (2x, 3x, whatever) 2) Take the log base 10 3) Multiply by some flat constant that is the same for everyone, so that the total national amount taxed is how much the US needs. Last I checked, that flat constant would be around 9. 4) The result is what percentage of your revenue you should pay in taxes. Currently, we are far from logarithmic. Under this scheme, pretty much everyone reading this board would pay less taxes. Bill Gates pays about the right amount. Exxon would pay more. Useful as a thought experiment to explore how far away we are from a fair level of progressive taxation.
      - hackuser 10y ago
        Thanks. > It's generally accepted that the value of money is roughly logarithmic as it increases I assume that is economic theory; do you remember whose or have any pointers to where I can read more?
        tunesmith 10y ago
        I think it was Bernoulli that first talked about the logarithmic relationship of utility and value. That was back in the 1700's. I believe there have also been empirical studies that suggest that it holds up in experiments, etc.
- rqebmm 10y ago
  While you ARE technically correct, the alternative in the wild is progressive taxation. That makes flat taxation a de facto regressive tax, as it will be more regressive than the current taxation regime.
  - perseusprime11 10y ago
    I think this whole tax debate misses an important point. Taxes are viewed as revenue in terms of budget and there is a business tendency to make more revenue to cover expenses. If you stop seeing Tax as a major source of revenue and start having Govt invest money in different ways to make money other than just taxes, we can start actually having a real debate around what is a fair tax rate for govt to cover their expenses and figure out a way to make it progressive.
- tunesmith 10y ago
  It is regressive when compared to the idea that the value of money is roughly logarithmic as it increases. $5000 means more to a working class person than a billionaire. If taxation should take an equal amount of value from each, then a flat percentage is comparatively regressive.
ZoeZoeBee 10y ago
The time for fixing Social Security with "minor tweaks" has passed, the problem moving forward is Demographics >Social Security's total income is projected to exceed its total cost through 2019, as it has since 1982. The 2015 surplus of total income relative to cost was $23 billion. However, when interest income is excluded, Social Security's cost is projected to exceed its non-interest income throughout the projection period, as it has since 2010. The Trustees project that this annual non-interest deficit will average about $69 billion between 2016 and 2019. It will then rise steeply as income growth slows to its sustainable trend rate as the economic recovery is complete while the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.
- dragonwriter 10y ago
  > The time for fixing Social Security with "minor tweaks" has passed, the problem moving forward is Demographics Eh, if it makes it past the Boomers (which it does in the low-cost estimate in recent trustees reports, but not in the intermediate- or high-cost estimates; so risky-but-plausible with no intervention, certainly achievable with minor tweaks) it's fine, demographically, for the foreseeable future; Gen X is a demographic trough, and the Millennial generation is a gentler boom than the Boomers.
  - tptacek 10y ago
    It's also the case that (most) boomers benefit from a lower retirement age than subsequent generations, so getting clear of them reduces pressure on the system for other reasons.
  - ZoeZoeBee 10y ago
    I'm sorry, but quite frankly the low-cost estimate is about as Rosy a prediction as one can hope for, and is decoupled from current and past demographic and economic trends. 1) To get to that number the Trustees assume fertility rates will rise to over 2.2, a rate not seen since 1970 which completely goes against the trend of the last 50 years. 2) They continue to assume 1 million migrants a year to the US, despite active legislation seeking to limit migration to half a million a year. https://www.ssa.gov/oact/TR/2016/2016_Long-Range_Demographic_Assumptions.pdf https://www.ssa.gov/oact/TR/2016/2016_Long-Range_Demographic... All of this is dependent upon a Labor Force Participation Rate not encumbered by automation and a general lack of skills by the populace. Which may not be a problem but the BLS has been underestimating the decline in LFPR in their projections for the last 20 years. We're decades a head of where we should be based on Demographics alone, according to all of their predictions. https://www.stlouisfed.org/publications/regional-economist/october-2013/a-closer-look-at-the-decline-in-the-labor-force-participation-rate https://www.stlouisfed.org/publications/regional-economist/o...
mason240 10y ago
>Please resist the urge to argue that the trust fund doesn't exist. Except it doesn't. The only way to for SS to collect from the trust fund is from the general fund. That means that in order for SS to get $1 from the general fund: A) Raise non-SS taxes $1 to go into the general fund. B) Cut $1 of other spending from the general fund. C) Increase the deficit by $1
- tunesmith 10y ago
  For the benefit of those who actually don't know, the reason this doesn't hold water is because: A) The trust fund is in surplus from payroll (FICA) taxes. B) The general fund is in deficit from income tax cuts. C) Most income tax cut benefits go to richer people. So if someone argues that trust fund doesn't exist, they are arguing that revenue from payroll taxes should finance tax cuts for those richer than them. Effectively transferring money from poor to rich. Keep this in mind as the Social Security caterwauling starts to increase around 2019 (when SS is expected to start needing money from the trust fund). People will argue that Social Security needs to be cut because of that deficit. Most of those people know better and are being intellectually dishonest. 2034 is the actual challenge, but again, there are reasonable fixes to that - for instance, gradually raising the maximum amount of earnings covered by Social Security, or creating a new residual estate tax and dedicating it to Social Security. Democrats also like the idea of raising the upper limit, which will also work and is an easier sell but less defensible philosophically.
  - mason240 10y ago
    A) That surplus money was already been spent in the 1990s. B) Not true or relevant. B) Not true or relevant. >So if someone argues that trust fund doesn't exist, they are arguing that revenue from payroll taxes should finance tax cuts for those richer than them. Effectively transferring money from poor to rich. Again, not true at all. Notice how you can't actually answer the question I posed about how SS can actually get the money out of the trust "fund." The fund is empty and is quite literally only made of a IOUs from the general fund.
    - 10y ago

