Let me explain one way you are about to get screwed by Obama's $250K tax break?

[kentuck]

If you make $106K dollars a year, you will pay 100% payroll taxes on all your income. But if you make $250K per year, you will pay less in overall taxes than someone making less than half of what you make. Simply because the payroll tax stops at the $106K limit. It is totally unfair.

[elleng]

1. So people 'get screwed by OBAMA's $250K tax break???'

As if PrezO invented the $106K limit???

[SharonAnn]

30. It was that way before any changes, even those made by GWB.

[elleng]

35. Right. Thanks.

[Tarheel_Dem]

2. If you make six figures, I find it difficult to work up the necessary empathy...

whether it be $106k or $250k. Sorry.

[jberryhill]

7. Perhaps you should re-read the OP

[HiPointDem]

3. This slice of the population, folks dependent primarily on earned income making about

$100K to $500K, actually pay the highest rate of combined federal taxes of any income group, including folks in the same bracket whose income comes primarily from capital, and the super-rich in the bracket above them.

They pay up to the contribution limit & get the same benefits someone making $99K does.

I am highly suspicious of calls to uncap Social Security in the interest of "fairness," because the likely result is that this group will become even less supportive of SS than it already is, & without this group's support, Social Security will be more vulnerable to attack.

This group is the most politically active and connected segment of the working population.

Anything that makes SS less universal and more like welfare is a political fail and a Trojan horse for privatization IMO.

[jberryhill]

5. My income is over the cap, and I support removing it

[HiPointDem]

8. It's not about *you*. I don't care what *you* support. It's about what *most* people

would support, or could be demagogued into supporting.

The more money you have, the more likely it is that:

1) you will vote republican, and
2) you will feel you are overtaxed.

Russ Douthat says Social Security would be easier to cut if it were a welfare program:

http://www.democraticunderground.com/10021885238#post4

[jberryhill]

13. And I don't care what *you* think "most" people believe

Most people don't even know about the cap. You provide no factual support for your assertion that "most people" prefer keeping the cap, and I do not believe you.

[HiPointDem]

16. I'm fairly sure a lot of people in the upper brackets know about the cap. Or their accountants

do.

If not, they will certainly be made aware when their tax bill jumps by $10K.

[jberryhill]

20. And they are a minority of voters

Your argument boils down to "let's not anger the 1%"

And polls indicate strong support for raising the cap.

So, if you "care about what most people think" why do you only seem to care to the extent of disagreeing with them?

[HiPointDem]

62. gee, do we get to vote on what to do about SS? i didn't know that. yeah, our representatives

*always* do what "we the people" want.

there is support for raising the cap because that's the remedy of choice of the .0001%.

the reason is so they can avoid raising their own income taxes and can continue to fund the general budget out of the SS trust fund surplus for the next 20 years.

[msanthrope]

73. My income is over the cap, and I support removal, too. nt

[kentuck]

6. It's a question of fairness and progressivity.

Your tax rates should not go down as your income goes up but the reverse.

[HiPointDem]

10. as i said, people in this bracket pay combined federal taxes at a combined higher rate

than those above or below them.

And personally, I don't care what you consider "fair" if that "fairness" acts to KILL Social Security.

[kentuck]

12. What are you talking about ???

How is that going to kill Social Security??

[HiPointDem]

14. I think it's pretty obvious how higher taxes without higher benefits would act to decrease

support from high earners.

Sorry you don't get it.

Russ Douthat says Social Security would be easier to cut if it were a welfare program

http://www.democraticunderground.com/10021885238#post4

[kentuck]

17. Russ Douthat is an asshat!

Please don't mention his name in polite company.

[HiPointDem]

64. he may be an asshat, but he's saying what everyone knows & won't say. decreasing

social security's universality & undermining its funding structure will decrease support for the program & open up new ways to demagogue it into non-existence.

