Why not propose a flat-tax for SS reform to counter piratization

[tk2kewl]

I mean SS payroll tax is currently regressive, so a flat tax would be a step in the right direction. We could probably confuse some wingnuts into supporting it too.

[Sirveri]

1. flat tax is regressive.

[tk2kewl]

3. current payroll tax is more regressive than a flat tax

because it has a cap. so the less you make the larger percentage of you income you pay. So removing or the cap and lowering the percentage to would create a flat tax.

[Sirveri]

22. in that case I agree with you, and it might be a good first step.

My main objection is to a across the board flat tax.

Then again, why don't we simply remove the upper limit cap?

[mdhunter]

16. Strictly speaking, it's proportional.

A regressive tax takes a decreasing share of your income as income rises.

A proportional, or flat, tax takes the same share of income at all income levels.

A progressive tax takes an increasing share of income as income rises.

While it's true that a flat tax isn't progressive, it isn't strictly regressive either. However, I do not support a flat tax for SS. The overall tax burden - federal income taxes, state taxes income taxes, sales taxes, excise taxes, payroll taxes, etc is roughly proportional right now. Most people think, because the largest part - federal taxes - is progressive, that the overal burden is... but it's not, it's proportional, or slightly regressive. So any additional regressive, or even proportional, tax makes the overall burden even more unfair.

[Sirveri]

25. I call it regressive because while it technically isn't, it ends up being

regressive. A person who makes 20k is less able to pay 2k a year than a person who makes 2M is able to pay 200k. But I get what you're saying. As for SS tax, just remove the cap.

[mopinko]

29. but the person who has 2k

needs the insurance a lot more.

[Sirveri]

32. I'm not saying they should disband SS.

Though I would love it if the SS payment was a more progressive model. The person who makes 2k a year does probably need the insurance more (unless they never get disabled or old of course), but why should they have to pay in the same percentage of their income into it when they so desperately need that extra income more than someone who makes 20-100 times as much?

[mopinko]

35. because it is fair

everybody gets out according to what they put in. i don't subsidize you, i don't ask you to subsidize me. i don't have any problem with welfare, food stamps, all that good stuff for poor people. i'd like to see corporations pay their fair share.
but this ONE program is not that.
and maybe it is hard to understand now, but when the program was started, that's the way people wanted it. yes, the first generation got payouts when they didn't pay in. but they accepted that because the people paying in would get theirs back later. they didn't want to have it just handed to them. many would not have accepted the money otherwise. hard to imagine now, maybe, but that's how i want it, too.
it still works. leave it alone.

[Sirveri]

38. I sort of agree, and sort of don't.

You are right that it still works, all they need to do is stop dipping into it. It will never go bankrupt if we do that, but well, apparently they can't help themselves.

[OrwellwasRight]

30. Thank god for somebody who gets the distinction.

Whether people support flat taxes or not, I wish they would just start talking about them correctly. It is knee-jerk liberal to dismiss flat taxes as regressive simply becuase one doesn't like them. And it is not any less ignorant than when right wingers dismiss affirmative action as "reverse discrimination" or dismiss drug addiction treatments as "coddling criminals."

Also, I disagree that federal taxes are roughly proportional. They may be to some extent, but most homeowners I know pay less in taxes than I do (even though they make more money than I do) because they can take a giant deduction that I can't. And the deductions get more usable and more used as you go up the income scale (and the "flat" SS taxes become a smaller and smaller share of income to the point of imperceptability when you get to the incomes of Gates, Walton, Rockfeller, Soros, Trump, Turner, Buffett, etc.).

FLAME BAIT: Given that we know many of the biggest US corps pay no income tax ona regular basis, how in the world can we say the system is roughly proportional? I think the nominally progressive structure gives the W&M Repubs cover to write shelter, break, and deduction into the law until the rich pay nothing at all. I say flatten it, get rid of every tax deduction scam (and I mean EVERY deduction), and we will see more fairness and more money from the rich.

[Sirveri]

34. The housing market would collapse.

That would be a bad thing. Suddenly people would not be able to pay their mortgage and their taxes. You can't just wipe out every deduction and make it flat. Oh, you make 2k a year, give us 200 dollars or you go to jail? I perfer a tiered flat tax personally with a grandfathered exemption for mortgage write offs.

[OrwellwasRight]

42. Fuck the housing market.

The housing market has caused suburban sprawl, which destroys habitat and increases air pollution by putting people far away from jobs. If buying single family homes is really what the market wants, then let's remove the market distortion favoring it and see if it survives. If it doesn't, then perhaps we did not need to craft the tax code to promote poor development and environmental policies in the first place. Moreover, the tax giveaway induces people to take on debt they can't afford and ensures that people who are using government services like roads and highways are not paying proportionate to their use of them. Not to mention the destruction of the pedestrian city center which promoted community, and good things like knowing and caring for thy neighbor as opposed to living in gated communities and driving SUVs just so we can "live the American dream" with our tax break that poor people can't afford to qualify for.

And, um, nobody said anything about reviving debtors' prison, so let's relax on the "go to jail" bit.

