Social Security?

[Conundrum]

Actually, all that had to be done is to withhold ss taxes from everyone, without the 130k income limit.

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All that had to be done is tax the wealthy making money on money instead of withholding 12.4% of wages from the common working man. I mean it is a social safety net right?

[MyNameIsAugustWest]

All that had to be done is tax the wealthy making money on money instead of withholding 12.4% of wages from the common working man. I mean it is a social safety net right?

I think you don't understand how small a percentage of the tax-paying population are actually "rich". It's sheer numbers that provide revenue to the government, not the wealthy few. Even if we went back to taxing the rich at 90+% of their income, it still wouldn't offer relief to the masses. I do agree with removing the cap though. Every time my income got close to the cap, they would raise it but there should be no benefit to those that make more.

They are stealing from the fund to pay for other massive social programs. In the big picture, defense spending and foreign aid really isn't that much.

And no, Social Security was never a social safety net (that's what unemployment and medicaid/medicare are). Social Security was a forced savings plan dreamed up by the elite who thought the unwashed masses were too stupid to save for themselves.

[riser4]

OK, boomer.

[Conundrum]

I think you don't understand how small a percentage of the tax-paying population are actually "rich". It's sheer numbers that provide revenue to the government, not the wealthy few.

Pretty much my point. If the % of rich is so small, how would removing the cap really help? How many low income workers even know what cap gains, 1031 exchanges, defered comp, etc means? $300 billion is moved in the stock market daily. What if there was a 1% fee there? I'll do the quick math-just under $1T revenue and I did take the weekends out.

And no, Social Security was never a social safety net (that's what unemployment and medicaid/medicare are). Social Security was a forced savings plan dreamed up by the elite who thought the unwashed masses were too stupid to save for themselves.

Uh… Taken from the “check my benefits” section of SSA.gov. You know, the social security administration.

Our benefits are there for you when you:

Age and retire
Can't work because of a disability
Lose a spouse (or a young child loses a parent)
Have difficulty paying for essentials like food, clothing, and a home

And then you can go to a different section of the website and sign up for Medicare which is you guessed it, administered by the social security administration.

https://www.ssa.gov/medicare/sign-up

[SumJongGuy]

Actually, all that had to be done is to withhold ss taxes from everyone, without the 130k income limit.

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That's what just about everyone means when we said "raise/eliminate the cap".. But thanks anyway..

[skaredshtles]

In the big picture, defense spending and foreign aid really isn't that much.

Defense spending is... not that much??

[Master of Energy]

.......In the big picture, defense spending and foreign aid really isn't that much.

Our defense spending is off the charts insanely high. Almost a trillion a year. mostly handouts to loafers and losers and then the golden pensions.

We could easily cut it in half and still have 4 of the top 5 air forces in the world.

[Conundrum]

https://www.usaspending.gov/explorer/budget_function

Quick and easy chart to see what the US is spending and on what.

[Bunion 2020]

RE: SS Cap

Social Security payroll taxes are not collected on earnings over a set cap. In 2021, this cap was $142,800, so workers making more than this enjoyed the benefit of zero Social Security taxes on all earnings in excess of this cap.

However, rising income inequality is skewing this tax structure even further to the benefit of top earners and diminishing funding for the crucial retirement program so many Americans rely on.

Social Security’s payroll tax—of which employees pay 6.2% and employers 6.2% each—has a cap that rises with growth in the national average wage index compiled by the Social Security Administration (SSA). In 2023, for example, the cap is set at $160,200. But since wage growth for top earners continues to outpace average wage growth, a growing share of total earnings is spilling over the cap and escaping taxation, eroding Social Security revenues.

Significant reforms to Social Security made in 1983 set the cap at a level so that 90% of all earnings would be subject to taxes. Over time, rising inequality meant that this share shrank as more earnings for higher-wage workers spilled over the cap. In 2020 and 2021, the share of earnings subject to Social Security taxes hit the lowest levels since before the 1983 reform. In fact, by 2021, the share of earnings subject to Social Security taxes was at the lowest level in nearly 50 years (since 1972).

This fact is important for at least two reasons:

First, Social Security is likely to be under threat in coming years as part of a general return to debates over long-run fiscal sustainability in the United States.

Second, a recent debate on earnings inequality trends has rightly highlighted a pronounced compression of wages among the bottom 90% of workers. But the Social Security data we highlight in this brief show that growth at the very top of the earnings distribution—the top 1% and above—continues to exceed growth of the bottom 99% of the workforce. This means there has been very little (or no) compression between earnings for the bottom 90% and those at the very top of the earnings distribution.

Earnings growth at the top in recent years

According to our latest research using SSA data, annual earnings rose fastest for the top 1% of earners (up 9.4%) and top 0.1% (up 18.5%), while those in the bottom 90% saw their real earnings fall 0.2% between 2020 and 2021. As wage growth over the cap continues to outpace average wage growth, a higher share earnings fall above the Social Security tax cap. This costs the Social Security system significant amounts of revenue relative to a scenario where wage growth was more equal and there was no growth in the share of overall earnings above the cap.

https://www.epi.org/blog/a-record-sh...s-accelerated/

[skaredshtles]

RE: SS Cap



https://www.epi.org/blog/a-record-sh...s-accelerated/

TBH, most people don't even realize that this cap exists.

[riser4]

Our defense spending is off the charts insanely high. Almost a trillion a year. mostly handouts to loafers and losers and then the golden pensions.

We could easily cut it in half and still have 4 of the top 5 air forces in the world.

I sure hope you're referring to the defense industry fat cats as loafers and losers and their golden pensions.

[neufox47]

While I personally won’t benefit, SS should apply to capital gains as well, for all entities, not just individuals.


