• Guest, The rules for the P & N subforum have been updated to prohibit "ad hominem" or personal attacks against other posters. See the full details in the post "Politics and News Rules & Guidelines."

Social Security is a regressive tax

Lithium381

Lifer
May 12, 2001
12,458
2
0
Affects 100% of poor and middle class workers . . . and starting at 110,000 you get a 6.2% tax break! What happened to the rich paying their fair share? Why not tax ALL earned income at 2% or some other lower figure. . Sounds equitable for everyone. A tax cut for the poor/middle-class and we could probably maintain the same level of revenue if not more. Since the employers would also be on the hook for more taxes paid, they'd consider that when giving 15 million dollar salaries to the CEOs . . . well maybe
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,872
4,214
126
Affects 100% of poor and middle class workers . . . and starting at 110,000 you get a 6.2% tax break! What happened to the rich paying their fair share? Why not tax ALL earned income at 2% or some other lower figure. . Sounds equitable for everyone. A tax cut for the poor/middle-class and we could probably maintain the same level of revenue if not more. Since the employers would also be on the hook for more taxes paid, they'd consider that when giving 15 million dollar salaries to the CEOs . . . well maybe
So if I earn $109,999 then get $1 more I save 6.2% on my taxes? That's fantastic? How do I get this break?
 

Lithium381

Lifer
May 12, 2001
12,458
2
0
So if I earn $109,999 then get $1 more I save 6.2% on my taxes? That's fantastic? How do I get this break?
You save 6.2% on any income above 110,000, correct. You don't have to do anything, it's automatic.

Although i think the rate starting in 2011 is 4% but the employer is still paying 6%
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,872
4,214
126
You save 6.2% on any income above 110,000, correct. You don't have to do anything, it's automatic.

Although i think the rate starting in 2011 is 4% but the employer is still paying 6%
So what you are saying is that people aren't saving 6.2% on that amount of money, but on the difference between that earned minus 110k.

If that's correct then someone making 130K isn't saving 6.2, but on the taxable portion of 20k neglecting any effect by tax brackets or AMT.

Do I have that right?

Here's the thing. SS is a program which is paid into and the amount you get back is dependent on how much one pays in. If you are going to eliminate the ceiling then it follows that the amount of return is likewise lifted. I'm not sure how that's an advantage. If one is going to tax income, then tax it.
 

cubby1223

Lifer
May 24, 2004
13,518
42
86
Affects 100% of poor and middle class workers . . . and starting at 110,000 you get a 6.2% tax break! What happened to the rich paying their fair share? Why not tax ALL earned income at 2% or some other lower figure. . Sounds equitable for everyone. A tax cut for the poor/middle-class and we could probably maintain the same level of revenue if not more. Since the employers would also be on the hook for more taxes paid, they'd consider that when giving 15 million dollar salaries to the CEOs . . . well maybe
Please, next time before you create a thread, kindly use the search function.
 

the DRIZZLE

Platinum Member
Sep 6, 2007
2,956
1
81
your SS benefit payout is also capped starting that level.
This. Not only is it not regressive, but the formulas that determine benefits based on contributions are intentionally built to be progressive. If you want to consider SS to be a regressive tax, then you have to consider SS payments to be welfare to be internally consistent.
 

Jhhnn

No Lifer
Nov 11, 1999
62,365
14,618
136
Of course it's regressive. No SS taxes on carried interest, capital gains or dividends, either, which receive other preferential tax treatment as well.

I don't have a problem with it being a regressive tax, provided that benefit levels are maintained now & in the future. It's been a giant cash cow for 30 years with excess revenues flowing from the trust to the treasury, and the desire & designs of the usual suspects to welch on the obligations in that are obvious, and growing, now that the cash flow needs to be reversed.
 

nehalem256

Lifer
Apr 13, 2012
15,669
6
0
Of course it's regressive. No SS taxes on carried interest, capital gains or dividends, either, which receive other preferential tax treatment as well.