[jberryhill]

18. You are spectacularly wrong about what "most people think"

By the way...

http://m.dailykos.com/story/2011/01/24/938541/-Poll-Cut-Social-Security-benefits-or-raise-payroll-cap-Not-even-close

[HiPointDem]

19. I'm clearly not referring to the general population, but to the high-earning workers whose

payroll taxes you want to uncap.

they are generally conservative where their money is concerned. they are more likely to vote republican, also.

[jberryhill]

22. Oh, okay, so a majority of Republicans should dictate policy?

Are you sure you are in the right place?

By your logic, we should have all voted for Romney, because by electing Obama we have annoyed a lot of upper income Republicans.

In case you haven't noticed, they are the same crowd that wants to eliminate social security already. Are you suggesting that keeping the cap where it is will make then change their already made-up mind?

So when you say "most people" we should understand that those earning under 106k are not what you mean by "people".

Got it.

[kentuck]

23. Damn! My head is spinning!

[jberryhill]

25. I know, right?

It's a novel definition of the meaning of "most people".

My god, I can't imagine we would do something so foolish that we would lose the support of a lot of Republicans!

[kentuck]

28. That is what kills me about this place lately...

All these folks claiming to be Democrats and talking and acting like fucking Republicans.

[HiPointDem]

32. By your logic, it's necessary to destroy the village in order to save it.

Removing the cap, making 100% of wage income subject to SS taxes means that the top 10% of earners, the one group who doesn't *need* Social Security, will be paying more than half its costs.

"The top 10% pays 70% of Social Security taxes!!!! Unfair!!!!"

That's what gave us welfare "reform", and it's what will give us Social Security "reform" as well.

The one thing that is keeping them from "reforming" SS is the program's universality and the public's perception that they are paying for their benefits, and paying roughly in line with the benefits they receive.

That's what makes the general public willing to fight, that's what gives their support a 'moral' component, and that's what keeps some proportion of the top 10% on board.

Remove that & you kill SS. It's that simple.

[jberryhill]

33. They already think taxes are unfair - all taxes

Tell you what, in 2016, if the Republican candidate gets 10% of the vote, I'll be okay with that.

An overwhelming majority of the people in this country support removing or raising the cap.

Call me simple, but my idea of a democracy suggests that when 77% of the people agree to something, and that something is not unconstitutional, then our process should generally move in the direction toward that something.

[HiPointDem]

36. "they" all do? but you are one of those high income workers who doesn't, you said?

really, you're not making sense.

It's no surprised that an overwhelming majority support it. Most people are economically insecure, and removing the cap seems "fair". On the surface. Most people don't look any further, which is why elites are able to corral them and move them toward 'solutions' favored by elites.

My idea of democracy is that it involves open promulgation and discussion of all facts and viewpoints, something that rarely, if ever, happens under the regime of capital.

We don't live in a democracy, we live in an oligarchy that claims to be a democracy even though the top 5% owns everything that matters, including all major communication venues and the machinery for selecting candidates and issues.

[jberryhill]

38. Lol...

So, you don't like living in an oligarchy, but you fear a policy move which most people support, but which is opposed by your still-unsupported assertion that the top 10% of income earners would oppose.

That makes no sense.

Additionally, in a previous post you took the same "revenue side" line of argument that is typical of Limbaugh republicans in talking about the percentage of revenue obtained from a proposed tax structure, instead of what that means as a proportion of the income of those who pay it.

I'll tell you what, then. I will agree that everyone should pay a fixed dollar amount - say $10,000 per year - in social security taxes, as long as you agree that everyone will be paid $100,000 in income. Not a penny more and not a penny less.

You remind me of my tax law professor who tended to give the impression that the worst possible fate anyone could suffer is to earn income.

I'm more than economically secure, but haven't lost sight of what right and wrong are.

[HiPointDem]

40. yes, i'm a closet limbaugh supporter, my posting history certainly demonstrates that.

republicans support your idea. they don't support mine.

[jberryhill]

42. You obviously didn't look at the poll I posted the link to

Overall support was higher among Democrats than Republicans, dear.

