President to propose tax increases <shocker!>

[ElFenix]

Matt1970 doesn't seem to realize that correlation doesn't equal causation. And also fails to realize that revenue only increased for two years and then SHARPLY dove. Also fails to notice that the largest revenue increase was from '83 to '84 (hint, Reagan's big tax cuts happened in '86).

a) revenue increased for 3 years then was flat for a 4th.
b) the economy tanked, revenue drops even faster due to progressive tax structure. what else is it supposed to do?

 

[Matt1970]

Matt1970 doesn't seem to realize that correlation doesn't equal causation. And also fails to realize that revenue only increased for two years and then SHARPLY dove. Also fails to notice that the largest revenue increase was from '83 to '84 (hint, Reagan's big tax cuts happened in '86).

Wrong. Tax Revenue was above 2003 levels till mid 2007. 4 Years of increased Revenue. Reagan cut the upper tax bracket from 70% to 50% in 1981 increasing revenue from 517 billion to 599 billion. Reagan cut the upper tax bracket from 50% to 39% in 1986 increasing revenue from 734 billion in 1985 to 909 billion in 1988.

 

[GuitarDaddy]

I want to opt-out of SS. The government can keep the 6+ years of funding I put into it though as long as I don't have to pay any more I'm fine with that.

I personally have no problem at all with that, anybody who wants to should be able to opt out. But it would have to be a one way street, once you opt out there should be no getting back in. But keep in mind if everyone opts out the current retirees must still be paid and this would require funding it out of the general fund for many years until the current retirees cleared the system, and this is exactly why it is structured as a tax and not an individual retirement account because history proves people in general are too stupid or too niave to provide for themselves in retirement.

 

[IGBT]

DOA. flip the coin and make equivalent spending cuts. Giving these idiots more money will assure that the can gets kicked down the road and the spending addiction continues. Cold Turkey Time.

 

[alphatarget1]

National sales tax (VAT). That way you tax IRA distributions twice! hahahaha.

Taxes will have to be raised if you want to fix the budget, whether you like it or not. I would like to see a more efficient federal government before taxes are raised, however.

 

[Patranus]

Good. Most people who are genuinely interested in reducing the deficit realize that it has to be done through spending cuts combined with tax increases. Of course never extending the Bush tax cuts to begin with would have been an easy way to do this since they were always unaffordable, but such is life.

LOL. You are funny.
You guys act like the government wasn't working when the budget deficit was under 450 billion back in 2008.

 

[fskimospy]

LOL. You are funny.
You guys act like the government wasn't working when the budget deficit was under 450 billion back in 2008.

Gee, it's almost like government revenues were hugely inflated by a massive speculative investment bubble of some sort.

Whatever happened to that crazy old thing anyway?

 

[child of wonder]

How do you propose to get rid of it?

Some sort of system that new SS benefit enrollees get a smaller and smaller percentage of full benefits as the years go by. Eventually, say after 20-30 years, no new enrollees can collect benefits because the percentage will be down to 0%.

There's no good way to eliminate SS, unfortunately. No matter how you slice it, someone will get screwed.

 

[ElFenix]

Let's assume today you are 22 and fresh out of college. You are making $100,000 per year right out of college and 12.4&#37; of your income (between you and your employer) is paid in SS tax.

Assuming you get an average raise of 3% per year and the government safely invests your SS tax and gets a 6% return every year, your SS taxes will have grown to $2.4 million by the time you reach age 70 (when you can get the maximum SS payout).

So you're 70 and you get to retire with (according to ssa.gov's quick calculator) $18,345 per month or $220,140 per year in benefits. If you live to the ripe old age of 90, SS will pay you $4.4 million during your 20 year retirement -- FAR more than what you paid in.

Where does that additional $2 million come from? Other citizens' SS taxes.

It is not just YOUR money.

edit: should be $3.7 million, not $2.4. and with a $3.7 million dollar annuity at 6% you get a payout over 20 years of nearly $6.4 million. or, $2 million more than SS would pay you (given working from 22 to 70 and contributing the cap to SS every year and 6% rate of return).