schoen 10y ago

> The flat tax is regressive. Strictly speaking, a flat tax is the border between progressive and regressive taxation and is neither progressive nor regressive.

abeyer 10y ago
I think that's only true in a very academic sense. Ideally you would want to exclude the expenses incurred to sustain a reasonable minimum quality of life and only consider taxation on income in excess of that. A truly flat tax rate is still regressive in the sense that it is a significantly higher burden on that expendable income at the lower end of the scale.
- dragonwriter 10y ago
  Even ignoring the disposal income question, it's regressive in utilitarian terms because money, like most commodities, has declining marginal utility, so taking 20% of $1,000,000 takes a lower percentage of the utility of that $1,000,000 than taking 20% of $100,000 does of the $100,000. (A lot of analysis gets based on the misuse of $ as a flat measure of utility, which is deeply flawed.) EDIT: more accurately, this subsumes and generalizes the disposable income issue, rather than ignoring it, since the concept of "necessities" that come out before income is "disposable" is really a simplification of the "low hanging fruit" of high-utility spending to a binary category, rather than a continuum.
- hackuser 10y ago
  > Ideally you would want to exclude the expenses incurred to sustain a reasonable minimum quality of life and only consider taxation on income in excess of that I don't agree that is ideal. Ideally, everyone makes an equal sacrifice. What is an equal sacrifice? * Everyone could pay the exact same amount of tax, let's say $15K. But that is not equal sacrifice; some people can afford $15K much more easily than others (especially those who don't have $15K). * Everyone could pay the same percentage of their income, let's say 17%. That also is not equal sacrifice: If you earn $1 million, you can afford to give up 17% of it much more easily than if you earn $10,000. * Tiered progressive tax rates: These can be equal, if calibrated effectively. It will never be perfect and always up for debate, but it can be done pretty well.
  - tunesmith 10y ago
    It's generally accepted that the value of money is roughly logarithmic as it increases. A logarithmic flat tax could look something like this: 1) Figure how many times poverty rate you make in revenue (2x, 3x, whatever) 2) Take the log base 10 3) Multiply by some flat constant that is the same for everyone, so that the total national amount taxed is how much the US needs. Last I checked, that flat constant would be around 9. 4) The result is what percentage of your revenue you should pay in taxes. Currently, we are far from logarithmic. Under this scheme, pretty much everyone reading this board would pay less taxes. Bill Gates pays about the right amount. Exxon would pay more. Useful as a thought experiment to explore how far away we are from a fair level of progressive taxation.
    - hackuser 10y ago
      Thanks. > It's generally accepted that the value of money is roughly logarithmic as it increases I assume that is economic theory; do you remember whose or have any pointers to where I can read more?
      - tunesmith 10y ago
        I think it was Bernoulli that first talked about the logarithmic relationship of utility and value. That was back in the 1700's. I believe there have also been empirical studies that suggest that it holds up in experiments, etc.
rqebmm 10y ago
While you ARE technically correct, the alternative in the wild is progressive taxation. That makes flat taxation a de facto regressive tax, as it will be more regressive than the current taxation regime.
- perseusprime11 10y ago
  I think this whole tax debate misses an important point. Taxes are viewed as revenue in terms of budget and there is a business tendency to make more revenue to cover expenses. If you stop seeing Tax as a major source of revenue and start having Govt invest money in different ways to make money other than just taxes, we can start actually having a real debate around what is a fair tax rate for govt to cover their expenses and figure out a way to make it progressive.
tunesmith 10y ago
It is regressive when compared to the idea that the value of money is roughly logarithmic as it increases. $5000 means more to a working class person than a billionaire. If taxation should take an equal amount of value from each, then a flat percentage is comparatively regressive.

