Strange SS argument - HELP

[proud2BlibKansan]

I posted this to a freeper on another board:

Collecting SS tax on incomes above $80,000 would solve the supposed problems. That sure seems like a simpler solution.

Here is his reponse. Any ideas for how I can rebut this?

It's $90,000 not $80,000.

And if you would stop and think a minute - SS benefits are tied to how much you contribute and for how long.  Those who contribute at $90,000 will receive greater benefits than those who contributed at $25,000.  If you raise the taxable level above $90,000, then those who contribute above that amount should receive even greater benefits.  How does this solve the problem unless those contributing over $90,000 don't get any greater benefits which means they are contributing a larger share to the program and thus being penalized for earning greater salaries.

[Cleita]

1. Because they do get greater benefits.

As the system is set up now, the more you pay in the better chance you will get the maximum benefit that is under $2,000 a month. The average working class Joe Smuck gets an average of $600 a month. It's on the SS official site under FAQ.

[proud2BlibKansan]

2. So are you saying

we should not support taxing incomes above $80,000 to help SS?

[ohkay]

8. Well, it's $90k

and I support it for two reasons:

1- The very selfish desire to watch wealthy republicans' heads explode as their ass monkey double crosses them :evilgrin:

2-It would go a long way to helping the problem. If you make more, you should contribute more. If I'm making $30k, I'm counting every penny. If I'm making $150k, I don't miss the $$ as much. Simple, really.

[sadiesworld]

24. JK wanted to raise taxes for those making OVER $200K per year...

why do DUers want to raise taxes for those making UNDER $200K per year?

[Cleita]

15. No I think we should lift the caps on wages and have

deductions just like on income tax. This way the poor aren't the major supporters of the program and the rich will have to take on more of the burden. What's with this freepers anyway? Don't they get the concept of pooling assets for the greater good?

[Coastie for Truth]

13. The benefit goes up with two numbers

1. Age when you begin to draw benefits (max age is 70)

2. A rough function of "Total Life Time Covered Earnings.

The Good Lord Willin - and the Creeks Don't Rise -- I plan to work to age 70. So, my total Social Security, Private Pensions, and Annuitized Personal Savings will give me about 80%-85% "Replacement".

[noamnety]

3. this part isn't neccessarily true

"Those who contribute at $90,000 will receive greater benefits than those who contributed at $25,000."

A person might make over $90,000 one year, then get laid off or disabled and have no income in following years - and could conceivable over a lifespan put in less than a person who earned $25,000 consistently every year.

Why should a person who earned $300,000 over the course of one year, and nothing for the next 3 years, put in less than a person who earned $25,000 each year for 4 consecutive years?

[Cleita]

19. Because over a lifetime he will not have contributed that much.

If he is in good health and makes over $90,000 a year for forty years, then he will have a large account and the maximum benefit. No one understands that the benefit is calculated on your highest earning quarter during a certain time frame in your lifetime (or at least it used to be unless they changed it).

[ohkay]

4. Because

the money collected NOW is going to my parents, it's not sitting in a trust fund waiting for the guy who makes more than $90,000. With inflation, more and more people are making $90k.

By the time I retire, I had better be making a lot more than $90k. We will have only the poorest people contributing for all of their salary.

[proud2BlibKansan]

6. But the max is still

$2000 month, right?

[Dr.Phool]

5. I say eliminate the cap

Payroll taxes are regressive the way they're set up now. They are indexed to inflation, and they do rise each year.

Take for example, I earn $90k this year. I pay the payroll tax on my entire wage. Bill Gates earns $1 billion this year. He pays the same payroll tax that I do in dollar amount, but I'm paying an effective rate of 7%, His effective rate is less than .01%.

On edit: Only once in my life did I exceed the cap. A few years back, with a raise and lots of overtime, my last paycheck of the year didn't have any SS tax taken out.

[alcuno]

7. It is 90,000. That wage earner along with the $2,000,000 wage earner pay

the same amount into social security. The $90,000/ year earner pays in roughly half of $11,000 (I believe it's 12.4%) while the 2 million dollar earner pays in the same half of $11,000 (.5%). How is that fair to the $90,000/year earner?

The 2 million dollar/year earner doesn't need an increased benefit under social security. What is it with this obsession with the welfare of the elite in this country? Don't people get it? They are LAUGHING at all the peons concerned for their well-being.

