An easy solution to Social Security and Medicare Funding w/o benefit cuts

[papau]

In 2004, the phase in of the Reagan 1984 law’s age 67 Social security retirement age means those born in 1939 retiring this year must be Age 65 and 4 months to get FULL NORMAL retirement benefits with a max monthly benefit of $1,825.

The bend points for that calculation of the PIA from the average indexed monthly earnings (AIME) will be 90% of first $612, plus 32% of amount between $3,689 and $612, plus 15% of the amount over $3,689.

Which of course leads to the question of why a wage base – for taxes paid and benefits as calculated above – must be capped – in 2004 – at $87,900. All the financing problems go away if there is no cap – meaning SS taxes all wages, and the benefit is calculated using the same old formula – namely 15% of the amount over $3,689 is part of the rich fellows PIA/benefit.

Indeed there would be no change in PIA Family benefit calculation of 150% of PIA up to $782, plus 272% of PIA between $1,129 and $782, plus 134% of PIA between $1,472 and $1,129, plus 175% of the PIA over $1,472 per month.

As to Medicare financing, just move Medicare from a “wage base” to an “income base” tax, with capital gains and investment income included in the amount against which the 2.9% Medicare tax is applied. Heck, just use the individual portion – 50% of the 2.9%, or 1.45% - as the tax that would be collected when the person’s FIT is filed, and even then only collect the excess of that “total adjusted income” Medicare tax calculation over the amount already paid via withholding.

[nothingshocksmeanymore]

1. That combined with people letting go of their immigration paranoia

so that immigration makes up for the lower birth rates would more than compensate.

[hippiegranny]

2. it is as if they don't want to fix the problem

there is no reason why 100% of my income is subject to fica but people who earn more than $87,900 get yet another tax break. these same people will collect way more than i will as well. just another way to squeeze the middle class.