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> It's not in dire crisis: we will start to see it drag on other government finances in 20 years, It's actually a drag now, as it has been paying more in benef

by anamax 14y ago

> It's not in dire crisis: we will start to see it drag on other government finances in 20 years, It's actually a drag now, as it has been paying more in benefits than it receives for the past few years. Yes, I know about the bonds. Paying them back is a drag because they weren't used to create profitable assets.

_delirium 14y ago
That seems like a problem for the regular budget to sort out: Soc. Sec. basically has the money it needs for some decades, but the rest of the budget either needs significant cuts or tax hikes so that it can pay back Soc. Sec. what it owes it. I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along, contrary to Reagan's assurances in 1983 that he wasn't making a regressive change to the tax code, because of the bonds. If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.
- anamax 14y ago
  > I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., I didn't suggest that. I'm just pointing out that the "drag" has already started. > and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along It's not a regressive tax because of the payout is capped too. In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible. That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners. > If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security. Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights. Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS. If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits. I think that SS's designers got that part correct. The payout formula needs some tweaking.
- anamax 14y ago
  > That seems like a problem for the regular budget to sort out I agree. My point is that the problem exists now. > I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., I didn't suggest default. I'm just pointing out that the "drag" has already started. > and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along It's not a regressive tax because of the payout is capped too. In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible. That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners. > If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security. Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights. Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS. If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits. I think that SS's designers got that part correct. The payout formula needs some tweaking.
  - _delirium 14y ago
    Re: removing the cap, that was in the case, which is vaguely proposed on and off, that Social Security will never get the money back from its mythical "lockbox", and instead the money will be retroactively turned into just general-treasury money. If it's just general-treasury money, then the Social Security tax is a general-revenue tax (not one earmarked for Social Security benefits), but as a general-revenue tax it's a regressive one. If the money really is going to be repaid to the Social Security system and used exclusively for benefits, then I agree it's a different situation, more of a quasi-retirement-account.
    - anamax 14y ago
      > but as a general-revenue tax it's a regressive one. SS is not a general revenue tax - taxes don't have contribution-based payouts. If you're suggesting that SS payouts should be completely means tested, you're opening the biggest can of worms. The SS recipients that complete means testing would most affect are among the most politically active people in America. When I was younger, I used to argue against SS and the like as old-people welfare. I didn't see why my money should go to to folks who were better off than me. My age-cohorts disagreed. Soon the subsidies will start flowing my way....

by anamax 14y ago

_delirium 14y ago

That seems like a problem for the regular budget to sort out: Soc. Sec. basically has the money it needs for some decades, but the rest of the budget either needs significant cuts or tax hikes so that it can pay back Soc. Sec. what it owes it. I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along, contrary to Reagan's assurances in 1983 that he wasn't making a regressive change to the tax code, because of the bonds. If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security.

anamax 14y ago
> I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., I didn't suggest that. I'm just pointing out that the "drag" has already started. > and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along It's not a regressive tax because of the payout is capped too. In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible. That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners. > If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security. Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights. Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS. If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits. I think that SS's designers got that part correct. The payout formula needs some tweaking.
anamax 14y ago
> That seems like a problem for the regular budget to sort out I agree. My point is that the problem exists now. > I don't think it's an acceptable option to retroactively say that some of the Soc. Sec. taxes won't be paid back to Soc. Sec., I didn't suggest default. I'm just pointing out that the "drag" has already started. > and just kept for the general fund. If that happened, then it's basically been a regressive income tax all along It's not a regressive tax because of the payout is capped too. In fact, it's actually a progressive tax because of the way that payout works. The ROI for folks who pay the minimum is pretty good. The ROI for folks who hit the cap is horrible. That said, some subgroups do worse/better than others. The worst is probably black men. They don't live long enough to get the payouts. I think that white women are the big winners. > If that is likely to happen, then at least the regressiveness should be fixed ASAP by removing the $110k cap, because the only justification for the cap is that the money is earmarked for Social Security. Actually, the designers of SS put in the cap because they thought that it was the best way to protect SS from political fights. Are you planning to remove the benefits cap as well? If not, it's just another tax and rich people are going to care. SS's designers wanted rich people to ignore SS. If you do remove the benefits cap, then you get to explain why Ross Perot gets $400k/year in benefits. I think that SS's designers got that part correct. The payout formula needs some tweaking.
- _delirium 14y ago
  Re: removing the cap, that was in the case, which is vaguely proposed on and off, that Social Security will never get the money back from its mythical "lockbox", and instead the money will be retroactively turned into just general-treasury money. If it's just general-treasury money, then the Social Security tax is a general-revenue tax (not one earmarked for Social Security benefits), but as a general-revenue tax it's a regressive one. If the money really is going to be repaid to the Social Security system and used exclusively for benefits, then I agree it's a different situation, more of a quasi-retirement-account.
  - anamax 14y ago
    > but as a general-revenue tax it's a regressive one. SS is not a general revenue tax - taxes don't have contribution-based payouts. If you're suggesting that SS payouts should be completely means tested, you're opening the biggest can of worms. The SS recipients that complete means testing would most affect are among the most politically active people in America. When I was younger, I used to argue against SS and the like as old-people welfare. I didn't see why my money should go to to folks who were better off than me. My age-cohorts disagreed. Soon the subsidies will start flowing my way....