10 ms·

The Rich Are Living Longer and Taking More From Taxpayers

137 points by 11thEarlOfMar 10y ago

sp332 10y ago
I dunno, "living longer" is one of the least offensive ways someone can get disproportionately more money from taxpayers. I think the focus should be on the opioid epidemic that is shortening middle-aged people's lives.
- NoGravitas 10y ago
  Well, it's concerning that in the US, wealthier people live longer. Generally, when you hear someone trying to justify the extreme wealth inequality of the US (compared to most of the developed world), the response is along the lines of, "well, there's huge inequality in relative terms, but that's not important, because in absolute terms, the poor in the US are pretty well off". But if being poor in the US means you die young, then wealth inequality is pretty important in terms of quality of life!
  - pdonis 10y ago
    > if being poor in the US means you die young That's not what the article is saying. According to the table it gives, the life expectancy of the bottom 20% is still 76.1 years. That's not "young". It is significantly younger than the top 20%. > wealth inequality is pretty important in terms of quality of life I think it's hard to make this case just based on life expectancy; what we really need is some way of quantifying how healthy the bottom 20% are from, say, age 60 on (or even earlier), compared to the top 20%. I suspect that this would show a much larger disparity than just the life expectancy data.
    - Recurecur 10y ago
      > The life expectancy of the bottom 20% is still 76.1 years. That's not "young". It's also worth considering that the lowest 20% is much more likely to encounter violent crime, and also more likely to enlist in the military. I'm sure those things play into lower life expectancy as well.
      - pdonis 10y ago
        The key thing to look at here would be the variability: what is the standard deviation of life expectancy for the bottom 20%, vs. the top 20%? The factors you bring up would suggest that the SD should be significantly higher for the bottom 20%.
  - frgtpsswrdlame 10y ago
    There was an article in The Nation earlier this year which gave a little more detail on the life expectancy issue: https://www.thenation.com/article/why-are-poor-americans-dying-so-much-earlier-than-rich-americans/ https://www.thenation.com/article/why-are-poor-americans-dyi... As for how socioeconomic inequalities translate into inequities in life span, “It’s rather mysterious,” said Lisa Berkman, the director of the Center for Population and Development Studies at Harvard University. One answer is that low-income people tend to be sicker in the first place, because the neighborhoods they can afford to live in are more polluted; because they can’t afford to adopt and maintain healthy behaviors; because they can’t afford health insurance premiums, copayments, and prescription drugs. Woolf accounts much of the disparity in death rates to what he calls “stress-related conditions.” People who aren’t secure economically are likely to experience high levels of stress, which studies have linked to shorter lifespans and a heightened risk of death from strokes, heart attacks, and other illnesses. “We’re seeing a dramatic increase in deaths from opioids, whether we’re talking about prescription painkiller or heroin, but also from suicides, liver disease, and other conditions that I personally feel come from different ways that people are coping, in an unhealthy way, with the stresses that they’re facing in their daily lives,” Woolf said, particularly since the recession. Smoking, the leading cause of preventable death, takes a particularly costly toll on low-income people. Berkman traces at least some of the stress load on lower-income Americans to changes in the workplace. The 1920s cohort analyzed by the Brookings researchers had their greatest earnings in the 40s and 50s, a time of economic growth and greater equality across the income spectrum. While low-income people born in the 1940s entered a labor market that was less demanding physically, they may also have experienced greater insecurity as wages stagnated, and difficulty balancing work and family life as more women entered the workforce. Unlike many other peer countries with more robust family support, the United States didn’t do much to accommodate the increased challenges facing working parents, Berkman noted. “The second wave of occupational risk are sets of working conditions that are hugely stressful,” she said. “They aren’t so physically stressful, but they’re socially stressful. They’re insecure, they’re inflexible, or they have no ability to balance work and family issues. We need to rethink what occupational health and safety is.”
  - clarkm 10y ago
    The story isn't so simple. Hispanics have a longer life expectancy than non-Hispanic whites in the US, despite having much lower income levels. This is known as the Hispanic Epidemiological Paradox, and a lot of research has gone into studying this: https://www.princeton.edu/main/news/archive/S46/31/53A76/ https://www.princeton.edu/main/news/archive/S46/31/53A76/
- Retric 10y ago
  They live longer, are more likely to be married, get a lot more per month, and have a capped tax.
  - sp332 10y ago
    What's the cap?
    - snissn 10y ago