Again, your assertions about who supports what are not only unsupported by any facts, but you are demonstrably wrong.

[HiPointDem]

43. i'm not talking about the general public -- "dearie".

such sexist & condescending language. i think this discussion is over.

[jberryhill]

44. Yes I know. Fuck what they think

Whatever makes people who make under 100k think their opinions should have any weight, I have no idea.

The nerve of them.

[bornskeptic]

60. Nobody is talking about higher taxes without higher benefits.

Social Security benefits are determined by the amount a person pays in over their lifetime. A person who pays in more because the cap is raised will be eligible for a higher monthly benefit as a result. The benefit computation is progressively structured, it is true, but raising the cap does not in any sense turn Social Security into a welfare program.

[HiPointDem]

63. So you're saying not only will higher-earners pay more, they'll also get higher benefits?

well, that will be a big savings, i'm sure. yes, that will keep things solvent forever.

you might consider that maybe the people who designed the program (who were more progressive than 90% of today's democratic office-holders) knew what they were doing.

Over the last 30 years, over $2 trillion was borrowed from workers in the form of excess Social Security taxes. That surplus went to fund the general budget during those 30 years.

When the Reagan administration hiked SS taxes in 1983, we were told we were 'prefunding' our own retirements and the money would be paid back out of the general budget (funded by income taxes, of which the top 1% pays 37%) when needed.

For 30 years we paid those extra taxes. During the same time period, income taxes on the rich were cut, and the SS surplus made up part of the difference.

According to the last SS Trustees report I saw, in 2021 SS starts taking in less taxes than it pays out in benefits, and the general fund will have to start repaying part of what it borrowed. Which means the rich need an income tax hike and a capital gains hike.

But funny thing, instead of letting the Bush tax cuts (the bulk of which went to the richest segment of the population) sunset when they were supposed to, this administration gave the rich an extension.

And the democrats are talking about how we need to uncap social security so as to get even more money from workers. Why the rush?

I figure the rush is to avoid raising income taxes on the rich for another 20 years.

Then they can pull the same stunt again.

So when are the rich going to pay what they owe?

Never, methinks.

[jberryhill]

15. Because HPD believes it, that's why

[HiPointDem]

58. Social Security has never been progressive so far as its taxation goes. Yet it's survived

longer than any retirement insurance program in the world.

Maybe the people who designed it knew what they were doing.

It's progressivity is in the payout, including disability & family support.

[quakerboy]

56. You are right

We should just exempt them fully. Maybe from regular income taxes as well. Seeing as they are so politically connected, and thats what they want.

[HiPointDem]

59. You act as though "we" hold all the cards. I wonder why "we" haven't succeeded in

holding their feet to the fire on income tax, then.

The 400 top taxpayers pay at an effective rate of 18%.

I'd be a little wary of getting on the bandwagon pushing for immediate changes to SS. You may get more than you bargained for.

There's no reason to do anything to SS now, as even the BS forecasts say it's fine for another 20 years. Yet everybody seems convinced something must be done now. Why?

So income taxes don't need to be raised on the rich, that's why. So they can keep funding the federal budget on the extra taxes you just OK'd for another 20 years -- increasing the SS debt and giving them more to demagogue 20 years from now, when they start the same drumbeat again.

Reagan redux.

[quakerboy]

66. Again, you are absolutely right

They have all the power. We have none. We should do nothing that might upset our rightful masters.


Snark aside, I agree with you in part. I am not in a hurry to change SS. I definitely wouldn't trust this lame duck congress to do it. Not sure I trust the next one enough more to want immediate action there either.

But I have no issue with removing the cap. The powerful already agitate against SS and work towards its destruction. I am not worried about making them angry. They will demigogue for the next 20 years whether we change nothing, remove the cap, or double tax all income over 500k. Its ideological, and nothing we can do will make it ok with the rand followers.