Social security is a safety net to keep people from crashing through the floor into abject poverty in their old age. That's it. It's not a retirement scheme or a pension plan.

[ohkay]

9. the $2m republican

doesn't care about grandma. Let her move to a low rent nursing home and be tied to her bed for days at a time.

he's got a 401k.

[TeeYiYi]

28. Social Security calculator . . .

I don't know how accurate it is but it's interesting to plug in some numbers. I tried $20,000, $40,000, $90,000 and $190,000. It's obvious why the very rich don't care about social security and would like to see it changed or abolished entirely. This calculator makes clear the need to hang on to social security for those at the bottom rung of the wage scale ladder. Especially now with jobs disappearing and $7/hr temporary wages becoming the norm. Anywayz . . .

http://democrats.senate.gov/ss/calc.html#

TYY

[Dr.Phool]

10. Another thing

In a 2 income family, if both make $90,000 each, they both pay the full amount. However, lets say you have a stay at home mom or dad. The working half makes $180,000. Their contribution is capped at the first $90k.

[ohkay]

11. your sig line is AWESOME!!

consider it lifted!

[Dr.Phool]

14. Thats OK

I think I picked it up from another persons post on DU a few months back.

[sadiesworld]

12. My understanding is that raising the cap on contributions will

not raise the level of benefits. If so, SS will truly become the entitlement program conservatives currently (and erroneously) label it.

I think raising the cap is a TERRIBLE idea. SS can pay full benefits through 2052 as long as the treasury notes are honored. The debt owed SS should be paid the same way any other debt is paid, i.e., raising taxes or cutting spending. How would Americans feel if the politicians suggested raising the SS cap in order to satisfy our debt to China?

The * tax cuts and wars are the problem, not SS.

[Dr.Phool]

17. Thats the problem

I think this whole idea was a White House scam to default on $2 trillion in treasury notes.

[sadiesworld]

29. The * trifecta:

-Ensure that his base (the uber wealthy) are not responsible for the debt owed SS.
-Put the burden on $90-140K wage earners (lots of blue, big city dems) and then blame it on the dems--* said he wouldn't even consider raising SS taxes...SEE he's only trying to COMPROMISE with the unruly dems.
-Funnel the cash to Wall Street.

:(

[ohkay]

18. Well, we won't be cutting spending anytime soon

We have more countries to "liberate". I agree, if we would use ss money for ss and that's IT, we would be fine. But we won't, no one even thinks it's possible, because there are NO true conservatives ( fiscally speaking) in the government.

What tax do you think should be raised? not the sales tax I hope..

[sadiesworld]

22. No, not the sales tax.

Our representatives will soon be determining whether *'s income, inheritance, capital gains, and dividend tax cuts will be made permanent. Some of these tax cuts should be repealed.

I say we start with the inheritance tax cut and work from there until the $1.7 (?) trillion in debt owed SS is satisfied.

[ohkay]

26. Ah, I think the inheritance

tax cut can be fiddled with, for people who, for instance, will never have to work in their lives b/c of great uncle rockafella, but if my parents work their whole lives and save a significant amount of money, the Gov should not get a large chunk of that when it falls to my siblings and I.

As for the income tax cuts- that's crap. There is NO WAY bush's cuts should stand. You make more than $200k, you SHOULD pay more than I do.

[sadiesworld]

27. Before * took office the inheritance tax didn't kick in until $600K.

The exempted amount has steadily increased and the tax is set to be eliminated entirely. Personally, I think the cut-off should be at $2M.

[Yupster]

20. You are correct

Raising the cap does not necessarily raise the benefit amount for the extra money paid in.

However, I would propose they are both raised. If the guy gets his cap raised to $ 200,000 and pays more than twice as much in that he now pays in, then raise his benefit amount too. That's only fair.

But...

The way the social security payout formula is figured, the bendpoints are so progressive that it won't matter.

The social security tax is regressive, but the payout is incredibly progressive.

A guy who made $ 40,000 per year gets little more than a guy who made $ 20,000 per year. Not even close to twice as much.

A guy who made $ 90,000 a year gets very little more than a guy who made $ 45,000 per year. So raise the cap to $ 200,000 but also tell the guy you're raising his benefit too.

With the way the formula is figured, he'll pay in more than twice as much and get an extra 15 %.