 

[fskimospy]

I personally have no problem at all with that, anybody who wants to should be able to opt out. But it would have to be a one way street, once you opt out there should be no getting back in. But keep in mind if everyone opts out the current retirees must still be paid and this would require funding it out of the general fund for many years until the current retirees cleared the system, and this is exactly why it is structured as a tax and not an individual retirement account because history proves people in general are too stupid or too niave to provide for themselves in retirement.

You guys are missing the whole point. Large numbers of people will in fact opt out, and then they WILL come crying when they are old an indigent. We as a society have decided that abject poverty for the elderly is something we cannot accept, and I don't think we'll be more willing to watch 'ol granny starve to death in the future than we are today.

What will end up happening is that these fools will opt out, and then we'll end up paying for them anyway.

 

[the DRIZZLE]

Run the numbers yourself.

Go to paycheckcity.com and use their 401k calculator to find out how much the SS taxes would amount to if a person made $100,000 per year, 12.4&#37; were put into 401k (SS tax), and they earned a 3% raise per year and the SS tax return was 6% per year for 37 years. You'll end up with $2.4 million.

Then go to ssa.gov and use their quick calculator to find what your SS benefits will be if you were born today in 1989, you make $100,000 per year, and will retire in May of 2059. It's $18,345 per month.

1. You said the person is 22 and works for 37 years. That doesn't make sense. SS collection age is 65 so they should work for 43 years (depressing). That brings the theoretical "account" value up to $3.6M

2. 6% of $3.6 million is 215k in 2055 dollars, or $75k in 2011 dollars. Your theoretical investor could live off the interest alone indefinitely and never touch the principal. Note that if you use the SSA calculator you'll see that your payment is about half this amount and you don't get to leave the$3.6mm to your kids.

3. The reason your numbers are so wrong is that in SS you get the rate of return of tbills, which lower not 6%.

4. What you've basically proven is that SS is a bad investment for a high earner.

 

[child of wonder]

1. You said the person is 22 and works for 37 years. That doesn't make sense. SS collection age is 65 so they should work for 43 years (depressing). That brings the theoretical "account" value up to $3.6M

2. 6% of $3.6 million is 215k in 2055 dollars, or $75k in 2011 dollars. Your theoretical investor could live off the interest alone indefinitely and never touch the principal. Note that if you use the SSA calculator you'll see that your payment is about half this amount and you don't get to leave the$3.6mm to your kids.

3. The reason your numbers are so wrong is that in SS you get the rate of return of tbills, which lower not 6%.

4. What you've basically proven is that SS is a bad investment for a high earner.

You're right! I botched the numbers! Thanks for showing me that.

So let's assume 47 years of working (retire at 69 with max SS benefits) with the SS fund getting an average 4% return. That's $4.2 million after 47 years or $867,000 in today's money assuming an average inflation of 3.43% per year.

As you said, still not an attractive investment option for one's retirement.

SS made a little sense when the typical family had 4 children so there were constantly way more people paying in than collecting. However, we're not all farmers and have access to birth control so many people are having about 2 kids. It's an unsustainable system.

 

[bamacre]

He can't cut Medicare or Social Security,

He damn well better...
http://www.bloomberg.com/video/68637962/

and he can't cut defence.

His party needs to hold him by his fucking balls until he does. If he doesn't sell the idea of cutting defense, then who will? The Republicans? It's absolutely ridiculous what Democrats are letting him get away with. They are in the same ballpark as Republicans under Bush, and they look just as hypocritical.

 

[IGBT]

this is going to be nothing more then a campaign speech and a doubling down on failure.

 

[HomerJS]

If the GOP is so interested in lowering the debt without raising taxes why did they kill the hiring of new IRS agents to collect owed revenue? GAO shows for every dollar spent in enforcement we get back $10.

We are owed 300B for this year alone. You might not get it all but would be much more then the <$38.5B cuts they just argued about.

Yeah I know everyone including me doesn't like IRS but are we really interested in bringing down the debt??

 

[werepossum]

You guys are missing the whole point. Large numbers of people will in fact opt out, and then they WILL come crying when they are old an indigent. We as a society have decided that abject poverty for the elderly is something we cannot accept, and I don't think we'll be more willing to watch 'ol granny starve to death in the future than we are today.

