My response to a Freepers "Why do we need taxes"

[KDLarsen]

(The original text is in cursive)

There's one pretty damn good reason as to why the state should at least provide a minimum of services to the public:

Private companies have one ultimate goal - make a profit.

State schooling is an expensive farce. Reduced tax burdens that would allow more families to homeschool and private schools would be a improvement by several orders of magnitude.

And what about families who are already struggling with their private economy? I'm sure they'll just love being told that they're now also going to pay for the childrens schooling. So, what's most likely going to happen? Either their children will end up attending a crappy school or one of the parents will have to ditch their job(s) to homeschool the children, which will put an even bigger strain on the families economy.

Private roads are safer, less congested, and are not being worked on 360 days out of the year. When a firm actually has customers who can choose to travel on a different road if the firm's isn't up to snuff, it makes for better roads. The only acceptable monopoly in people's minds is a government monoply, and that's because they've been trained (brainwashed) to accept it by the state schools.

Ok, so I suppose you're willing to give up your backyard to a private company to let them build a road that's going to compete with the one 200 feet away? Get real.

Retirement insurance? A 25 year-old person today will pay in something like $1M over his working career and only get back ~$400K from Social Security. Invest for your own retirement. It's what Americans did back before Leviathan.

Social Security is just what it says - a security that even if your stocks are going broke (hellllooooo Enron & Worldcom) & you lose all of your belongings, you're not going to be forced out into the street at retirement age.

The Constitution authorizes Congress to provide for the national DEFENSE. It does not say police the world or build an American Empire. You do not need the mammoth military that we have to defend our borders, which is something that Congress refuses to do anyway. There are 240 million privately owned guns in this country, and 75 million gunowners. I don't think we have much to worry about from an invading country.

If the military is all about defending the US borders, what the hell are they doing in Iraq & Afghanistan these days?

[alcuno]

1. So replace state schools with homeschooling and private schools?

Sounds like a return to the 1840's to me. It's the right to a free public education that has made America into a great country in the first place.

[Spider Jerusalem]

8. Public education actually got its start in the 1840's...

but the intent was not (and is not) to educate. People who can think for themselves are dangerous. The intent was to acclimate students to responding to bells and to regimentation in order to produce better workers for an industrial society.

[Hippo_Tron]

2. I sort of agree with that last one

Well the first part about building an American Empire anyway. Not that part about getting rid of the organized military and replacing it with un-trained civilians who own guns.

[DireStrike]

3. These people are basically anarchists...

Should be fertile recruiting ground for them.

[K-W]

28. Not anarchy at all, they dont want no government,

they want a different government. They are no more anarchist than we are.

[DireStrike]

35. No taxes = no government.

Unless you're calling Feudal Corprocracy a government...

[Dookus]

4. how would a worker pay in $1M

into Social security?

over a 45 year career, that would be over $22,000 per year. Since there's a cap on how much you pay each year, that number is completely bogus.

[northzax]

10. stop using facts to make sense

after all, Social Security is 6.2% of income up to (this year) $90,000. The most any single individual will pay in Social Scurity taxes this year is $11,060, assuming you are a self employed person making $90,000/year or 15 million a year. at that rate, you would have to work 90.41 years to pay in $1,000,000.

[qwghlmian]

15. The wonders of compound interest.

Someone earning $40,000/year. The Social Security payments are not 6.2% - they are around 13% (since they are matched by the employer). Thus, the total someone who earns $40,000/year pays for Social Security is around $5,000.

If you pay $5,000/year and the investment grows at a (very modest) 5% per year, in 46 years (from 21yo to 67yo) it will become around $900,000, assuming of course that you never get a raise. That's not $1M but pretty close.

When you reach 67, that $900,000 will allow you to withdraw $60K/year for the next 25 years (if the growth contunues at 5%) or $50K/year for the next 40 years.

Considering that the stock market on the average over long term grows at 10%/year, the assumption of 5% is pretty conservative.