That's a pretty good deal for the taxpayers, and it sounds a lot more fair than we're raising your tax but not your payout

[sadiesworld]

23. As you are well aware...

the super wealthy have been getting away with bloody murder for the past 20+ years. Taxes are being shifted from wealth to work. Your "plan" does little to halt this disturbing trend.

We don't have a social security "crisis" we have a rather large debt problem, primarily due to artificially low tax rates on wealth and the wealthy.

Of course, I have seen you argue that the inheritance tax (even with a $2M exemption) is unfair, so your post comes as no surprise.

[kentuck]

16. It's not a savings program..

You don't get back what you put in. It's a Social Security program to prevent our elderly from living in poverty. It's the small price we pay to live in a civilized society.

[Cleita]

21. Thanks for saying that Kentuck.

Putting old people out to pasture, without any hay, because they didn't make enough money in their lifetime doesn't mean they didn't contribute to society with their work. Look at all the women who stayed at home to raise children and all the immigrants who picked vegetables so you could eat. They didn't earn a lot of money, but they did make a contribution to society and as such should be taken care of in their old age.

[WMliberal]

25. attack the last line. It seems to be the greatest moral qualm he seems to

have with taxing people mroe than others.

"How does this solve the problem unless those contributing over $90,000 don't get any greater benefits which means they are contributing a larger share to the program and thus being penalized for earning greater salaries."

This is an argument that is ALWAYS raised by those who think it's a bad thing to tax rich people. They see it as "bad doggie! how dare you earn so much money!" What they don't see is ability to pay, likelihood of those being filthy rich already having a healthy retirement portfolio, reasons those who earn that much GOT TO BE IN THE POSITION TO EARN THAT MUCH (this is the one they REALLY don't get), and the fact that the system that put them into that position already provides them with more benefits than someone who earns substantially less.

Start from there and you can make this person steam from the ears and foam at the mouth.

On edit: Also go after his notion of what Social Security is. He seems to think it works like bonds or mutual funds. It isn't. It is a system designed to prevent the elderly from starving in case they do fall on hard times. My dad is a good example of that. He did very well in the 80's and 90's (earning enough to be in th mentioned bracket). However, he has been marginally employed since then (another tech sector victim) and our family went bankrupt because of medical debt. Retirement plans are now nonexistant and he's in his 50's. If this were the era before Social Security, he'd be fucked and looking at working full time until death.

[proud2BlibKansan]

32. Thanks

good advice

[Eric J in MN]

30. Boo hoo. The wealthy may pay in more to Soc. Sec. than

they get out.

I'm crying a river right now.

[Hamlette]

31. It's Bush's idea. The cap is lifted but the benefit will not be increased

so yes, the person making over 90K will be contributing move but not getting a greater benefit (basically). Of course, SS is currently progressive, this will just make it more progressive.

The other alternative is to means test it. This accomplishes that (in effect) without means testing. Means testing is a worse idea as it makes people feel like they are on welfare.

Could it be that the attack on SS is fueled in part because the people making the laws are rich and see that their rich friends don't need it. I keep hearing from the right wingers "people don't need the benefit." They must mean rich folk.

[DU GrovelBot]

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[lumberjack_jeff]

34. Raising the cap is risky, imho

Social Security is intended to do two things;
1) Guarantee a minimum retirement pension so that retirees have a minimum level of dignity in their old age, and
2) Guarantee disability income for people who are unable to work, or if they die, for their dependents.

The "premium" for this insurance coverage is a tax shared between employee and employer. A certain level of premium entitles the worker a certain level of retirement income. At $90,000 per year, the retirement income that the premium entitles the worker to is considered ample, and thus above the system's mission.

So, IN MY VIEW, lifting the cap means one of two things;
1) IF the benefit schedule is expanded upwards to provide commensurate benefits to high income SS tax payers, then Social security is now for something more than minimum sustenance to avoid poverty. On the other hand,
2) if the benefit schedule remains as it is, so that a retiree who earned $200,000 gets the same benefit as a retiree who earned $90,000 as a worker, then it's not insurance anymore. At that point it becomes partially a wealth redistribution system (welfare).

Not that there's anything inherently bad with the latter, but it opens a can of worms that Social Security has thus far avoided, and is the reason for its popularity. I think you only do that if there's a demonstrated crisis. At likely levels of GDP growth, the Social Security System has ample resources to pay benefits for everyone alive today, and predicting the economy beyond that timeframe is not useful.

Our grandkids will die in the next ice age anyway.