I don't have a problem with it being a regressive tax, provided that benefit levels are maintained now & in the future. It's been a giant cash cow for 30 years with excess revenues flowing from the trust to the treasury, and the desire & designs of the usual suspects to welch on the obligations in that are obvious, and growing, now that the cash flow needs to be reversed.
This is because SS is setup as a progressively paid out annuity with a disability scam rider.
 

blackangst1

Lifer
Feb 23, 2005
21,144
894
126
You understand the payout of said SS at retirement is also capped...right? So, if you have no problem with unlimited SS contribution, do you also have no problem with unlimited collection at retirement? As it is there are 2.9 working people for every SS recipient...what do you think those numbers would look like with your proposition?

edit: ack already covered.
 
Last edited:

Tom

Lifer
Oct 9, 1999
13,293
1
76
This. Not only is it not regressive, but the formulas that determine benefits based on contributions are intentionally built to be progressive. If you want to consider SS to be a regressive tax, then you have to consider SS payments to be welfare to be internally consistent.
so a lower tax rate on capital gains is also welfare ?

not to mention mortgage interest deductions, health insurance deductions, property tax relief for corporations..
 

Anarchist420

Diamond Member
Feb 13, 2010
8,645
0
76
www.facebook.com
The payout system is progressive. However, higher income earners are probably more likely to survive so they can cash their SS checks.

Ultimately, the SS system is a payment from the poor to the rich. If we hadn't had the income tax and if there had been no monetary inflation, then SS would've never been necessary.
 

Jhhnn

No Lifer
Nov 11, 1999
62,365
14,618
136
The tax rate on capital gains should be lower because a large portion of the "gains" is actually inflation.
Tell you what- tax all income progressively as income, then provide an inflation offset for everybody. If inflation is 3%, knock 3% off everybody's taxable income.

It's not like the Rich have any claim to more favorable treatment than the rest of us.
 

nehalem256

Lifer
Apr 13, 2012
15,669
6
0
Tell you what- tax all income progressively as income, then provide an inflation offset for everybody. If inflation is 3%, knock 3% off everybody's taxable income.

It's not like the Rich have any claim to more favorable treatment than the rest of us.
You should probably knock off an inflation adjustment for long term capital gains, and earned interest.

There is no need for short term capital gains or earned income because inflation should not be a factor for those.

Of course if you do the math I think that historical long term stock market gains were around 9-10%/year with around 3% of that being dividends.

so around 6-7% for capital gains. Inflation has averaged 3%. So for a marginal rate of 35% you end up with capital gains rate of 17.5% - 20%. Which means that the current capital gains rate is slightly low for the highest earners and probably slightly high for say middle class people.

Using an actual inflation adjustment would probably make taxes hideously complex. In conclusion the capital gains tax rate is no where near as biased as liberals like to claim.
 

HeXen

Diamond Member
Dec 13, 2009
7,821
33
91
in a perfect america, the govt would just re evaluate everything, give everyone and limit everyone to millions of dollars instead of wasting it on things that don't work and export all work overseas so we wouldn't have to work. but yet, here we are.
 

piasabird

Lifer
Feb 6, 2002
17,168
60
91
Only about 60% of SS is actually for people that retired. There is also an advantage if you are married. So a lot of SS is for survivor benefits (Children) and disability, and for children of unwed mothers (They dont get that much). Then if you earn a retirement from your job and work in education of work as a government worker you may get a reduced SS benefit by up to 2/3 of an expected benefit. It is like people that worked for the government do not count.
 

piasabird

Lifer
Feb 6, 2002
17,168
60
91
This is all a sick joke because all the SS tax goes into the general revenue and government just does with it as they want. So we should do away with the ss tax and just make a higher rate of income tax. The poor are getting ripped off and the rich get a free ride.

The bottom line is we need fewer deductions for the rich. I think if your income is over $200,000 you should get zero deductions and credits. That should be only for poor people.
 