[HiPointDem]

67. Yes, the powerful already agitate against it. They'll have more material to work with when

the upper middle class is paying most of the freight and the lower middle class can be tarred as "takers who don't pay their fair share".

Meanwhile, more SS surplus $$$ from workers goes into the general budget so the capital gains tax for finance capital can be reduced even more. Win-win.

The powerful have been agitating against SS since its inception. But it survived because of its universality. Every step away from that design is a step towards its ultimate destruction. What you propose would be a big one, on top of the ones that have already been taken.

Jobs & wage increases will keep SS in fine shape. That all the conversation is about how to take more money from workers is because that's the conversation capital wants to have.

[quakerboy]

71. They dont need more material

They are already painting that picture. Your average Joan or Brian on the street has absolutely no clue that people who earn more than them are exempted from paying more SS tax. Changing that will have absolutely no effect on the rhetoric.

Your argument is backward. I want it to be universal. Not exempted for the rich.

And whether the congress is using the SS surplus for their own purposes is a separate issue. Yes, it is. Although, Im not entirely convinced that's a bad thing. Did you want them to keep it in a bank account, or as cash in a vault? Whats the practical alternative. And on the flip side, since the congress is going to borrow money to fund things regardless of whether SS exists or not, I think its just as well our national debt is owed to SS as opposed to China or France or whatever private insurance company might otherwise buy that portion of our debt.

[HiPointDem]

72. "the rich" get most of their income from capital and don't pay much in the way of SS taxes.

they can also change the form their income appears in, taking stock options instead of salary, for example, if it's more convenient for tax purposes.

"whether" congress is using the surplus for their own purposes? It's been mandated since the program began: all surpluses are borrowed by the US government & fund the general budget.

No, I didn't want them to keep it in a bank vault. I didn't want them to collect huge surpluses in the first place. It violated the original pay-go design of the program, with the surplus limited to about a year's worth of outgo.

The Reagan era fix amounted to a massive FRAUD on the population similar to the requirement that the Post Office prefund its health care benefits for 80 years or whatever it is, which is making the Post Office insolvent.

The Reagan tax hikes, billed as a fix that would prefund the Boomers' retirements 30 years down the road, was the same kind of deal. It was intended to weaken the institution, not strengthen it, and did NOTHING to fund anything except income tax cuts for billionaires & war.

Here we are, the Boomers are retiring, and the pols are coming again saying THERES NO MONEY WE NEED MORE MONEY. Because the $2.7 TRILLION DOLLARS in the Trust Fund will have to come out of income taxes -- and the rich, who make most of their income from CAPITAL, don't want to pay more income taxes.

They want workers, who make their income from WAGES, to pay TWICE. And they want to destroy support for the program at the same time. The program of finance capital, being enacted at all levels of government, is to direct tax streams into their own pockets.

Our government doesn't HAVE TO borrow money for anything if it doesn't want to. The borrowing is a sleight of hand that ultimately enriches the super-rich and the finance sector through a convoluted sleight of hand similar to the one they pulled on Social Security.

[Angry Dragon]

4. So you get rid of the SS cap

and anyone having taxable income over $5 million pays at the top rate of 70%
I can live with that

[Tennessee Gal]

9. Income taxes have nothing to do with the cap on Social Security.

Two totally different issues.

Raise the cap on Social Security. I am all for that.

[kentuck]

11. A tax is a tax is a tax...

It is money taken from your earning. Call it a Golden Calf if you want.

[Tennessee Gal]

21. When is a tax not a tax?

Seriously, the point is that the tax rates being discussed regarding the $250,000 income level are a separate entity from the FICA cap.

I am all for raising the FICA cap.

[kentuck]

26. I am saying it is unfair.

for people making 250K to pay less than those making 100K and it is unfair for those making $1 million and more to pay less than those making 250K. We demand fairness in our tax code, damn it!

[WCGreen]

29. There is fairness built into how SS benefits are taxed when one is retired.

See my other posts in your thread...