      In 2017, the Social Security Wage Base was $127,200 and the Social Security tax rate was 6.20% paid by the employee and 6.20% paid by the employer.[1] A person with $10,000 of gross income had $620.00 withheld as Social Security tax from his check and the employer sent an additional $620.00. A person with $130,000 of gross income in 2017 incurred Social Security tax of $7,886.40 (resulting in an effective rate of approximately 6.07% - the rate was lower because the income was more than the 2017 "wage base", see below), with $7,886.40 paid by the employer. A person who earned a million dollars in wages paid the same $7,886.40 in Social Security tax (resulting in an effective rate of approximately 0.79%), with equivalent employer matching. In the cases of the $130k and $1m earners, each paid the same amount into the social security system, and both will take the same out of the social security system. [1] https://en.wikipedia.org/wiki/Social_Security_Wage_Base https://en.wikipedia.org/wiki/Social_Security_Wage_Base
  - lg 10y ago
    if we lift the tax cap, can we also lift the benefit cap?
    - Retric 10y ago
      As long as it's still a diminishing return and includes investment income, I have no problem with that. The real issue IMO, is it's simply not diminishing enough relative to expected lifespans, and there is a huge benefit associated with being married.
    - gregable 10y ago
      There is no benefit cap, just a progressive rate. At low lifetime contributions, you get 90% benefit compared to contribution. As you increase your contribution this moves up to marginal rates of 32 and 15%.
- deleted 10y ago
  [deleted]
gavman 10y ago
The article ignores the fact that while the wealthy may be living longer, they also disproportionately fund social security. They may be receiving benefits for more years, but while I don't know the numbers, I would guess their ROI is much much smaller than the bottom 20% of earners. There is certainly a very valid separate point to be made about how in the US wealth leads to longer/healthier lives and we definitely need to think about how to fix that, but putting it in terms of receiving more social security feels disingenuous to me.
- NoGravitas 10y ago
  No, they really don't disproportionately fund Social Security. Quite the opposite, in fact. You only pay Social Security payroll taxes on the first $127,200 of your annual income. So if you make $250k, your payroll tax rate is effectively half that of someone making 125k (numbers rounded off here, don't nitpick). Details here: http://thehill.com/blogs/congress-blog/economy-budget/204996-scrapping-the-social-security-payroll-tax-cap http://thehill.com/blogs/congress-blog/economy-budget/204996... and https://en.wikipedia.org/wiki/Social_Security_Wage_Base https://en.wikipedia.org/wiki/Social_Security_Wage_Base
  - maxerickson 10y ago
    $125000 is above the 90th percentile for individual income. People making that are doing pretty well in relative terms. I guess the cutoff for 'wealthy' is often higher than that though.
  - gregable 10y ago
    That also misses the point since benefits are directly tied to lifetime contributions, not earnings. Double the cutoff and you would double someone's contributions. The feature that does make social security progressive it's the diminishing contribution to benefit ratio a lifetime contributions increase.
  - loeg 10y ago
    Single income of $127,000 is 93rd percentile in the US. Given that, sure, the top 7% or 1% or the 0.1% don't fund SS proportionately (but they also do not receive higher benefits than the people at exactly $127,000). The article isn't really talking about the 0.1% or 1%, though, which is a tiny portion of SS payouts, but instead the top 20% or 40% (top quintiles).
anthony_romeo 10y ago
So here's the thing. Social Security (SSDI) is a system you pay into. When you retire or become disabled, the amount of benefits you are eligible for is related to the amount you pay in, which is a percentage of your income. Naturally, if one earns more money over their lifetime they would have paid more into the system, and thus are getting more Social Security benefits in return. For those who have earned very little income over their lifetime, they are eligible for benefits through the SSI program, which one does not have to pay for. However, you may not be eligible for SSI if you have too many assets (e.g. saved money, a 2nd car). The problem is that the cutoff of SSI based upon assets has not been raised since 1989. You're only allowed to have no more than $2,000 in savings, basically requiring the applicant to be completely destitute before becoming eligible. In my personal opinion, this amount needs to be drastically updated to match modern cost-of-living standards. This program is far too out-of-reach for those merely dipping their feet in poverty.
- qntty 10y ago
  What you're describing would be the rich consuming proportionately more SS. The article is specifically describing how they consume disproportionately more SS.
  - loeg 10y ago
    > The article is specifically describing how they consume disproportionately more SS. The headline makes that claim, but the article's figures do not support the claim.
    - the_mitsuhiko 10y ago
      It would appear the article's figures support that claim.
      - throwanem 10y ago
        The disproportion isn't in Social Security benefits consumption. The disproportion is in lifespan, and the difference in benefits consumption is a side effect thereof, because of the way Social Security is defined to work. I'm not sure that it actually helps anything to cast it in the cart-before-horse way the article does.
loeg 10y ago
