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PaperclipPerfector  7mo ago (text post)   29347 thread views

Culture War Roundup for the week of October 2, 2023

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I will strongly oppose any increase/stealth increase (raising the payroll cap/widening the tax base) in taxes. Raising the payroll cap is just kicking the can down the road as the CBO mentions:

As a result, outlays for Social Security would increase, and that effect would grow for many decades beyond the 10-year period of the estimates as more individuals subject to the new taxable maximum claimed their benefits.

But it looks great in their 10-year horizon becuase most of the people earning it are well beyond 10 years from retirement.

Bush's partial, optional privatization proposal was probably as close as it will ever get. After the sound rejection that got, I am looking forward to the plan failing. There's no political path to fix it.

My likely XIRR on contributions and statutory benefits under is already a nominal 2.77%. I'd be in favor of privatization whose only option was taking any part of even future social security contributions and sticking them in a treasury direct account, anything beats 2.7%. What a gigantic waste of almost a million USD.

I will strongly oppose any increase/stealth increase (raising the payroll cap/widening the tax base) in taxes. Raising the payroll cap is just kicking the can down the road as the CBO mentions

I'm referencing the second of the two options they describe:

The second alternative would apply the 12.4 percent payroll tax to earnings over $250,000 in addition to earnings below the maximum taxable amount under current law. The taxable maximum would continue to grow with average wages but the $250,000 threshold would not change, so the gap between the two would shrink. The Congressional Budget Office projects that the taxable maximum would exceed $250,000 in calendar year 2039; after that, all earnings from jobs covered by Social Security would be subject to the payroll tax. Earnings under the current-law taxable maximum would still be used for calculating benefits, so scheduled benefits would not change under this alternative.

I'm referencing the second of the two options they describe.

Which is taking my 2.7% return and likely driving to near zero or even negative because now I'm paying taxes on more income but only getting a benefit based on a fraction of my contributions. I'd much prefer ending universal social security and setting up a much smaller means tested welfare program for seniors.

Yes wealthy people would be paying a larger share under this sytem and the benefits would be distributed downwards, like most other taxes.

Someone making $160k/yr in NYC or SF, while very fortunate, is likely quite far from being wealthy. The New Yorker would need a roomate to afford median rent, and neither can afford the median home.

This proposal doesn't hit people making over $160k, it hits people making over $250k, about 100 stacks more and solidly in the top 5% of the nation. I empathize with their higher cost of living, but if we have a funding shortfall, who other than the most well off should we be raising taxes on first?

but if we have a funding shortfall, who other than the most well off should we be raising taxes on first?

Its always best to tax people who can't avoid the tax. Which means things like VATs, Payroll taxes, and sales taxes. All the most efficient taxes are flat or regressive. Taxing the rich is a waste of time and resources with little actual benefit to the treasury.

Its always best to tax people who can't avoid the tax. Which means things like VATs, Payroll taxes, and sales taxes.

Yes, this is a tax on payroll.

Sure, but then its still another progressive tax. Which is also a bad type of tax. The more regressive, the less it will impact economic choices.

Because the $250,000 isn't indexed to inflation it's just a slow transition into removing the cap on taxed income while providing benefits only on the social security max income. We've already increased taxes significantly to cover these future benefits. It's high time for benefit shortfalls to match funding shortfalls.

Because the $250,000 isn't indexed to inflation it's just a slow transition into removing the cap on taxed income while providing benefits only on the social security max income.

Yeah, the title of that section was "Raise the Payroll Cap", this wasn't hidden. Unpleasant decisions will half to be made either way, a decade and a half transition from the payroll cap that fundraises a trillion in the first decade off the top 5% of earners is one of the more reasonable ones I've seen.

It's high time for benefit shortfalls to match funding shortfalls.

Should we cut benefits by over almost a quarter? That's what we're on track to do currently.

Should we cut benefits by over almost a quarter? That's what we're on track to do currently.

Yes! Or more when that's necessary. I'd much prefer very low incomes were supplemented with on-budget, means tested assistance.

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I empathize with their higher cost of living, but if we have a funding shortfall, who other than the most well off should we be raising taxes on first?

The most numerous, who already aren't paying their share of the tax burden.

From my OP:

  1. Raise Payroll Taxes - “even a modest change, such as a gradual increase of 0.3 percentage points each for employees and employers (or less than $3 per week for an average earner), could close about one-fifth of the gap.”

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