Originally Posted by stephanie
On the other hand, as long as we are talking about transparency, I don't think supporters of SocSec or the current structure are as fearful (or at least should be as fearful) of it as was suggested. I'd like to see the budget numbers separating out SocSec and Medicare and comparing them with payroll taxes plus the Medicare payments and the rest of the budget with everything else. Given that the right these days likes to talk about the progressivity of taxes without including FICA and the percentage of people who don't pay federal income taxes (excluding FICA), let's break out FICA and SocSec/Medicare in the overall analysis of the budget shortfalls. It would give us that transparency and let the country discuss the issue.
I agree except why bring Medicare into it? There's no reason to yoke Medicare and SS together. They only have one thing in common, they benefit old people.
Those who complain about 50% not paying taxes simply ignore that Joe Six pack who makes 50K a year pays 7.5% of his salary for SS. Meanwhile, Joe CEO who makes 750K a year pays 1% of his salary for SS. So if you do the math it looks like this:
50K Joe Six Pack:
- SS rate 7.5% + Income tax rate of 20% = Total tax rate of 27.5%
750K Joe CEO:
-SS rate 1% + Income Tax rate of 35% = Total tax rate of 36%
Well, he wants to means test, which would seem to suggest that spending for people who need it isn't bad, spending for people with "a great pension" perhaps is. The problem I see with means testing -- apart from the attack on the idea that its a program for everyone -- is simply incentives. I mean, I think pensions of the type you are referring to are mostly going away (and already have for most), so if it encourages that not such a big deal. But doesn't it discourage savings? Certainly if people buy the idea that income taxes discourage earning. I'd want to understand better how the plan would be structured to avoid this, at least.
I don't understand the whole "Mean testing" for SS. Just make SS fully taxable and there's your "Means Test" right there. Of course, that's assuming you've kept the progressive income tax.