> The U.S. retirement system looks more even-handed if you include in the analysis all government benefits received and all taxes paid by Americans after age 50. This graph shows a roughly flat benefits-less-revenue per quintile, but is still disingenuous because it ignores revenue from under age 50. Social security payouts start as early as 62 — so this only factors in 12-20 working years and ignores the first 28-32 working years. I would guess the higher quintiles at 50 also paid more in Social Security taxes during their younger working years. I suspect a lifetime graph of benefits less revenue would show the system is still progressive, if not as progressive as it was 30 years ago. Either way — the headline statement, "Wealthy Americans Consumer Disproportionately More Social Security," is false.
- jeffdavis 10y ago
  I am confused by the wording of that graph. Does it include a lifetime of contributions and a lifetime of benefits? Or 12-15 years of contributions and a lifetime of benefits?
  - loeg 10y ago
    I read it as "After age 50 by income group," but it is somewhat ambiguous. Maybe it uses "lifetime" to distinguish ordinary payouts from survivor benefits? I'm not sure.
  - twoodfin 10y ago
    I think it's the (less interesting) average benefit minus tax per year, not in aggregate. The latter is presumably much harder to measure. I'd be shocked if high earners with average life expectancies could expect to recoup (inflation-adjusted) their lifetime contributions, given the "bend points" of the benefits formula.
    - basseq 10y ago
      Correct. Given average life expectancies, the IRR of contributions vs. benefits of Upper-Middle and Top 20% are 2.9% and 1.7%, respectively. Given a 3.22% inflation rate, both are negative (meaning the returns don't even keep up with inflation).
asdfGUYasdfn 10y ago
Funny
asdfGUYasdfn 10y ago
Funny ... you work your whole life and pay into a system that is there for everyone, and then people criticize that you take part in it when you are given the right to do so. Blows my mind. It's very much like the 2nd Amendment - people are all up in crazy town because you exercise your right like the 1st or 4th to express yourself and what you believe in. Hypocrisy.
rhino369 10y ago
Let me opt then.
snappyTertle 10y ago
Does anyone actually like social security?
- pwthornton 10y ago
  It's very popular, since most Americans don't have anything significant in savings for retirement. "Eight in 10 Americans think Social Security has been good for the country, with 70 percent of young adults agreeing and almost nine in 10 senior citizens saying the same." http://www.politico.com/story/2011/09/poll-social-security-still-popular-064766 http://www.politico.com/story/2011/09/poll-social-security-s...
- pjmorris 10y ago
  You could probably find people who like it among those who are receiving checks from it. I think SS is a good place to consider Chesterton's Fence: before removing something, you have to explain and understand why it's there in the first place. Incidence of senior poverty has dropped since SS was implemented. Maybe it's not so much that people like SS as that they weren't comfortable with the poverty of their elders that they saw before implementing SS.
rdl 10y ago
Rich white women seem to benefit substantially at the expense of middle-income black men, specifically, too. The racial disparity in life expectancy is bad on its own, but has a financial impact here. (And women live longer, plus often end up with a superior amount of SS to what they've earned themselves due to spousal benefit, including survivor benefit. That is one of the overt goals of the system, though, and probably broadly supported.)
MrTonyD 10y ago
Was it Howard Zinn or Noam Chomsky who described these types of arguments as: "fighting over the scraps". The point being that we are missing the bigger picture - the massive bulk of the money is going to the rich and we need to fix that problem. Then there will be plenty of money for Social Security - and it will be possible to fix it.
- joelrunyon 10y ago
  "the massive bulk of the money" What "the money?" Are you talking income, earnings, government payout, overall wealth? Your argument goes to crap really quickly unless you're specifying where the problem is originating from...
  - MrTonyD 10y ago
    Guess you haven't heard about the 1% with most of the wealth? If so, then I don't think I can offer you any advice.
    - joelrunyon 10y ago
      You're being argumentative without being useful. You're not offering any advice at all. "THE MONEY" ≠ Wealth ≠ Income. They are separate, unique things. You need to acknowledge the differences before you can have a useful discussion. Unless, of course, you're just mad that some people have a lot of money. In which case, you can just yell about some people having "ALL THE MONEY" and not actually work towards a solution.
dkrich 10y ago
Here's an idea- give people with a certain income the option to not pay into SS with the obvious consequence of not being able to collect. Make this option available to people at a certain age or less (maybe 40), so that those closer to retirement don't get hosed after having paid in for most of their working lives.
Consultant32452 10y ago
Social security is super racist for exactly this reason. Ironically, right wing white nationalists who want to remove SS have a less racist policy (on this one issue) than your average bleeding heart liberals.
- Jtsummers 10y ago
  This doesn't make social security racist. It means that there are systemic issues that disproportionately impact people based on race that need to be fixed. Disproportionate receipt of Social Security benefits is merely a symptom or indicator, not a cause.