And regarding folks with a $2000 income paying $200 in taxes, very little would actually change. Those folks already pay 6.2% in SS taxes and 1.45% in Medicare taxes = 7.65% on all income. Add in sales taxes, gas taxes, cigarettes taxes, and they are already paying more than 10% of their income, so it would be doable if you had to. However, there are other things to consider.

Any proportional tax could be proportional with an income exclusion. For instance, the first $10K or $15K or whatever could be tax free, a sort of "personal exemption," and the flat tax of 10% or whatever % could kick in after that exclusion is met.

Looking at it another way, a totally flat tax (especially one easy to calculate like 10%) could actually benefit people of all incomes (even very low incomes) by adding transparency to salary negotiations. For example, if my boss says "I'm giving you a raise from $49K a year to $51K a year, I don't know what in the world that means. Will I see an extra $175 a month, $100, $50? Nobody has a frickin clue because nobody knows until April 15 what the hell is going on.

If you knew that you got to keep 90 cents of every dollar earned and that was the way it is no matter what, you could calculate your needs easily. Did you get offered $7 an hour? You know you take home and keep $6.30. If that is not enough to cover your living expenses, you can negotiate for more or turn down the job. As it is people say yes to jobs and only later realize that what is in their take home is insufficient and then they sign up for food stamps while working full time for Wal Mart. I think it would give workers power when negotiating with employers for salaries, it would not leave people at the mercy of H&R Block, and it would allow people manage their money better and therefore promote savings and ridiculous spending on houses they can't afford in the suburbs of LA.

Lastly, I don't buy the argument that some people are too poor to contribute to their community. If we have good enough social services, even the poorest can give a penny from his dollar and then she too can proudly say that she contributes to the community and take her rightful place in it. We are all our brothers keepers; it is reciprocal. Even the poorest can contribute taxes and then reap so much more in benefits. All we have to do is dream big and set up the system right.

Besides, I said it was flame bait, didn't I????

[Sirveri]

43. flame bait?

Like I said, I prefer a tiered flat tax system. Because the biggest threat I see to capitalism itself is the vast increase in the divide between the rich and poor, and the current decimation of the working class. One way to fix that is to give the ultra rich less incentive to take 20 Million dollar paychecks and instead return it to the company or its employees. If we have to tax everything made above 5 Million at 95%, then so be it.

[OrwellwasRight]

47. But they won't pay it;

they'll run to the politicians, say how it is unfair for the govt to take 95% of their income (which it kind of is, I mean, 95% is ridiculous, someone might as well make $0 if you are going to do that). The government, liking their political contributions and somehwat buying their argument will add tax breaks, deductions, exemptions and shelters back in, and we'll be right where we started: with many rich folk paying no taxes. That's one rfeason even many wealthy folks oppose flat taxes: because they know they's end up paying more. Better to get more out of them the fair and square and transparent way, with no deductions for arrowheads or expanding fraternity houses--real deductions by the way. A full 10% of Bill Gates's income is better than 95% of nothing, which is what we get now.

Besides, as I said, flat taxes collectr from each accorindg to his increasing ability to pay more taxes.

[Sirveri]

55. sure ok.

When I said 95%, I meant, everything after the 5Million mark would be taxed at 95%. Everything under that would be at a differant rate. But you're right, that will never go thru without a popular revolution. My plan is similar to flat tax, but not quite the same. But it's unlikely that you really care that much about it. The primary purpose of it is to discourage the excessive accumulation of wealth which leads to a widening of the rich poor divide.

[OrwellwasRight]

56. "The primary purpose of it is to discourage the excessive accumulation"

of wealth...

Totally agree. That is the primary purpose of the estate tax. Too bad so many Dems in the Senate support its abolition. It is one of the only things that you can have in a capitalist society that keeps its from devolving back into some medieval serfs & lords scenario. In fact, a variety of flat or progressive tax plans are at least defensible if you have effective and sufficiently high estate taxes to equalize after death and prevent the accumulation of wealth.

[Sirveri]

61. Of course dems oppose estate tax. They're rich.

If I was rich I would probably oppose it as well, but I'm a poor uneducated slob who is slowly being ground down into the morass of the ultra poor slave worker class. Actually, I likely wouldn't opposse the estate tax, because I know the accumulation of excessive wealth eventually leads to the destabilisation of society and eventual popular revolution, be that a liberal, socialist, communist, anarchic, libertarian, reactionary, conservative, theocratic, or whatever style revolution. I suspect the style will depend on the education of the masses at the time, god help us if we get a libertarian theocratic revolution when the reds wake up and realise that Bush's policies have been screwing them over for years and years. TV might be anasethsia, but like all drugs, you eventually develope a tolerance, no matter how strong the drug, they will eventually wake up.

