General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forumsif you want to save social security without lifting the cap-
make capital gains subject to fica. us boomers will be rolling in dough.
truebluegreen
(9,033 posts)and then raise the cap as much as necessary, tie it to inflation, (although personally I'd rather just do away with it) and cut the 15% in half: back to where it was before St Ronnie of Raygun changed it. We boomers have been paying double, for current retirees and for ourselves.
Lugnut
(9,791 posts)I've never understood the logic of the cap in the first place.
mopinko
(70,139 posts)an insurance program that gives all almost americans something in retirement. it is not meant to be the entirety of retirement planning and savings. as such, it is capped. there is a maximum payment. therefore there is a maximum you can put in. this keeps it an insurance program and not a welfare program. although a lot of people do not get this, it is important. when raygun tried to dump the cap, teddy kennedy fought tooth and nail for the nature of the program.
listen to the speeches today about social security and medicare- these are not handouts, people paid into these programs all their lives.
get rid of the cap, and you either get rid of the cap on payouts, so that bill gates gets 6 figure social security checks, which doesn't really help the program for long, or you keep the cap on payments, in which case the link between your investment and your payment is broken, and it becomes the dreaded wealth transfer. that will be very hard to defend from the wolves.
truebluegreen
(9,033 posts)Let's try this then: allow the cap to rise with inflation, instead of having to be reset by Congress periodically.
And payments are supposedly tied to inflation now, but they don't keep up with the true cost of living increases, so that needs to be addressed as well.
mopinko
(70,139 posts)it goes up the same percentage as the cola.
truebluegreen
(9,033 posts)But I take your point.
MercutioATC
(28,470 posts)you'd also have to eliminate the FICA cap.
"What's the FICA cap?", you ask.
It's the earned income (or ALL income, if things changed) beyond which one stops paying FICA taxes. In 2012, anything over $110,100 is exempt from FICA.
Simply making capital gains subject to FICA would accomplish pretty much nothing.
mopinko
(70,139 posts)huh?
MercutioATC
(28,470 posts)Therefore, if you taxed capital gains as earnings and left the FICA cap intact, the guy making $5M a year wouldn't pay any more than the guy making $100,100 a year.
mopinko
(70,139 posts)how many of those with that kind of capital gains also have wages? i sure wouldn't work, unless it was a one off year.
MercutioATC
(28,470 posts)I don't care HOW much he makes. That's what a "cap" is.
Plenty of people with huge capital gains also draw a huge salary.
mopinko
(70,139 posts)but especially when you consider that romney's money isn't really capital gains, it's management fees that are relabeled to avoid taxes (illegally), this closes a loophole.
MercutioATC
(28,470 posts)Every little bit helps, though.
Response to MercutioATC (Reply #9)
Honeycombe8 This message was self-deleted by its author.
Honeycombe8
(37,648 posts)are the ones retiring (living off 401k and IRAs, invested) and saving for retirement (invested retirement accounts).
mopinko
(70,139 posts)i find that perfectly defensible.
aandegoons
(473 posts)Money drawn after retirement from them is considered income. At least that is the way it was explained to me by my retirement adviser.
Honeycombe8
(37,648 posts)or IRAs...just big savings and investment accounts, other types of pensions, etc.
But like the other poster said, you could exempt those. Don't know how you'd exempt "anyone over 40 in 2013," but "everyone under 65 beginning in 2025."
Cleita
(75,480 posts)It would work for me. I find taxing income regressive, although we should also do that because the wealthy will find a way to use it to their advantage if you don't.
mopinko
(70,139 posts)could be set up the same way for gains.
Luminous Animal
(27,310 posts)mopinko
(70,139 posts)something i hope to hell is at the top of the list for the new, crazily democratic congress we are about to elect.
lets hitch this to inflation, too. like, whatever raise the congress gives itself it gives to social security recipients, school teachers and the minimum wage.