  - Consultant32452 10y ago
    This disparity in receipt of SS benefits has been known about by the people who run/regulate these things since its inception. I'd be shocked if they didn't know this would happen even before its inception. Can you name a single mainstream politician who has made a serious effort to correct this problem? Maybe a couple exist, but I've personally never heard it uttered by a candidate.
    - cgy1 10y ago
      I believe this was one of the reasons for George W. Bush's push for privatizing part of social security.
      - Jtsummers 10y ago
        Privatizing it still doesn't address any of the systemic issues regarding ageism, classism, sexism, racism which have impacts on longevity. This argument is fundamentally absurd. It's like saying that public schools in predominantly rich, white districts are better than schools in predominantly poor, black districts so we should get rid of all public schools because poor blacks get a poor education so it's racist. No, we should address the problem of the schools and opportunities themselves, not eliminate it (though that may still be part of the solution). Here, with pensions, they serve a need. Eliminating them will actually hurt the poor, and minorities, more despite the discrepancies in payouts. The focus should be, why do they have worse life expectancies and what, if anything, can be done to address that. Why do they have worse savings rates so what can be done to increase their savings rates, or increase their wages so they're more able to save.
rogov 10y ago
I would be interested in seeing how much it costs the top quintiles to stay alive that much longer than the lower quintiles. I suspect their SSDI payments aren't enough to cover the costs on average.
cgy1 10y ago
OTOH, I wonder whether the opportunity costs of paying social security taxes are disproportionately higher for the rich than for the non-rich. What I mean is if the rich, instead of paying social security taxes, were able to invest that money, are they likely to generate much greater returns than the amount of social security benefits that they end up receiving in the current system?
aaronchall 10y ago
The rich pay everyone's share. [1] SS benefits are a really bad deal for those who would otherwise save. [2] Ergo, forcing the wealthy to participate in Social Security benefits the rest of us at their expense. [1] https://www.aei.org/publication/cbo-study-shows-that-the-rich-dont-just-pay-a-fair-share-of-federal-taxes-they-pay-almost-everybodys-share/ https://www.aei.org/publication/cbo-study-shows-that-the-ric... [2] http://www.reuters.com/article/us-column-miller-socialsecurity-idUSBRE89H0YG20121018 http://www.reuters.com/article/us-column-miller-socialsecuri...
- Jtsummers 10y ago
  Just like almost every form of insurance. The healthy reduce the costs for the unhealthy. The safe drivers reduce the costs for the bad drivers.
- basseq 10y ago
  I built a quick model to compare IRR of contributions vs. benefits using the numbers in the Bloomberg article and income distribution reports[1]. With some massive assumptions (that I can enumerate if anyone is interested), the Bottom 20% quintile gets a 6.5% IRR on lifetime benefits vs. contributions. The Top 20%, by comparison, gets a 1.7% IRR. So despite "the rich taking more", the system is still very progressive. Just, perhaps, not quite as progressive as it used to be—but certainly not "proportionate" or "disproportionate" in favor of the wealth. To give you a sense, had a Top 20%-er turning 65 in 2016 invested his or her SS contributions over the years in a Dow Jones Index Fund, the value of their investment would be $1.1M... versus the $290k lifetime benefit they would receive from the government. (It's pretty much a wash for a Bottom 20%-er: their DJI investment would be worth $136k vs. $130k in SS Lifetime Benefits). [1] https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/49440-Distribution-of-Income-and-Taxes-2.pdf https://www.cbo.gov/sites/default/files/113th-congress-2013-...
  - basseq 10y ago
    Oh, and for those who are thinking, "Huh, 6.5% return is pretty good", remember that's based on individual contributions alone. Your employer contributes the same amount on your behalf. Meaning that for a Top 20%-er, you and your employer are contributing more than you will see back in absolute dollars (ignoring inflation, which makes it worse—you and your employer give me $1 in 1970s dollars and I give you $0.90 in 2017 dollars).
mankash666 10y ago
Complete mis-representation of the truth. The rich pay more into the system than they cost [1] , and the non-rich cost more than they pay - which is OK as the system is designed to be that way. This article is sensationalist click-baity crap that wants to paint a picture where the rich somehow feed off the poor. [1]: http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/ http://www.pewresearch.org/fact-tank/2016/04/13/high-income-...
antisthenes 10y ago
I've never seen so much poor reading comprehension and economic illiteracy concentrated in 1 thread. The TL;DR point of the article is that the rich live longer, thus collecting far more SS benefits than the less wealthy percentiles. Yes, accounting for the fact that they pay more into it.
skilesare 10y ago
I have a modest proposal that is a kind of earned basic income. Would love comments and feedback. Http://skilesare.github.com/immortality Its a long term solution and doesn't fix the immediate problems.

