Divisive Issue: Social Security Tax Base

[dawg]

Social Security is a government program. It isn't a 401(k) or a savings account.

So my question for the day is this:

Why aren't other forms of income, other than labor, taxable for Social Security purposes? What if interest, dividends, and capital gains could also be taxable for Social Security purposes. The rate could be a lot lower than it is now, which would be a hugely stimulative tax cut for most ordinary working families.

The biggest argument I can think of against such a plan is that you get no earnings credits for unearned income, so there would be no payback to the individual taxpayer for that portion of their taxes. But shouldn't those fortunate enough to have lots of unearned income be able to pay a little of that into the system to help cover the projected shortfall, cut taxes for everyone else, and to help stimulate and stabilize the economy and safety net?

[Romulox]

1. K/R. The arguments against progressive taxation don't hold up.

And the argument that non-wage income should be shielded from taxation doesn't hold water, either.

[dawg]

2. All this "SS is running out of money" is a false premise.

All we have to do is find a funding mechanism that works better than the one we are currently using. Hell, we could just raise the income tax and fund it out of general revenues if we wanted to.

The powers that be want to make this seem way more complicated than it really is. They want to make benefit-cuts seem *inevitable*.