ZoeZoeBee 10y ago

The time for fixing Social Security with "minor tweaks" has passed, the problem moving forward is Demographics >Social Security's total income is projected to exceed its total cost through 2019, as it has since 1982. The 2015 surplus of total income relative to cost was $23 billion. However, when interest income is excluded, Social Security's cost is projected to exceed its non-interest income throughout the projection period, as it has since 2010. The Trustees project that this annual non-interest deficit will average about $69 billion between 2016 and 2019. It will then rise steeply as income growth slows to its sustainable trend rate as the economic recovery is complete while the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.

dragonwriter 10y ago
> The time for fixing Social Security with "minor tweaks" has passed, the problem moving forward is Demographics Eh, if it makes it past the Boomers (which it does in the low-cost estimate in recent trustees reports, but not in the intermediate- or high-cost estimates; so risky-but-plausible with no intervention, certainly achievable with minor tweaks) it's fine, demographically, for the foreseeable future; Gen X is a demographic trough, and the Millennial generation is a gentler boom than the Boomers.
- tptacek 10y ago
  It's also the case that (most) boomers benefit from a lower retirement age than subsequent generations, so getting clear of them reduces pressure on the system for other reasons.
- ZoeZoeBee 10y ago
  I'm sorry, but quite frankly the low-cost estimate is about as Rosy a prediction as one can hope for, and is decoupled from current and past demographic and economic trends. 1) To get to that number the Trustees assume fertility rates will rise to over 2.2, a rate not seen since 1970 which completely goes against the trend of the last 50 years. 2) They continue to assume 1 million migrants a year to the US, despite active legislation seeking to limit migration to half a million a year. https://www.ssa.gov/oact/TR/2016/2016_Long-Range_Demographic_Assumptions.pdf https://www.ssa.gov/oact/TR/2016/2016_Long-Range_Demographic... All of this is dependent upon a Labor Force Participation Rate not encumbered by automation and a general lack of skills by the populace. Which may not be a problem but the BLS has been underestimating the decline in LFPR in their projections for the last 20 years. We're decades a head of where we should be based on Demographics alone, according to all of their predictions. https://www.stlouisfed.org/publications/regional-economist/october-2013/a-closer-look-at-the-decline-in-the-labor-force-participation-rate https://www.stlouisfed.org/publications/regional-economist/o...

mason240 10y ago

>Please resist the urge to argue that the trust fund doesn't exist. Except it doesn't. The only way to for SS to collect from the trust fund is from the general fund. That means that in order for SS to get $1 from the general fund: A) Raise non-SS taxes $1 to go into the general fund. B) Cut $1 of other spending from the general fund. C) Increase the deficit by $1

tunesmith 10y ago
For the benefit of those who actually don't know, the reason this doesn't hold water is because: A) The trust fund is in surplus from payroll (FICA) taxes. B) The general fund is in deficit from income tax cuts. C) Most income tax cut benefits go to richer people. So if someone argues that trust fund doesn't exist, they are arguing that revenue from payroll taxes should finance tax cuts for those richer than them. Effectively transferring money from poor to rich. Keep this in mind as the Social Security caterwauling starts to increase around 2019 (when SS is expected to start needing money from the trust fund). People will argue that Social Security needs to be cut because of that deficit. Most of those people know better and are being intellectually dishonest. 2034 is the actual challenge, but again, there are reasonable fixes to that - for instance, gradually raising the maximum amount of earnings covered by Social Security, or creating a new residual estate tax and dedicating it to Social Security. Democrats also like the idea of raising the upper limit, which will also work and is an easier sell but less defensible philosophically.
- mason240 10y ago
  A) That surplus money was already been spent in the 1990s. B) Not true or relevant. B) Not true or relevant. >So if someone argues that trust fund doesn't exist, they are arguing that revenue from payroll taxes should finance tax cuts for those richer than them. Effectively transferring money from poor to rich. Again, not true at all. Notice how you can't actually answer the question I posed about how SS can actually get the money out of the trust "fund." The fund is empty and is quite literally only made of a IOUs from the general fund.
  - 10y ago