137 points by 11thEarlOfMar 10y ago

sp332 10y ago

I dunno, "living longer" is one of the least offensive ways someone can get disproportionately more money from taxpayers. I think the focus should be on the opioid epidemic that is shortening middle-aged people's lives.

NoGravitas 10y ago
Well, it's concerning that in the US, wealthier people live longer. Generally, when you hear someone trying to justify the extreme wealth inequality of the US (compared to most of the developed world), the response is along the lines of, "well, there's huge inequality in relative terms, but that's not important, because in absolute terms, the poor in the US are pretty well off". But if being poor in the US means you die young, then wealth inequality is pretty important in terms of quality of life!
- pdonis 10y ago
  > if being poor in the US means you die young That's not what the article is saying. According to the table it gives, the life expectancy of the bottom 20% is still 76.1 years. That's not "young". It is significantly younger than the top 20%. > wealth inequality is pretty important in terms of quality of life I think it's hard to make this case just based on life expectancy; what we really need is some way of quantifying how healthy the bottom 20% are from, say, age 60 on (or even earlier), compared to the top 20%. I suspect that this would show a much larger disparity than just the life expectancy data.
  - Recurecur 10y ago
    > The life expectancy of the bottom 20% is still 76.1 years. That's not "young". It's also worth considering that the lowest 20% is much more likely to encounter violent crime, and also more likely to enlist in the military. I'm sure those things play into lower life expectancy as well.
    - pdonis 10y ago
      The key thing to look at here would be the variability: what is the standard deviation of life expectancy for the bottom 20%, vs. the top 20%? The factors you bring up would suggest that the SD should be significantly higher for the bottom 20%.
- frgtpsswrdlame 10y ago
  There was an article in The Nation earlier this year which gave a little more detail on the life expectancy issue: https://www.thenation.com/article/why-are-poor-americans-dying-so-much-earlier-than-rich-americans/ https://www.thenation.com/article/why-are-poor-americans-dyi... As for how socioeconomic inequalities translate into inequities in life span, “It’s rather mysterious,” said Lisa Berkman, the director of the Center for Population and Development Studies at Harvard University. One answer is that low-income people tend to be sicker in the first place, because the neighborhoods they can afford to live in are more polluted; because they can’t afford to adopt and maintain healthy behaviors; because they can’t afford health insurance premiums, copayments, and prescription drugs. Woolf accounts much of the disparity in death rates to what he calls “stress-related conditions.” People who aren’t secure economically are likely to experience high levels of stress, which studies have linked to shorter lifespans and a heightened risk of death from strokes, heart attacks, and other illnesses. “We’re seeing a dramatic increase in deaths from opioids, whether we’re talking about prescription painkiller or heroin, but also from suicides, liver disease, and other conditions that I personally feel come from different ways that people are coping, in an unhealthy way, with the stresses that they’re facing in their daily lives,” Woolf said, particularly since the recession. Smoking, the leading cause of preventable death, takes a particularly costly toll on low-income people. Berkman traces at least some of the stress load on lower-income Americans to changes in the workplace. The 1920s cohort analyzed by the Brookings researchers had their greatest earnings in the 40s and 50s, a time of economic growth and greater equality across the income spectrum. While low-income people born in the 1940s entered a labor market that was less demanding physically, they may also have experienced greater insecurity as wages stagnated, and difficulty balancing work and family life as more women entered the workforce. Unlike many other peer countries with more robust family support, the United States didn’t do much to accommodate the increased challenges facing working parents, Berkman noted. “The second wave of occupational risk are sets of working conditions that are hugely stressful,” she said. “They aren’t so physically stressful, but they’re socially stressful. They’re insecure, they’re inflexible, or they have no ability to balance work and family issues. We need to rethink what occupational health and safety is.”
- clarkm 10y ago
  The story isn't so simple. Hispanics have a longer life expectancy than non-Hispanic whites in the US, despite having much lower income levels. This is known as the Hispanic Epidemiological Paradox, and a lot of research has gone into studying this: https://www.princeton.edu/main/news/archive/S46/31/53A76/ https://www.princeton.edu/main/news/archive/S46/31/53A76/
Retric 10y ago
They live longer, are more likely to be married, get a lot more per month, and have a capped tax.
- sp332 10y ago
  What's the cap?
  - snissn 10y ago
    In 2017, the Social Security Wage Base was $127,200 and the Social Security tax rate was 6.20% paid by the employee and 6.20% paid by the employer.[1] A person with $10,000 of gross income had $620.00 withheld as Social Security tax from his check and the employer sent an additional $620.00. A person with $130,000 of gross income in 2017 incurred Social Security tax of $7,886.40 (resulting in an effective rate of approximately 6.07% - the rate was lower because the income was more than the 2017 "wage base", see below), with $7,886.40 paid by the employer. A person who earned a million dollars in wages paid the same $7,886.40 in Social Security tax (resulting in an effective rate of approximately 0.79%), with equivalent employer matching. In the cases of the $130k and $1m earners, each paid the same amount into the social security system, and both will take the same out of the social security system. [1] https://en.wikipedia.org/wiki/Social_Security_Wage_Base https://en.wikipedia.org/wiki/Social_Security_Wage_Base
- lg 10y ago
  if we lift the tax cap, can we also lift the benefit cap?
  - Retric 10y ago
    As long as it's still a diminishing return and includes investment income, I have no problem with that. The real issue IMO, is it's simply not diminishing enough relative to expected lifespans, and there is a huge benefit associated with being married.
  - gregable 10y ago
    There is no benefit cap, just a progressive rate. At low lifetime contributions, you get 90% benefit compared to contribution. As you increase your contribution this moves up to marginal rates of 32 and 15%.
deleted 10y ago
[deleted]