[yankeedem]

16. What happens if you get sick?

Or don't make 40k a year? 37% of people who collect SS aren't retired.
And the stock market doesn't average 10% long term, it averages about 8%. That is coming off of the best 20 year period in US history. The Dow is almost to the penny the same price as it was when Shrub took office. That is 4 years of 1% (dividends) return. After the stock market crashed in '29, it took until '55 until the Dow reached pre-crash levels.

Don't buy into the talking points. Here are the real facts.
http://www.socsec.org/publications.asp?pubid=503

[qwghlmian]

18. 5% is an extremely reasonable expectation

for a "safe" investment over long term.

My point was to show that, if a person put the $ into personal investment account and invested very conservatively, he'd get as much money or more in retirement than his pre-retirement salary. So as a "pension", Social Security sucks. As "insurance" it sucks as well because premiums are huge. You can buy disability insurance for a tiny fraction of the Social Security payments. So - why have it?

[WoodrowFan]

19. and when we didn't have it

and before we had it the poverty rate, especially among the elderly, was MUCH higher than it is now. We have Social Security because it's like any insurance policy, it spread some of the risk among a large population. Risk that can come from a bank failure, poor investments, bad luck in health causing you to spend your income on medical treatment instead of investing it, the collapse of a company taking its pension plan with it (which is what happened to my one grandfather.) If we replace SS with letting us each invest in the stock market, and the stock market collaspes again, what then??


Like so many other RWers, those that oppose Social Security ignore that these programs were created to serve a real need based on experience.

BTW, do you prefer marble or granite??

[qwghlmian]

21. You are using strawman arguments -

There is no "bank failure" involved in personal retirement accounts, since there are no "banks" involved, the investments can be limited to some very safe ones, the "bad luck in health" does not allow anyone today to opt out of paying the Social Security payments, so not sure why you are bring it up, the deposits into the personal retirement accounts would still be mandatory, and the company pension plans have nothing to do with it either.

[WoodrowFan]

23. pay attention this time

OK, try reading it slower this time. let your lips move if it helps.


"bank failures" : you're being to literal, if any financial firm that holds your investments fails, you can lose you money. see: Savings and Loans 1980s.


"Poor Health" if you get rid of social security and replace it with individual accounts and I have a lot of medical bill I may decide to take that money and spend it on those bills and not invest it. If you still want to deduct the money from paychecks then invest it, then this does not apply.


Company pension plans: If they fail, then all that's left is Social Security and you want to risk it in the Stock Market.



BTW, I've not noticed the anti-SS crowd mentioning that those European states, like Britain, that have tried partial privatization are now trying to back away from it because the government plan worked better.

tell you what, instead granite or marble, which are expensive, let's go with plain plaster. You can invest the savings in a nice safe company like Enron for your retirement.

[qwghlmian]

25. By the way - "stock market" is another strawman

since when I speak of "safe investments", that is not stocks. It would most probably be a combination of CDs, government bonds and company bonds.

You don't seem to be interested in actual discussion, judging by your insults, so this is pointless. Come back when you have at least a modicum of respect for people who may not agree with you, and we'll discuss this further.

[northzax]

30. sure there is bank failure

or would these accounts be insured by the government? There's a reason it is called 'risk' because things can happen. Your model of compound interest makes the most money in the last five years. If you compound once annualy (simply for the sake of easier calculations) you would have $883,380.86 ($5000/year for 45 years at 5%)

What if you retired at the end of a bear market? In the past five years, the S&P500, one of the safest stock investments, has a total increase of only 1%. So we have a total of...729,304.90. So choosing t o hit 65 at the wrong time costs you 160 grand.

And none of this takes into account the 1% that Merrill Lynch is going to charge you annually. So it's really only 4%, and the last five years are 0%. and that number becomes...$658,558.72, if you were lucky enough to hit 45 in 2000, or $543,137.78 if you were lucky enough ti hit 65 today.

So your overly optimistic number of $883,380.86 for the lucky bloke who makes 100 grand+ for every year of his life is really only 658,558.72. Best cast. You just lost 230 grand to the vagaries of market timing and the fact that the banks like getting paid.