Last edited:

nehalem256

Lifer
Apr 13, 2012
15,669
6
0
Only about 60% of SS is actually for people that retired. There is also an advantage if you are married. So a lot of SS is for survivor benefits (Children) and disability, and for children of unwed mothers (They dont get that much). Then if you earn a retirement from your job and work in education of work as a government worker you may get a reduced SS benefit by up to 2/3 of an expected benefit. It is like people that worked for the government do not count.
Children of unwed mothers get SS?

This is all a sick joke because all the SS tax goes into the general revenue and government just does with it as they want. So we should do away with the ss tax and just make a higher rate of income tax. The poor are getting ripped off and the rich get a free ride.
You do realize that the poor receive a disproportionate amount back right? And the payouts are capped.
 

piasabird

Lifer
Feb 6, 2002
17,168
60
91
Only in certain cases and I dont have a clue how they figure it out. I have seen it while scanning tax returns. It may only be when the fathers die or something like that. I have scanned so many federal tax returns for financial aid that I dont pay close attention to anything very much. SSI whaterver that is.

I guess technically it is not really social security. Here is some info:
I think this entitlement is lumped in with the Social Security Laws.
All I really know is this is something tax payers pay for???
What is Supplemental Security Income? (SSI)
Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes):
It is designed to help aged, blind, and disabled people, who have little or no income; and
It provides cash to meet basic needs for food, clothing, and shelter.

When I scan documents I see a lot of this. It is classified as Other Income, kind of like unemployment. Here is a website:

http://www.ssa.gov/ssi/

Some people get this but I dont really know what the requirements are. You probably have to be disabled or exremely poor. Looks like it is just for disabled people, however, lately disabilities are kind of subjective. Being and alcoholic or a drug addict could be considered a disablility.
 
Last edited:

Jhhnn

No Lifer
Nov 11, 1999
62,365
14,618
136
You should probably knock off an inflation adjustment for long term capital gains, and earned interest.

There is no need for short term capital gains or earned income because inflation should not be a factor for those.

Of course if you do the math I think that historical long term stock market gains were around 9-10%/year with around 3% of that being dividends.

so around 6-7% for capital gains. Inflation has averaged 3%. So for a marginal rate of 35% you end up with capital gains rate of 17.5% - 20%. Which means that the current capital gains rate is slightly low for the highest earners and probably slightly high for say middle class people.

Using an actual inflation adjustment would probably make taxes hideously complex. In conclusion the capital gains tax rate is no where near as biased as liberals like to claim.
Utter goobledegook of obfuscation. You're claiming that the income tax system should compensate wealth holders for the inflation losses to principal rather than inflation losses to income.

Income taxes are about income, not principal. Even assuming that the rest of the country wants to advantage wealth holders in such a fashion, your numbers don't add up. At a 7% rate of return & a 15% tax rate, inflation would have to exceed 5.95% for an investor to lose value. That'd be 4.55% inflation at 35% tax rate. Vanishingly few Americans will ever pay 35% federal tax on any portion of their income, anyway.

None of that applies to the 15% carried interest tax rate paid by hedge fund & PE managers, whose 2 and 20 compensation often means that the rate of return on their own money is in hundreds of percents...
 

cubby1223

Lifer
May 24, 2004
13,518
42
86
This is all a sick joke because all the SS tax goes into the general revenue and government just does with it as they want.
Agree

piasabird said:
So we should do away with the ss tax and just make a higher rate of income tax.
Maybe. The way it currently stands, everyone who earns a paycheck pays into the SS tax, but not everyone who earns a paycheck pays federal income tax.

piasabird said:
The poor are getting ripped off and the rich get a free ride.
Disagree. For "the rich" to be getting "a free ride", that would mean the money they pay to the government is less than or equal to the amount of direct personal benefits they receive from the government. While I don't have the stats in front of me, I highly doubt this is true.
 

Throckmorton

Lifer
Aug 23, 2007
16,830
2
0
I don't get why SS is set up like a pension where what you get is based on what you put in. It's not a pension. Beneficiaries are getting money paid in by current workers.
 

ASK THE COMMUNITY