gavman 10y ago

The article ignores the fact that while the wealthy may be living longer, they also disproportionately fund social security. They may be receiving benefits for more years, but while I don't know the numbers, I would guess their ROI is much much smaller than the bottom 20% of earners. There is certainly a very valid separate point to be made about how in the US wealth leads to longer/healthier lives and we definitely need to think about how to fix that, but putting it in terms of receiving more social security feels disingenuous to me.

NoGravitas 10y ago
No, they really don't disproportionately fund Social Security. Quite the opposite, in fact. You only pay Social Security payroll taxes on the first $127,200 of your annual income. So if you make $250k, your payroll tax rate is effectively half that of someone making 125k (numbers rounded off here, don't nitpick). Details here: http://thehill.com/blogs/congress-blog/economy-budget/204996-scrapping-the-social-security-payroll-tax-cap http://thehill.com/blogs/congress-blog/economy-budget/204996... and https://en.wikipedia.org/wiki/Social_Security_Wage_Base https://en.wikipedia.org/wiki/Social_Security_Wage_Base
- maxerickson 10y ago
  $125000 is above the 90th percentile for individual income. People making that are doing pretty well in relative terms. I guess the cutoff for 'wealthy' is often higher than that though.
- gregable 10y ago
  That also misses the point since benefits are directly tied to lifetime contributions, not earnings. Double the cutoff and you would double someone's contributions. The feature that does make social security progressive it's the diminishing contribution to benefit ratio a lifetime contributions increase.
- loeg 10y ago
  Single income of $127,000 is 93rd percentile in the US. Given that, sure, the top 7% or 1% or the 0.1% don't fund SS proportionately (but they also do not receive higher benefits than the people at exactly $127,000). The article isn't really talking about the 0.1% or 1%, though, which is a tiny portion of SS payouts, but instead the top 20% or 40% (top quintiles).

anthony_romeo 10y ago

So here's the thing. Social Security (SSDI) is a system you pay into. When you retire or become disabled, the amount of benefits you are eligible for is related to the amount you pay in, which is a percentage of your income. Naturally, if one earns more money over their lifetime they would have paid more into the system, and thus are getting more Social Security benefits in return. For those who have earned very little income over their lifetime, they are eligible for benefits through the SSI program, which one does not have to pay for. However, you may not be eligible for SSI if you have too many assets (e.g. saved money, a 2nd car). The problem is that the cutoff of SSI based upon assets has not been raised since 1989. You're only allowed to have no more than $2,000 in savings, basically requiring the applicant to be completely destitute before becoming eligible. In my personal opinion, this amount needs to be drastically updated to match modern cost-of-living standards. This program is far too out-of-reach for those merely dipping their feet in poverty.

qntty 10y ago
What you're describing would be the rich consuming proportionately more SS. The article is specifically describing how they consume disproportionately more SS.
- loeg 10y ago
  > The article is specifically describing how they consume disproportionately more SS. The headline makes that claim, but the article's figures do not support the claim.
  - the_mitsuhiko 10y ago
    It would appear the article's figures support that claim.
    - throwanem 10y ago
      The disproportion isn't in Social Security benefits consumption. The disproportion is in lifespan, and the difference in benefits consumption is a side effect thereof, because of the way Social Security is defined to work. I'm not sure that it actually helps anything to cast it in the cart-before-horse way the article does.

