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> The meaningful number is 2033, the year Social Security is projected to run out of money. This is the year the trust fund runs out of money, at which point S

> The meaningful number is 2033, the year Social Security is projected to run out of money. This is the year the trust fund runs out of money, at which point Social Security won't be able to meet its full obligations, only what it can cover with current payroll taxes. Social Security can't run out of money unless the taxes that support it are eliminated. "Social Security won't be available for you Gen X'ers" is misleading propaganda spread by people who want Social Security to go away. When the trust fund is tapped out, unless we remove the income cap, Social Security will be less generous. It won't go away. If we remove or lift the income cap, this problem goes away altogether.

tibbon 5y ago
Removing the income cap is really a clear way to mitigate this problem greatly. From what I understand it doesn't fix it entirely. I wonder if we could put SS on capital gains, even at 1%. That would help this include investment gains.
- BitwiseFool 5y ago
  Please, no. Social Security was never meant to be funded this way. It was originally supposed to be paid for by a tax on labor, originally a minuscule at ~3% but now it is around 12.5%. It was supposed to be something that would pay out roughly what you paid in. But now it looks like people want to decouple that aspect of Social Security and turn it into a general wealth redistribution program.
- ethbr0 5y ago
  Removing the income cap for social security tax ($142,800 for 2021) would be interesting, because that's also the max for benefit purposes [0]. 35 years at max = max social security benefits. [0] https://www.ssa.gov/OACT/ProgData/retirebenefit1.html https://www.ssa.gov/OACT/ProgData/retirebenefit1.html
- dragonwriter 5y ago
  Applying the full amount of payroll (both SS and Medicare) tax to income regardless of origin, including capital gains (and the both-halves self-employment style to all non-wage income) or amount (uncapping contributions), while also uncapping benefits (but adding additional “bend points” above the current cap so the revenue-to-obligation ratio for high incomes is better) is a great way to secure the programs, increase fairness of treatment of labor and other income, increase fairness of taxation of low vs. high income, and extend qualification for social insurance to people of moderate means but atypical income patterns. But it means that people with disproportionate political clout would be taxed more heavily than in the present circumstances, so it would face an uphill battle.
  - candiodari 5y ago
    > But it means that people with disproportionate political clout would be taxed more heavily ... Not really, you could do what the Jeff Bezos does: "0 profit" (by reinvesting everything) and just enough income to live (very well, but still). Meanwhile the stocks he has amass value (and he can trade stocks, which can't be a taxable event if you use the company to do it and "don't do it yourself", for good reasons (for example joint-ventures would become impossible if this were to be taxed)). So you can still amass large amounts of wealth under these circumstances without getting taxed on them. Plus you can cheat by having the business pay for your expenses (and if you live for your job that's not even unreasonable).
28698367 5y ago
As someone who makes far in excess of the $100k income cap, I find the income cap to be bonkers. I funnel a lot of that excess into my own investments, and maybe that’s the point, but $100k sure ain’t what it used to be. Why not make it $250k?
jfengel 5y ago
That's correct: the trust fund runs out and it won't be able to meet the full obligation. It will be able to meet partial obligations, though there's no law specifying how. This isn't GenX complaining that Social Security should go away. That was GenX complaining that Boomers spent the 80s spending extravagantly through the federal government, and racking up enormous debts, while patting themselves on the back for being fiscally conservative. It wasn't the Social Security they were unhappy with, but the other expenditures. Which expenditures, of course, are always hard to pin down -- it's easy to complain about the bottom line but not to say what you want to cut. Many would point to the ballooning military budget -- and that's all before 9/11. But that's water under the bridge. We still expect to receive less Social Security than our forebears, and there's practically nothing we can do about it.
- dragonwriter 5y ago
  > That was GenX complaining that Boomers spent the 80s spending extravagantly through the federal government, The Silent Generation was politically dominant in the 1980s. Boomer political dominance was more a 90s and later thing, and the first decade of that was something of a period of relative fiscal responsibility. > We still expect to receive less Social Security than our forebears, and there's practically nothing we can do about it. Wel, demographically, yes, there's little GenX alone can do about it. It’s pretty trivially fixable, though.

tibbon 5y ago

Removing the income cap is really a clear way to mitigate this problem greatly. From what I understand it doesn't fix it entirely. I wonder if we could put SS on capital gains, even at 1%. That would help this include investment gains.

BitwiseFool 5y ago
Please, no. Social Security was never meant to be funded this way. It was originally supposed to be paid for by a tax on labor, originally a minuscule at ~3% but now it is around 12.5%. It was supposed to be something that would pay out roughly what you paid in. But now it looks like people want to decouple that aspect of Social Security and turn it into a general wealth redistribution program.
ethbr0 5y ago
Removing the income cap for social security tax ($142,800 for 2021) would be interesting, because that's also the max for benefit purposes [0]. 35 years at max = max social security benefits. [0] https://www.ssa.gov/OACT/ProgData/retirebenefit1.html https://www.ssa.gov/OACT/ProgData/retirebenefit1.html
dragonwriter 5y ago
Applying the full amount of payroll (both SS and Medicare) tax to income regardless of origin, including capital gains (and the both-halves self-employment style to all non-wage income) or amount (uncapping contributions), while also uncapping benefits (but adding additional “bend points” above the current cap so the revenue-to-obligation ratio for high incomes is better) is a great way to secure the programs, increase fairness of treatment of labor and other income, increase fairness of taxation of low vs. high income, and extend qualification for social insurance to people of moderate means but atypical income patterns. But it means that people with disproportionate political clout would be taxed more heavily than in the present circumstances, so it would face an uphill battle.
- candiodari 5y ago
  > But it means that people with disproportionate political clout would be taxed more heavily ... Not really, you could do what the Jeff Bezos does: "0 profit" (by reinvesting everything) and just enough income to live (very well, but still). Meanwhile the stocks he has amass value (and he can trade stocks, which can't be a taxable event if you use the company to do it and "don't do it yourself", for good reasons (for example joint-ventures would become impossible if this were to be taxed)). So you can still amass large amounts of wealth under these circumstances without getting taxed on them. Plus you can cheat by having the business pay for your expenses (and if you live for your job that's not even unreasonable).

28698367 5y ago

As someone who makes far in excess of the $100k income cap, I find the income cap to be bonkers. I funnel a lot of that excess into my own investments, and maybe that’s the point, but $100k sure ain’t what it used to be. Why not make it $250k?

jfengel 5y ago

That's correct: the trust fund runs out and it won't be able to meet the full obligation. It will be able to meet partial obligations, though there's no law specifying how. This isn't GenX complaining that Social Security should go away. That was GenX complaining that Boomers spent the 80s spending extravagantly through the federal government, and racking up enormous debts, while patting themselves on the back for being fiscally conservative. It wasn't the Social Security they were unhappy with, but the other expenditures. Which expenditures, of course, are always hard to pin down -- it's easy to complain about the bottom line but not to say what you want to cut. Many would point to the ballooning military budget -- and that's all before 9/11. But that's water under the bridge. We still expect to receive less Social Security than our forebears, and there's practically nothing we can do about it.

dragonwriter 5y ago
> That was GenX complaining that Boomers spent the 80s spending extravagantly through the federal government, The Silent Generation was politically dominant in the 1980s. Boomer political dominance was more a 90s and later thing, and the first decade of that was something of a period of relative fiscal responsibility. > We still expect to receive less Social Security than our forebears, and there's practically nothing we can do about it. Wel, demographically, yes, there's little GenX alone can do about it. It’s pretty trivially fixable, though.