What will end up happening is that these fools will opt out, and then we'll end up paying for them anyway.

That's the way I see it. Cities that opted out early have done very well, but allowing individuals to opt out merely leads to retirement funded with Beanie Babies and/or classic cars and later picked up by the taxpayer.

He damn well better...
http://www.bloomberg.com/video/68637962/

His party needs to hold him by his fucking balls until he does. If he doesn't sell the idea of cutting defense, then who will? The Republicans? It's absolutely ridiculous what Democrats are letting him get away with. They are in the same ballpark as Republicans under Bush, and they look just as hypocritical.

Well said.

 

[werepossum]

If the GOP is so interested in lowering the debt without raising taxes why did they kill the hiring of new IRS agents to collect owed revenue? GAO shows for every dollar spent in enforcement we get back $10.

We are owed 300B for this year alone. You might not get it all but would be much more then the <$38.5B cuts they just argued about.

Yeah I know everyone including me doesn't like IRS but are we really interested in bringing down the debt??

I'd like to lose a few pounds but you don't see me starting by clamping my balls in a vise. The GOP is interested in reducing the deficit (and presumably eventually the debt) by reducing spending. If they succeed and the Democrats play along, then will be the time to look at additional taxes and enforcement to speed it up. Beginning with additional taxes and enforcement has historically resulted merely in higher taxes and even higher additional spending.

 

[rcpratt]

I admittedly don't know all that much about this.

This $4T from cuts and increased taxes over 12 years just seems like it will hardly make a dent. We're already $14.5T in the hole and the annual deficit is something like $1.5T, yes?

Truly fixing the debt would require like $2T per year. I realize it probably isn't realistic to try to regain that all at once, but it just seems like we're so far away.

 

[the DRIZZLE]

You guys are missing the whole point. Large numbers of people will in fact opt out, and then they WILL come crying when they are old an indigent. We as a society have decided that abject poverty for the elderly is something we cannot accept, and I don't think we'll be more willing to watch 'ol granny starve to death in the future than we are today.

What will end up happening is that these fools will opt out, and then we'll end up paying for them anyway.

If the only goal of SS to keep seniors above the poverty line we can reduce the maximum payout to 20k and reduce the maximum amount subject to SS tax as well. That would allow non retarded people to actually get a positive real rate of return on their money.

SS is also a sneaky way of redistributing wealth since you get less of what you paid in back as you move up the scale.

 

[the DRIZZLE]

I admittedly don't know all that much about this.

This $4T from cuts and increased taxes over 12 years just seems like it will hardly make a dent. We're already $14.5T in the hole and the annual deficit is something like $1.5T, yes?

Truly fixing the debt would require like $2T per year. I realize it probably isn't realistic to try to regain that all at once, but it just seems like we're so far away.

The debt isn't that much of a problem, its the deficit. If we got to a balanced budget we would be fine, but even that will be quite a challenge politically.

 

[MikeyLSU]

can't follow much from work right now, is he planning for the deficit to be gone in 12 years? or just to have less of a deficit?

 

[fskimospy]

If the only goal of SS to keep seniors above the poverty line we can reduce the maximum payout to 20k and reduce the maximum amount subject to SS tax as well. That would allow non retarded people to actually get a positive real rate of return on their money.

SS is also a sneaky way of redistributing wealth since you get less of what you paid in back as you move up the scale.

The annual benefit from Social Security per person is already well below $20k. And yes, that is basically the entire point of Social Security.

 

[Imp]

can't follow much from work right now, is he planning for the deficit to be gone in 12 years? or just to have less of a deficit?

Reduce deficit by $4 Trillion over 12 years. At the very least, it means a balanced budget and not adding to the deficit, which is better than now. Considering how long it's taken to rack up the $14 trillion (?) deficit, 12 years to reduce almost a third seems "reasonable".

 

[theeedude]

That is stupid. I'll go for that, not sure how much revenue it will bring in but its only fair that its done.

It's a non-starter for GOP.

 

[the DRIZZLE]

The annual benefit from Social Security per person is already well below $20k. And yes, that is basically the entire point of Social Security.

The max benefit is 28kish.