loeg 10y ago

> The U.S. retirement system looks more even-handed if you include in the analysis all government benefits received and all taxes paid by Americans after age 50. This graph shows a roughly flat benefits-less-revenue per quintile, but is still disingenuous because it ignores revenue from under age 50. Social security payouts start as early as 62 — so this only factors in 12-20 working years and ignores the first 28-32 working years. I would guess the higher quintiles at 50 also paid more in Social Security taxes during their younger working years. I suspect a lifetime graph of benefits less revenue would show the system is still progressive, if not as progressive as it was 30 years ago. Either way — the headline statement, "Wealthy Americans Consumer Disproportionately More Social Security," is false.

jeffdavis 10y ago
I am confused by the wording of that graph. Does it include a lifetime of contributions and a lifetime of benefits? Or 12-15 years of contributions and a lifetime of benefits?
- loeg 10y ago
  I read it as "After age 50 by income group," but it is somewhat ambiguous. Maybe it uses "lifetime" to distinguish ordinary payouts from survivor benefits? I'm not sure.
- twoodfin 10y ago
  I think it's the (less interesting) average benefit minus tax per year, not in aggregate. The latter is presumably much harder to measure. I'd be shocked if high earners with average life expectancies could expect to recoup (inflation-adjusted) their lifetime contributions, given the "bend points" of the benefits formula.
  - basseq 10y ago
    Correct. Given average life expectancies, the IRR of contributions vs. benefits of Upper-Middle and Top 20% are 2.9% and 1.7%, respectively. Given a 3.22% inflation rate, both are negative (meaning the returns don't even keep up with inflation).

asdfGUYasdfn 10y ago

Funny

asdfGUYasdfn 10y ago

Funny ... you work your whole life and pay into a system that is there for everyone, and then people criticize that you take part in it when you are given the right to do so. Blows my mind. It's very much like the 2nd Amendment - people are all up in crazy town because you exercise your right like the 1st or 4th to express yourself and what you believe in. Hypocrisy.

rhino369 10y ago

Let me opt then.

snappyTertle 10y ago

Does anyone actually like social security?

pwthornton 10y ago
It's very popular, since most Americans don't have anything significant in savings for retirement. "Eight in 10 Americans think Social Security has been good for the country, with 70 percent of young adults agreeing and almost nine in 10 senior citizens saying the same." http://www.politico.com/story/2011/09/poll-social-security-still-popular-064766 http://www.politico.com/story/2011/09/poll-social-security-s...
pjmorris 10y ago
You could probably find people who like it among those who are receiving checks from it. I think SS is a good place to consider Chesterton's Fence: before removing something, you have to explain and understand why it's there in the first place. Incidence of senior poverty has dropped since SS was implemented. Maybe it's not so much that people like SS as that they weren't comfortable with the poverty of their elders that they saw before implementing SS.

rdl 10y ago

Rich white women seem to benefit substantially at the expense of middle-income black men, specifically, too. The racial disparity in life expectancy is bad on its own, but has a financial impact here. (And women live longer, plus often end up with a superior amount of SS to what they've earned themselves due to spousal benefit, including survivor benefit. That is one of the overt goals of the system, though, and probably broadly supported.)

MrTonyD 10y ago

Was it Howard Zinn or Noam Chomsky who described these types of arguments as: "fighting over the scraps". The point being that we are missing the bigger picture - the massive bulk of the money is going to the rich and we need to fix that problem. Then there will be plenty of money for Social Security - and it will be possible to fix it.

joelrunyon 10y ago
"the massive bulk of the money" What "the money?" Are you talking income, earnings, government payout, overall wealth? Your argument goes to crap really quickly unless you're specifying where the problem is originating from...
- MrTonyD 10y ago
  Guess you haven't heard about the 1% with most of the wealth? If so, then I don't think I can offer you any advice.
  - joelrunyon 10y ago
    You're being argumentative without being useful. You're not offering any advice at all. "THE MONEY" ≠ Wealth ≠ Income. They are separate, unique things. You need to acknowledge the differences before you can have a useful discussion. Unless, of course, you're just mad that some people have a lot of money. In which case, you can just yell about some people having "ALL THE MONEY" and not actually work towards a solution.

dkrich 10y ago

Here's an idea- give people with a certain income the option to not pay into SS with the obvious consequence of not being able to collect. Make this option available to people at a certain age or less (maybe 40), so that those closer to retirement don't get hosed after having paid in for most of their working lives.

Consultant32452 10y ago

Social security is super racist for exactly this reason. Ironically, right wing white nationalists who want to remove SS have a less racist policy (on this one issue) than your average bleeding heart liberals.