[kentuck]

31. In regards to those retired folks..

I am sure you are correct.

But for those folks that are still in the labor market and making the big bucks, their FICA responsibility stops at $106K, is my understanding.

Is that correct?

[WCGreen]

34. that is absolutely correct...

But it is balanced out by how much money during retirement that will have to be tax as income.

That is one of the reasons they have been able to let the SS payouts rise with inflation.

And that $106k changes based on the previous years rate of inflation.

This all goes back to the point of not taxing the same income twice. The matching contribution from the employer is a deductible expense for that company.

It's how they came to that up to 1/2 of benefit.

[jberryhill]

47. You have some guarantee you'll live that long?

Die single at age 50 and then tell me how "fair" it is.

[WCGreen]

55. It's retirement fund....

If you become disabled at say age 50, it is SSI that pays out for disabled persons.

[jberryhill]

57. If I die at 55 I don't get shit

[HiPointDem]

65. and you still don't get shit if the cap is eliminated. So what's the relevance?

[jberryhill]

70. Actually *I* get a higher tax rate

And I am tired of you defending me from that.

[WCGreen]

27. Actually, it is not...

Kentuck is partially true. The amount of SS a taxpayer has to recognize as taxable income is dependent on how much income they earn either from a job, dividends and other taxable pension funds after they retire. The higher your retirement income is, the more of your SS yearly benefit will be included in your taxable income.

[Oasis_]

39. I support removing the cap as well..

however, there will need to be some serious horse trading to accomplish it--mainly a complete overhaul of our tax system.

I'd propose:

1) The aforementioned complete removal of the FICA cap which should in theory provide an increased monthly benefit to recipients (stimulative measure) while ensuring solvency for decades

2) A national sales tax of 1.0% to fund a transfer from private to a single payer system that obviously guarantees as a birthright health care to every citizen

3) Earned income up to $35,000 (single--70,000 married) is exempt, followed by a flat tax system of with the tiers negotiable, but no tax payer ever pays a marginal rate higher than 28%.

$250,000 > 28%.

$150,000 - $249,999 -- 25%

$75,000 - $149,999 -- 15%

$35,001-$74,999 --9%

The reduction in marginal rates is something of a "rebate" to offset the FICA cap removal. I'll trade lower marginal rates all day long for a windfall to the SS trust fund and Single payer.

The wealthy can only be taxed so much before avoidance becomes a major issue. I don't believe in the concept of punitive taxation. There's lots of statistics that confirm the rich are already paying their "fair share", by in large. This is more along the lines of "tax shifting". A Social Security program flush with funds that can actually afford an increase to beneficiaries coupled with a truly viable single payer system removes much of the need to tax the income of the wealthy beyond the rates I've proposed. The redundancy in the myriad of health care programs on the state and federal level we have currently is a major cost, and the savings captured would be substantial.

[HiPointDem]

41. you can support it all you like, you won't get it. but they'll take your "tradeoff" & screw

the rest in the next round.

the rich have never paid their "fair share, by and large". that's why they're rich and that's how they stay rich.

[Oasis_]

45. Ok

If the wealthy aren't paying their fair share, why would such a relatively small minority of earners pay such a large percentage of collected revenues?

My proposal implements (and pays for) single payer and significantly strengthens SS.

I don't see a downside.

[HiPointDem]

48. because such a big percentage of the population makes so little. the average income

of the bottom 90% = $36K.

The bottom 90% makes only half of US income, & half of them are living at a bare survival level.

That's why the top 10% pays 70% of income taxes. And that's why the top 10% will be paying most of the cost of social security if the cap is eliminated.

http://www.nytimes.com/interactive/2011/10/30/nyregion/where-the-one-percent-fit-in-the-hierarchy-of-income.html

[Oasis_]

50. Again

How much of that is consumed through health care costs? I've addressed and proposed a mechanism to fix it via Single payer with a bare minimum cost evenly spread.

You're seemingly discounting the very generous exemption of earned income ($35,000) I've also included.