Now let's look at your average bloke, shall we? Say you're a public school teacher. your average salary is $45,000. Let's bump that to 50 to compensate for inflation. You pay in the full 6.2 percent annually, and you make the same 5% compounded with no fees that your person made. their best bet is $547,677.53. Or a non-union worker, surviving a long and illustrious 45 year career uninjured, making 12 bucks an hour. that's $24,960/year. He gets to retire, under your plan, with $273,308.76. how about ten bucks an hour? he gets $227,833.85. And let us not forget the poor shlub hurt at the ripe old age of thirty, after making 100,000 for 8 years, and saving the maximum 5. he now lives on $57,520.00 for the rest of his life. And god forbid the 10 dollar worker, working since 16 who gets hurt at 30, that life is worth $29,091.44.

Social Security is not an investment program, nor should it be. is is insurance against the worst happening to you. Government guaranteed insurance. don't treat it as a financial investment, it isn't one.

[qwghlmian]

31. You do realize that the annual contribution to Social Security

is not 6.2% - it is 13% or so. My calculations were for someone who earns $40K/year - not $100K.

You say Social Security is insurance against "worst happening to you". If you go out and BUY insurance against "worst happening to you" - that is, both life- and disability- insurance, the premiums for both together will be a tiny fraction of the Social Security payments. Why is that?

[shrike]

33. The employer pays half of the 13 percent.

I'm self-employed, I pay a self-employment tax of 15.3, then get half of it as a tax break.

The average person, however, will never see that extra 7 percent or more; it did not come out of his/her own pocket, and is not "real" money in terms of his/her lifestyle. Hence, it is a straw argument to bring it up.

[fob]

20. You have answered a question that wasn't asked.

The OF (original freeper) said "a 25 YO worker will PAY IN over 1 million", NOT "will ACCRUE 1 million". The OF also says you will only get back 40%.

Go to http://www.ssa.gov/OACT/quickcalc/calculator.html and enter the data yourself.

Use 6/15/1980 as the birth date (A 25 year old today)
use $40,000 for salary
and choose retirement date of 07/2045

You can select to see results in Today's dollars or Future(inflated) Dollars

Todays Dollars you get $1247/mo
Future Dollars you get $5287/mo

Let's use your example and assume TOTAL amount accrued with employee AND EMPLOYER contributions along with any interest is $900,000.

How long before you draw that $900,000 at $5287/mo (remember you will be drawing out in year 2045)? 170 months or about 14 years.

That leaves out entirely, the spousal/family benefits.

All in all a highly successful insurance program.

[qwghlmian]

22. I don't know why simple math seems to be so hard - but

if the growth rate is 5%, withdrawing $5287/month will deplete the total in about 24 years, not 14. Also, note that the SSA calculation you cited assumes inflation in both the benefits and the salary, and my calculation of $900,000 total accumulated did not take inflation increasing the salary into account, so you are comparing apples and oranges.

[fob]

26. Since simple math isn't your strong suit I'll show my work

900,000 dollars divided by 5287 dollars per month will yield 170 MONTHS.

Converting MONTHS to YEARS divide by 12

170 MONTHS divided by 12 MONTHS per YEAR gives 14.185738 YEARS

Let's try your equation;
First convert years to months multiply by 12
24 YEARS = 288 MONTHS

288 MONTHS times 5287 dollars per MONTH = $1,522,656

Inflation or not doesn't matter. And since you weren't answering the question posed anyway why leave that info out? What number DO you wish to present as an ALL IN number for the value of a 25 YO's SS in the year 2045?

Take your time and use all the factors either shown or assumed or implied. When you are done take that number and divide it by the disbursement in 2045 dollars and that will give you the MONTHS you need to live before you start drawing beyond that ALL IN number. HINT: It will NOT be 24 years. Also I see you are neglecting the spousal/family benefits altogether.

Simple math ISN'T so hard, you just gotta break it down.

[WoodrowFan]

29. how dare you!

strawman! SPUTTER!! STRAWMAN!! SPUTTER!


You did some nice analysis, thanks FOB.

[qwghlmian]

32. You just don't seem to understand the concept that

money does not just sit under the mattress, it is invested and grows.

"Inflation or not" certainly matters. If my calculations took inflation into account, the final result would not be $900K, it would be more.