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[riser4]

While I personally won’t benefit, SS should apply to capital gains as well, for all entities, not just individuals.


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I assume you are meaning Social Security tax should
apply and that you are not seriously proposing that your payout should be based on your capital gains???

[Harry]

RE: SS Cap



https://www.epi.org/blog/a-record-sh...s-accelerated/

Excellent post.

Thank you.


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[El Chupacabra]

All that had to be done is tax the wealthy making money on money instead of withholding 12.4% of wages from the common working man. I mean it is a social safety net right?

Define "wealthy" here.

If someone saves all their life and retires with invested savings of $250K in a taxable account, are you arguing for assessing a SS tax on earnings from that investment?

I don't follow your reasoning for arguing that is a better approach than eliminating the cap on SS assessment against regular income, which is currently around $168K.

[frorider]

TBH, most people don't even realize that this cap exists.

Not disagreeing, just curious how you know that. Seems like people in my general circle ‘know’ there’s a cap but might not know that it’s $160k now.

[skaredshtles]

Not disagreeing, just curious how you know that. Seems like people in my general circle ‘know’ there’s a cap but might not know that it’s $160k now.

Just a WAG. I probably should have put "I'd wager most people" instead of posting it as some sort of fact based on evidence.

Then again, this is the Padded Room.

[Conundrum]

Define "wealthy" here.

If someone saves all their life and retires with invested savings of $250K in a taxable account, are you arguing for assessing a SS tax on earnings from that investment?

I don't follow your reasoning for arguing that is a better approach than eliminating the cap on SS assessment against regular income, which is currently around $168K.

Take away tax shelters that a majority of the population doesn't use because they are not in that asset class. I'm not against removing the cap but I think it's small potatoes. Stock market-place a small transaction fee on trades. Divert cap gains taxes to the SS fund to pay back money borrowed there. Or increase the cap gains tax rate. 1031 exchange goes away for anything except primary residence. Institute higher luxury goods taxes and vacation and investment real estate taxation. I would rather see low income workers not pay into SS until they hit a certain income threshold (exactly opposite of what happens now).

Wealth inequality is a major issue and getting worse. The removing the cap conversation is starting in the middle while continuing to tax the lowest earners like it's always been and slowly moving up. If we wanted to see real change, let's start at the top and work down by removing some of the tools the very well off use to become even more well off.

[jono]

Even if we went back to taxing the rich at 90+% of their income, it still wouldn't offer relief to the masses.

This argument is often made by people who understand that inflation is a hidden tax on savings. Somehow these same people make this argument without ever accounting for the inflation savings that results from taxing the rich. Even though savings from reduced inflation accrue directly to SS in the form of lower cost of living adjustments (very much applicable to the masses).

[Mustonen]

Half of all income earned in the US goes to the top 10%. Removing the cap is gonna have an impact.

I agree that making it truly progressive is a grand idea too, but arguing that just removing the cap isn’t going to make much of a difference is nonsense. I like the “remove the cap” approach largely because I don’t understand the headwinds against it, while restructuring it and bringing in capital gains taxes and all that are clearly going to rile folks up, even those folks who it will benefit.

I’m having a hard time imagining arguing to some old lady on social security that I shouldn’t have to pay the 6.2% on money I earn over $170K. Given what it’s for and who it benefits, it feels like an absurd bonus to hand out.

[schuss]

Take away tax shelters that a majority of the population doesn't use because they are not in that asset class. I'm not against removing the cap but I think it's small potatoes. Stock market-place a small transaction fee on trades. Divert cap gains taxes to the SS fund to pay back money borrowed there. Or increase the cap gains tax rate. 1031 exchange goes away for anything except primary residence. Institute higher luxury goods taxes and vacation and investment real estate taxation. I would rather see low income workers not pay into SS until they hit a certain income threshold (exactly opposite of what happens now).

Wealth inequality is a major issue and getting worse. The removing the cap conversation is starting in the middle while continuing to tax the lowest earners like it's always been and slowly moving up. If we wanted to see real change, let's start at the top and work down by removing some of the tools the very well off use to become even more well off.

To be clear, I'm in favor of a lot of changes to taxes on the wealthy (our deficit, for example, is mostly a product of GW bush tax cuts and more recently the Trump tax cuts). However, I've generally found it's more difficult and complex to fund things through unrelated taxes. If just changing the "90% of earnings" to 100% fixes the funding problem on SS, just do that. Keep it simple.
Wealth taxes are a whole different ball of wax with a variety of different solutions, but tying them to SS means you ultimately make SS vulnerable to the next generation of tax shelters.

[El Chupacabra]

Half of all income earned in the US goes to the top 10%. Removing the cap is gonna have an impact.

I agree that making it truly progressive is a grand idea too, but arguing that just removing the cap isn’t going to make much of a difference is nonsense. I like the “remove the cap” approach largely because I don’t understand the headwinds against it, while restructuring it and bringing in capital gains taxes and all that are clearly going to rile folks up, even those folks who it will benefit.

I’m having a hard time imagining arguing to some old lady on social security that I shouldn’t have to pay the 6.2% on money I earn over $170K. Given what it’s for and who it benefits, it feels like an absurd bonus to hand out.

This.

Sorry Conundrum, but I don't think your theory would benefit more than simply eliminating the cap on earnings.

[old goat]

All that had to be done is tax the wealthy making money on money instead of withholding 12.4% of wages from the common working man. I mean it is a social safety net right?

Another vote for both.

[Conundrum]

I concede. This is a SS thread. Wealth disparity is a bigger, albeit different issue. One thing at a time.

[SumJongGuy]

I assume you are meaning Social Security tax should
apply and that you are not seriously proposing that your payout should be based on your capital gains???

Or that corporate entities are also entitled to social security payouts at age 65 if they are also going to be taxed like individuals are???