[HiPointDem]

53. I didn't discount anything. I just said you can support the idea all you like but it won't

happen. Reducing their own income & power is not on the agenda of the folks in charge.

Reducing ours, is.

[jberryhill]

49. Why should they? I'll tell you why...

Because I don't want to live in a country where I am forunate enough to be comfortably retired, and most other people my age are living on cat food.

Whoever thought it wa ever a good idea to teach kids things like "it's good to share" really had their head up their ass.

[Oasis_]

51. ???

I stated the FICA cap would be lifted entirely--providing a significant increase to recipients.

No more cat food.

A real increase funded by the cap removal.

[WCGreen]

24. It's been that way since I have been doing tax returns...

Since 1986, in fact. The wages are only taxed up to $106 for payroll, or FICA taxes. It changes every year to take inflation.

Payroll taxes are there to fund Social Security. Well off retirees have to pay taxes on their full SS benefits while those of us who don't have great 401k's and premium pensions do not have to include more than half of their benefits, even if you bring home some good private benefits.

That is where the difference is.

So if you have $15k of pension money and receive $12k from SIS, you will not have to recognize the $12k as taxable income.

But if you have $50k in private benefits, you will have to recognize a good chunk of that $12 in SS.

And as the taxable income increases, those folks that are in the higher income levels are required to pay taxes on the full amount of their SIS benefits.

[GeorgeGist]

37. tax brackets might enlighten you.

Married individuals filing joint returns and surviving spouses

If Taxable Income Is: The Tax Is:
Not over $17,400 10% of the taxable income
Over $17,400 but not over $70,700 $1,740 plus 15% of the excess over $17,400
Over $70,700 but not over $142,700 $9,735 plus 25% of the excess over $70,700
Over $142,700 but not over $217,450 $27,735 plus 28% of the excess over $142,700
Over $217,450 but not over $388,350 $48,665 plus 33% of the excess over $217,450
Over $388,350 $105,062 plus 35% of the excess over $388,350
Standard deduction $11,900

Heads of households
If Taxable Income Is: The Tax Is:
Not over $12,400 10% of the taxable income
Over $12,400 but not over $47,350 $1,240 plus 15% of the excess over $12,400
Over $47,350 but not over $122,300 $6,482.50 plus 25% of the excess over $47,350
Over $122,300 but not over $198,050 $25,220 plus 28% of the excess over $122,300
Over $198,050 but not over $388,350 $46,430 plus 33% of the excess over $198,050
Over $388,350 $109,229 plus 35% of the excess over $388,350
Standard deduction $8,700

[RudynJack]

46. The SS cap is entirely different

from the income tax cuts. Conflating them is weird.

If a person with an income of $1,000,000 paid a full $70,000 in SS (matched by his/her employer), should that person also get 10x the (current) max Social Security retirement? There's a max benefit one gets from SS, and thus a max pay-in.

That said, I agree we should get rid of the cap. I'm just pointing out there are arguments on the other side that are not immediately dismissable.

And none of this has anything to do with the income tax cuts under discussion.

[pnwmom]

52. This isn't "Obama's" tax break. This has been the case for decades, if not forever.

There is a cap on Social Security taxation. This is nothing new -- the only thing that's ever been new is that the amount under the cap has risen from time to time.

[HiPointDem]

54. it rises pretty much every year.

http://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html

[pnwmom]

61. Thanks for the info. nt

[muriel_volestrangler]

68. I still can't work out why you're trying to blame Obama for a decades-old situation

Are you another person who thinks he has a time machine? Or was that just to attract replies to your thread?

[union_maid]

69. Oh, please

I'm all for raising or eliminating the cap. Or raising it with a donut hole as Obama once suggested might be possible. But geez Louise this is not new, not "Obama's $250K tax break" and the headline of the OP is not honest.

[lightcameron]

74. The self-employment penalty tax is also unfair.

There's a lot that can and should be changed.