If you really want me to recalculate it taking inflation into account, here you go:

Given: a 42 year period (since the retirement age will be at least 67). Inflation (if you take SS values of $1247/$5287) is 3.7%/year. Annual deposit: $5,000. Investment growth: 5%.

http://www.ratfactor.com/fun/interest.php?initial=0&contrib=5000&contrib_inc=3.7&contrib_inc2=0&interest=5&period=42&fees=0

Total in year 2045: around $1,2M

Time it will take to deplete this by withdrawing $5300/month - with the same parameters as above - 23 years.

http://www.carnegiefirst.com/cgi-bin/annuity.cgi?abal=0&pymt=417&time=42&intr=5&ryld=5&infl=3.7&raiz=3.7&wdrw=1247

This does both sides of this calculation.

So - this takes you until you're 90 years old. Of course, this is a very conservative calculation. If you increase the annual growth to 6%, this will take you to 100.

[fob]

34. No, the problem is you are implying that SS is an investment portfolio

when it is an insurance program. The fund itself may accrue interest through whatever means which allows it to self-fund to a degree, but the 25 YO hypothetical guy does NOT have a SS account sitting in the Treasury earning interest with his name on it.

Bottom line is the contributions by the employee and employer are PREMIUMS paid in over time and the guaranteed benefit received upon retirement is well in line with the amount paid in over time, your lack of understanding to the contrary notwithstanding.

A 25 year old today that retires at 67 and lives until 80 will draw out way more than the 40% the originalfreeper suggests is criminal and with which you agree. That does not even account for a spouse or family benefits along the way, let alone the peace of mind a guaranteed BENEFIT has over a defined CONTRIBUTION.

So any problem with SS has to do with the funds coming in NOT covering what goes out(ideally what you paid in plus what your employer paid in plus the interest the fund made would provide a comfortable monthly retirement benefit that lasted to the exact minute you expired), yet somehow your analysis PROVES that the fund NEVER runs out of money, congratulations! Call congress and let them in on your plan.

[qwghlmian]

36. You have to decide whether you look at Social Security

as an insurance, as a pension plan, or both.

As I showed, if it is a pension plan, it is not a very good one, since the same payments, if they went to a personal retirement account, would make a much better pension plan. If it is an insurance, it is an extremely expensive insurance, since you could easily buy a combined disability/life insurance whose premium would be a tiny fraction of a social security payment. So - if it is not a good pension plan and not a good insurance, what exactly is it.

[LaPera]

5. Who's going to pay for their beloved Iraqi war, and Bush & Co salary,

the roads they travel on, the police & fire departments they demand, their bias FCC, BLM, EPA, the courts to lock people away, aid to Israel, etc. etc.

They want it all, but want to pay for NONE of it...just cut my taxes and fuck everyone else.

[SheilaT]

6. The state schools,

which are actually pretty good for the most part (and at least some of them are excellent) are obligated to take all comers. They cannot reject undesirable students. And they're not given enough money to cover the costs of all the many special programs and services that special needs students require.

Home schoolers have essentially no overhead. Private and parochial schools can and do reject "undesirable" students.

As for the bit about defense, I take it these guys want to eliminate the military? Well that would certainly cut our taxes a great deal. These are also the same kind of people who will act as if since their father or grandfather fought in WWII (The Big One) no one else has any right whatsoever to criticize their fascist viewpoint.

[LeftyMom]

14. *snort* essentially no overhead

Bwahahahahahahahahahahaha! While homeschooling doesn't require the use of an additional building, it does require (generally) a parent home all day, a vehicle availible to take the kids places, utilities for lights and heat during he day (when public schooled kids and thier parents are generally out of the house) etc. Then there are the direct expenses of books (a significant expense in this era of stripped down libraries full of outdated books and rearely open,) curriculum (if one uses a prepackaged one, these can cost anywhere from a undred dollars to a thousand a kid,) state hsing org membership (a good idea if one expects a hassle from the local school district, as they generally have a legal team,) the museum memberships, etc.

[SheilaT]

17. People who are homeschooling

already have a parent home all day. So they're not giving up money there. They'll spend what they want to, or feel they can afford, on a curriculum. Which could be much less than the direct cost of attending school. Some homeschoolers feel no text other than the Bible is needed.

