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To most people, Social Security is seen as a tax, since it comes out of your paycheck in the form of a "Social Security Tax".

AnthonyMouse 8y ago
It's also an unusually regressive tax, because it's flat rate, which isn't that bad if what it funds is progressively delivered (i.e. paid out the same to everyone rather than based on how much income you had), but it isn't. And then on top of that there is an income cap above which you don't pay any more.
- kortilla 8y ago
  It’s paid out based on how much you contributed. Flat rate doesn’t mean everyone pays the same thing, it means same percentage.
  - AnthonyMouse 8y ago
    That's the problem. Progressive means taking from the rich and giving to the poor. It's possible to do that with flat taxes when they pay for a uniform benefit, so everyone pays 20% and everyone receives $10,000, because paying 20% is $50,000 for someone with a lot and $5000 for someone with a little. Social security doesn't do that. The rich get back everything they put in. Or more when you were forced to put money into social security and then couldn't use it for healthcare, then receive nothing because you don't live long enough, while the rich people who outlive you get the money you paid.
    - the_watcher 8y ago
      Progressive (when used in the context of taxes), does not mean this. It means that contribution increases progressively with income. What you are describing are redistributionary taxes. A flat tax of 10% on all incomes could still redistribute all of what the rich pay to the poor.
      - AnthonyMouse 8y ago
        > Progressive (when used in the context of taxes), does not mean this. It means that contribution increases progressively with income. That is the same thing once you account for where the tax money goes, which it is unreasonable not to do. For example, if you have a 25% tax that pays for a $10,000 UBI, there is a single marginal rate but the tax system is progressive because the effective rate is a curve. Someone at $20,000 pays $5000 and receives $10,000, net $5000, an effective tax rate of -25%. The effective tax rate is 5% at $50,000, 12.5% at $80,000, increasing asymptotically to 25% with higher incomes. Compare this with a version of social security that charged higher marginal rates for higher income people, but all benefits are still paid out in proportion to what each person paid in multiplied by their lifespan. There is nothing progressive about this -- if everyone lived the same amount of time it would be exactly breakeven, and since in practice the rich live longer it thereby becomes regressive.
        kortilla 8y ago
        Counting in lifespans is pretty senseless though. If your beef is with that then it would be much more effective to charge women more for social security than men. Smokers should get a social security discount along with obese people. Use actuarial tables from life insurance companies if you want it to be fair based on what people are expected to get out of it. Finally, the rich don’t really outlive the middle class by enough of a factor to matter (especially compared to the ones above).
    - RhysU 8y ago
      > The rich get back everything they put in. Source?
CydeWeys 8y ago
To most people it is a tax, because you're paying it but not getting any benefits from it (yet). This applies generally to any form of public spending that only benefits some smaller segment of the population. The same for Medicare; everyone pays the payroll tax but most don't get to use it. We'd have more personal sense of investment in our social programs if they helped people more widely, e.g. everyone of every age can use the healthcare they're being taxed for in countries that have nationalized it.

AnthonyMouse 8y ago

It's also an unusually regressive tax, because it's flat rate, which isn't that bad if what it funds is progressively delivered (i.e. paid out the same to everyone rather than based on how much income you had), but it isn't. And then on top of that there is an income cap above which you don't pay any more.

kortilla 8y ago
It’s paid out based on how much you contributed. Flat rate doesn’t mean everyone pays the same thing, it means same percentage.
- AnthonyMouse 8y ago
  That's the problem. Progressive means taking from the rich and giving to the poor. It's possible to do that with flat taxes when they pay for a uniform benefit, so everyone pays 20% and everyone receives $10,000, because paying 20% is $50,000 for someone with a lot and $5000 for someone with a little. Social security doesn't do that. The rich get back everything they put in. Or more when you were forced to put money into social security and then couldn't use it for healthcare, then receive nothing because you don't live long enough, while the rich people who outlive you get the money you paid.
  - the_watcher 8y ago
    Progressive (when used in the context of taxes), does not mean this. It means that contribution increases progressively with income. What you are describing are redistributionary taxes. A flat tax of 10% on all incomes could still redistribute all of what the rich pay to the poor.
    - AnthonyMouse 8y ago
      > Progressive (when used in the context of taxes), does not mean this. It means that contribution increases progressively with income. That is the same thing once you account for where the tax money goes, which it is unreasonable not to do. For example, if you have a 25% tax that pays for a $10,000 UBI, there is a single marginal rate but the tax system is progressive because the effective rate is a curve. Someone at $20,000 pays $5000 and receives $10,000, net $5000, an effective tax rate of -25%. The effective tax rate is 5% at $50,000, 12.5% at $80,000, increasing asymptotically to 25% with higher incomes. Compare this with a version of social security that charged higher marginal rates for higher income people, but all benefits are still paid out in proportion to what each person paid in multiplied by their lifespan. There is nothing progressive about this -- if everyone lived the same amount of time it would be exactly breakeven, and since in practice the rich live longer it thereby becomes regressive.
      - kortilla 8y ago
        Counting in lifespans is pretty senseless though. If your beef is with that then it would be much more effective to charge women more for social security than men. Smokers should get a social security discount along with obese people. Use actuarial tables from life insurance companies if you want it to be fair based on what people are expected to get out of it. Finally, the rich don’t really outlive the middle class by enough of a factor to matter (especially compared to the ones above).
  - RhysU 8y ago
    > The rich get back everything they put in. Source?

CydeWeys 8y ago

To most people it is a tax, because you're paying it but not getting any benefits from it (yet). This applies generally to any form of public spending that only benefits some smaller segment of the population. The same for Medicare; everyone pays the payroll tax but most don't get to use it. We'd have more personal sense of investment in our social programs if they helped people more widely, e.g. everyone of every age can use the healthcare they're being taxed for in countries that have nationalized it.