Jtsummers 10y ago
This doesn't make social security racist. It means that there are systemic issues that disproportionately impact people based on race that need to be fixed. Disproportionate receipt of Social Security benefits is merely a symptom or indicator, not a cause.
- Consultant32452 10y ago
  This disparity in receipt of SS benefits has been known about by the people who run/regulate these things since its inception. I'd be shocked if they didn't know this would happen even before its inception. Can you name a single mainstream politician who has made a serious effort to correct this problem? Maybe a couple exist, but I've personally never heard it uttered by a candidate.
  - cgy1 10y ago
    I believe this was one of the reasons for George W. Bush's push for privatizing part of social security.
    - Jtsummers 10y ago
      Privatizing it still doesn't address any of the systemic issues regarding ageism, classism, sexism, racism which have impacts on longevity. This argument is fundamentally absurd. It's like saying that public schools in predominantly rich, white districts are better than schools in predominantly poor, black districts so we should get rid of all public schools because poor blacks get a poor education so it's racist. No, we should address the problem of the schools and opportunities themselves, not eliminate it (though that may still be part of the solution). Here, with pensions, they serve a need. Eliminating them will actually hurt the poor, and minorities, more despite the discrepancies in payouts. The focus should be, why do they have worse life expectancies and what, if anything, can be done to address that. Why do they have worse savings rates so what can be done to increase their savings rates, or increase their wages so they're more able to save.

rogov 10y ago

I would be interested in seeing how much it costs the top quintiles to stay alive that much longer than the lower quintiles. I suspect their SSDI payments aren't enough to cover the costs on average.

cgy1 10y ago

OTOH, I wonder whether the opportunity costs of paying social security taxes are disproportionately higher for the rich than for the non-rich. What I mean is if the rich, instead of paying social security taxes, were able to invest that money, are they likely to generate much greater returns than the amount of social security benefits that they end up receiving in the current system?

aaronchall 10y ago

The rich pay everyone's share. [1] SS benefits are a really bad deal for those who would otherwise save. [2] Ergo, forcing the wealthy to participate in Social Security benefits the rest of us at their expense. [1] https://www.aei.org/publication/cbo-study-shows-that-the-rich-dont-just-pay-a-fair-share-of-federal-taxes-they-pay-almost-everybodys-share/ https://www.aei.org/publication/cbo-study-shows-that-the-ric... [2] http://www.reuters.com/article/us-column-miller-socialsecurity-idUSBRE89H0YG20121018 http://www.reuters.com/article/us-column-miller-socialsecuri...

Jtsummers 10y ago
Just like almost every form of insurance. The healthy reduce the costs for the unhealthy. The safe drivers reduce the costs for the bad drivers.
basseq 10y ago
I built a quick model to compare IRR of contributions vs. benefits using the numbers in the Bloomberg article and income distribution reports[1]. With some massive assumptions (that I can enumerate if anyone is interested), the Bottom 20% quintile gets a 6.5% IRR on lifetime benefits vs. contributions. The Top 20%, by comparison, gets a 1.7% IRR. So despite "the rich taking more", the system is still very progressive. Just, perhaps, not quite as progressive as it used to be—but certainly not "proportionate" or "disproportionate" in favor of the wealth. To give you a sense, had a Top 20%-er turning 65 in 2016 invested his or her SS contributions over the years in a Dow Jones Index Fund, the value of their investment would be $1.1M... versus the $290k lifetime benefit they would receive from the government. (It's pretty much a wash for a Bottom 20%-er: their DJI investment would be worth $136k vs. $130k in SS Lifetime Benefits). [1] https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/49440-Distribution-of-Income-and-Taxes-2.pdf https://www.cbo.gov/sites/default/files/113th-congress-2013-...
- basseq 10y ago
  Oh, and for those who are thinking, "Huh, 6.5% return is pretty good", remember that's based on individual contributions alone. Your employer contributes the same amount on your behalf. Meaning that for a Top 20%-er, you and your employer are contributing more than you will see back in absolute dollars (ignoring inflation, which makes it worse—you and your employer give me $1 in 1970s dollars and I give you $0.90 in 2017 dollars).

mankash666 10y ago

Complete mis-representation of the truth. The rich pay more into the system than they cost [1] , and the non-rich cost more than they pay - which is OK as the system is designed to be that way. This article is sensationalist click-baity crap that wants to paint a picture where the rich somehow feed off the poor. [1]: http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/ http://www.pewresearch.org/fact-tank/2016/04/13/high-income-...

antisthenes 10y ago

I've never seen so much poor reading comprehension and economic illiteracy concentrated in 1 thread. The TL;DR point of the article is that the rich live longer, thus collecting far more SS benefits than the less wealthy percentiles. Yes, accounting for the fact that they pay more into it.

skilesare 10y ago

I have a modest proposal that is a kind of earned basic income. Would love comments and feedback. Http://skilesare.github.com/immortality Its a long term solution and doesn't fix the immediate problems.