You're correct, to do it right, with lots of enrichment, would cost as much as you're willing to spend, which can easily be the cost of a good private school (over $10,000 per year to start). But the dedicated home schoolers feel any price is worth it. And then you're fighting those who don't currently have kids in the school system who demand to know why THEY should pay to educate YOUR kids. Personally, I find I'm constantly trying to get people to understand that strong public schools benefit us all, not just the breeders who have kids.

Oh, I'm one of those breeders, by the way, so I'm being a little ironic there.

[LeftyMom]

24. You're making a few assumptions there

Not all families who start homeschooling already have a parent home all day, although many do. I know several families who had to quickly make arrangements to get a parent home during the day when they pulled thier kids from public school. That's a significant expense, even if that parent is only dropping to part time work.

I don't know who these "all we need is a Bible" people are. None of the homeschoolers I know IRL or online is anything close to one. Heck, even the Amish even have reading primers and other homeschooling books they use. In general fundies tend to more rigid and school-like forms of homeschooling, and are much more likely to use pricey canned curriculums. If anything fundie types tend to buy more supplemental books as well, as those at the library don't usually refect thier veiwpoint. Of course, homeschoolers in general all seem
to share the joy of overstuffed bookshelves.

You seem to be telling me about homeschoolers, how they think, what they want. I am a homeschooling parent myself so that's really unneeded. I've never heard a homeschooler say they shouldn't have to pay into they system at all but I've heard many say that they should have a reduced burden in doing so since they've taken on the expense of the education of thier own children. Most homescoolers realize (In my experience) that public schools benefit us indirectly and would like to see them improve.

[SheilaT]

37. I stand corrected.

I gave serious thought to home schooling myself, but realized I am temperamentally unsuited to it. I know several people who've home schooled. The ones I know did it for a couple of years when it made sense to pull their kid out of conventional schools for a couple of years (some public, some private).

There are other places I see the "all we need is a Bible" sentiment. Perhaps those people aren't home schooling. It does seem as though some of them are challenging assigned books, which is a perennial problem in this country.

I often seen the drawbacks of conventional schools. I put my two boys into lots of enrichment things after school and in summers. What I personally dislike about regular schools is the rigidity, the "one size fits all", the assumption that all kids need to go through the curriculum lockstep. My oldest had a lot of trouble learning to read, and didn't master reading until well into second grade. Meanwhile he was making great strides in arithmetic, except that he couldn't advance ahead of the class in math. Sigh.

As someone who chose to put my two into private school, I'm a huge supporter of public schools, and feel that I'm probably not paying enough in taxes to support them properly.

Thank you for the feedback.

[KDLarsen]

7. Forgot to add the best bit..

... apparently, Americans were (financially I suppose) freer in 1900 than they were in 2000.

[DireStrike]

9. Oh, no doubt. 1/500,000 Americans was MUCH freer back then.

Child labor: it's a beautiful thing.

[ComerPerro]

11. Must be an old email

Because, ever since Bush got in office, the conservatives have been all for nation-building and policing the world.

And, about the roads...
Does this freeper actually think that a corporation that controled the roads would keep it in good driving condition? Or will they just do the cheapest, most half-assed, cost effective quick fix they can find? Besides, I imagine this guy would have no problem paying tolls every time he wants to drive anywhere, even to the store.

[KDLarsen]

12. Actually, it's just about 2 days old..

.. but I get your point ;)

I agree on the road thing, people who are in favor of privatisation of everything needs to realize that (most) corporations in this world have only one ultimate goal: Profit.

[ComerPerro]

13. Wow. Then, that is really puzzling

Hmm.

[JHB]

27. They always bring up "provide for the common defense"...

...but forget "in order to form a more perfect union, establish justice, insure domestic tranquility,...,promote the general welfare, and secure the blessings of liberty to ourselves and our posterity."

Try to do any of the above any they call you "communist" (or in this guy's case, "The Leviathan").

[HEyHEY]

38. To buy bullets

That'll shut em up

[AlCzervik]

39. If their house catches on fire it's nice to have a fire department to put

it out. School is also a good option for children.