Social Security is a regressive tax

[nehalem256]

Nobody is "required" to invest in anything, btw.

If you dont want to lose your hard earned money to inflation... then yes you are.

 

[Jhhnn]

That would be a problem of raises not being frequent enough. The solution would be for continuous adjustment of wages for inflation... which would be impossible.

So you're backpedaling?

Or investment returns need to be poor. The last decade or so ring any bells for you?

Returns were excellent during the contrived boom phase, excellent indeed. America's wealthiest cashed in big time, with the top .1% share of income peaking at nearly 12% in 2007. Yeh, they were selling while the pundits of the Right were assuring the chumps that the boom would go on forever...

Or perhaps investments in bonds. Checked interest rates they are paying out recently?

Already answered, above. Massive deleveraging creates a savings glut & low rates of returns for all savers. The false prosperity of the housing boom insures that people who paid too much will essentially be deleveraging to their creditors for a very long time. Those creditors see little reason to invest because there's a lack of demand, because borrowers are already cash poor from paying them off...

EDIT: And you could save a lot of space by just saying you hate rich people and do not actually care about tax "fairness".

Pure denial of the true believer, one who worships the wealthy as having God-like qualities and who deserve special considerations as sanctified objects of worship. Why, they deserve for the income tax system to preserve the value of their principal above and beyond what it earns, because, well, because they're rich, right? A guy making $500K/yr in earned income deserves to pay a higher rate than investors because he's not really rich at all, because he has no principal to protect, huh?

 

[nehalem256]

Pure denial of the true believer, one who worships the wealthy as having God-like qualities and who deserve special considerations as sanctified objects of worship. Why, they deserve for the income tax system to preserve the value of their principal above and beyond what it earns, because, well, because they're rich, right? A guy making $500K/yr in earned income deserves to pay a higher rate than investors because he's not really rich at all, because he has no principal to protect, huh?

So you admit you want to destroy people's wealth. That is your actual goal.

 

[the DRIZZLE]

Riiiight. That's why we've had decoupling for the last 30+ years' and why median family income & below as as % of GDP has shrunk...

Which is completely irrelevant to my point. That other forces have effected wages has nothing to do with the fact that when any party enters into a contract, they consider expected inflation over the period of the contract. It's only unexpected inflation that has a distributional effect on the parties in the contract.

7% is the average rate of return in the stock market over many, many years. Your notion that the Fed is suppressing savers is hogwash, because what we're experiencing is a liquidity trap of saving & a flight to safety among investors. Yield on govt securities is low because demand is high, not for any other reason, and yield for savers follows the same rationale. It's about expectations of future inflation & perceived risk wrt other investments. Corporate cash reserves are enormous as well.

Nobody is "required" to invest in anything, btw.

The Fed is driving demand for risk free assets, which lowers yields if said assets, which pushes investors into risky assets. The Fed currently owns around 12% of US debt and was buying over 60% of new issues at the peak of QE2. I don't know what percent they are buying now to maintain their balance sheet but I would guess it's at least 30%.

Financial repression is absolutely real. Do you dispute that:
1. Real interest rates are currently negative
2. Number 1 is impossible without central bank intervention in the market

 

[DCal430]

Inflation is near zero, so I don't see how real interest rates are currently negative.

 

[the DRIZZLE]

Inflation is near zero, so I don't see how real interest rates are currently negative.

YOY inflation from May 2011 to May 2012 was 1.7%. Most savings accounts are yielding around .50% or less.

 

[Jhhnn]

Which is completely irrelevant to my point. That other forces have effected wages has nothing to do with the fact that when any party enters into a contract, they consider expected inflation over the period of the contract. It's only unexpected inflation that has a distributional effect on the parties in the contract.

As if workers truly have "free will" wrt employment, particularly today.

The Fed is driving demand for risk free assets, which lowers yields if said assets, which pushes investors into risky assets. The Fed currently owns around 12% of US debt and was buying over 60% of new issues at the peak of QE2. I don't know what percent they are buying now to maintain their balance sheet but I would guess it's at least 30%.

Financial repression is absolutely real. Do you dispute that:
1. Real interest rates are currently negative
2. Number 1 is impossible without central bank intervention in the market

Heh. the first argument directly contradicts the second, in cas that escapes you. Obviously, purchasers of US securities have very low expectations of inflation in the contractual relationship. What actually causes inflation, anyway? Could it be... demand?

Maybe this isn't the usual postwar recession/depression created by the Fed to damp inflation... maybe it's a balance sheet recession/depression, kinda like the early 1930's, where the actual supply of money, including credit, has contracted enormously to preserve the balance sheets & the solvency of financial institutions? Perhaps they were horribly over leveraged a short while ago like 1929? Maybe, just maybe, the only way that the Fed can possibly create more money is to buy Govt bonds, the same as they've always done? Maybe negative real interest rates serve the same purpose as inflation in a deflationary economy, encouraging spending?

Have you even considered the idea that the economy would continue to spiral down into deflationary territory if interest rates were higher? Why would investors risk in the face of low demand if the value of their money grew stuffed into their mattresses?

Why should the Rich be granted risk-free investments at high yields, anyway? Because they're already rich?

That makes as much sense as expansionary austerity, or forcing layoffs to create jobs.

What you believe in is lies.

 

[Incorruptible]

It doesnt matter if its progressive or regressive, it will bankrupt itself and must be ended

 

[JS80]

SS is the most progressive tax we have. The more SS tax you pay, the less marginal benefit you get. The lesser you pay, the more return you get.

 

[ElFenix]

SS is the most progressive tax we have. The more SS tax you pay, the less marginal benefit you get. The lesser you pay, the more return you get.

SS is an intergenerational wealth transfer that transfers to the most wealthy segment of the population.

 

[Incorruptible]

SS is the most progressive tax we have. The more SS tax you pay, the less marginal benefit you get. The lesser you pay, the more return you get.

And this is exactly why it should be ended, these people are stealing money from hard working Americans and it will bankrupt soon