[mopinko]

50. your last graph is exactly what i am trying to say.

you are talking about something entirely different. taxes. and the problem with taxes is that rich people and corporations don't pay what they owe under the system that we have. they all got accounts, ya heard?
but this is a totally different program, and your last paragraph speaks to my opinion-
"Lastly, I don't buy the argument that some people are too poor to contribute to their community. If we have good enough social services, even the poorest can give a penny from his dollar and then she too can proudly say that she contributes to the community and take her rightful place in it. We are all our brothers keepers; it is reciprocal. Even the poorest can contribute taxes and then reap so much more in benefits. All we have to do is dream big and set up the system right."

the people who started social security wanted to pay their penny. they did not want a handout. no one was going to give it to them anyway. but the reason it is what it is is so that it is NOT a welfare program.
i think welfare is fine. but ss is not it. and if you make it welfare- ie means tested, etc, it will be destroyed IMMEDIATELY.

[OrwellwasRight]

54. Glad you agree that all should contribute

but I could not disagree more on your position about not lifting the cap. That goes back to my first point about the cap making it so regressive that uber-rick folks don't even feel the tax. If we have to pay 7.65% of our incomes, so should they. As it is, it is just a giveaway to the rich. Moreover, people don't get back exactly what they pay for insurance, in SS or otherwise. Some young folks die and lose what they paid in; others die with kids and the kids get a survivor's benefit even though the kids have never contributed a dime. I may get fire insurance and never have my house burn down. You may have a million dollar covered car accident the first week after you pay your $250 premium, so it is a false analogy to say that because SS in insurance that, ipso facto, there outght to be a cap on what rich people contribute. Just as the poorest contribute a small amount, the richer contribute a bigger amount: that is what it is SOCIAL security: because we live in a society, not a Hobbesian free-for-all.

[cthrumatrix]

45. LOL...that is the plan...that is what they want --- a flat tax or a VAT

[mopinko]

2. it's not a tax

it is an insurance premium. and it is flat. everyone pays the same percentage, up to the maximum payment for the maximum coverage.

[tk2kewl]

4. point is that there is a maximum

remove the max and lower the %

[shawcomm]

9. Yeah. Remove the cap.

One's wealth shouldn't dismiss them from their duties as a citizen. The idea is that they shouldn't have to pay past a certain point because they can provide for their own retirement. That's not the point, they should be required to submit their percentage like the rest of us do. It's the cost of living in a civilized country.

Pay up.

[mopinko]

15. no, that is not the point

you don't pay past a certain point because you don't get paid past a certain point. no one wants the system to owe the wealthy a gazillion dollars a month.

[BlueEyedSon]

6. Right, remove the cap. Or at least jack it way the hell up there...

[mopinko]

12. so that rich people can get huge benefits?

people, it is a basic insurance package. BASIC. INSURANCE. if you lift the cap, you have to lift the benefits, to exactly the people you are hoping to soak. unless you want to just turn it into a welfare program, which will destroy it faster that * will.
don't take my word for it. teddy kennedy has been screaming this at the top of his lungs for the last 20 years.
what we need is a government that is not bankrupting the whole freakin country.

[w4rma]

18. Fine. Let them have them, if they paid into the system.

As it is the payroll tax causes folks making under 85K/year to pay MUCH more out in taxes than those who mainly pay through the income tax, instead.

[mopinko]

20. so raising the cap adds nothing

more in more out. a wash.
and it's not a tax.

[w4rma]

26. But in your post number 14 you say

"it is not income redistribution."

You can't have it both ways.

[mopinko]

31. sorry, don't follow your complaint

[bvar22]

27. Remove the CAP, AND

institute Means Testing for payout!

[mopinko]

37. then it isn't insurance

and i no longer own it. what does the balance in my account mean then?
you cannot sell that. i wouldn't buy it, and believe it or not, i am a good lefty. try selling that to bubba. just try.

[bvar22]

41. I could sell that to Bubba easily.

The only people who won't buy it are the very wealthy.
Its time they paid their fair share.

You sure are working hard tonight.

[BlueEyedSon]

48. Mo, you don't understand how insurance works.

You do not "own" the pile of money (ie. reserves) at the insurance company.

Just try going down to the Allstate office and asking for the "cash balance" of your car policy, or to Cigna and ask them to write you a check for what you have "accrued" in your health insurance. Good Luck.

You could pay thousands of dollars a year for 20 years and - guess what? - NEVER COLLECT. I think for major medical & car that is the BEST CASE scenario (who needs the aggravation of being sick or in a car crash?).

The only way insurance works is statistically over a population. Some people will get more out in benefits than they pay in (based on circumstance and need) and some will pay in more. Assuming that the growth of the reserves only matches inflation, the premiums paid in must be larger than benefits to pay for operations & overhead (administration, advertising, etc).

[mopinko]

49. bes, you don't understand

it is not like car insurance, it is more like whole life, that pays out as an annuity. and when you tell me i have to pay $100/yr to get $10,000 on death, you cannot just say oops, we didn't do the math very well, and them write my family a check for $8,000. yes, premiums get raised sometimes. but a company that raises them to cover the fact that funds are being misappropriated elsewhere in the company would be in trouble with the law.

try this scenario-
a young married couple just starting out, with nothing but obligations, buys a life policy when they start a family. they are both lucky and hard working, and over the years, they accumulate a decent estate, and raise their kids to be upstanding and successful adults. they don't really need the insurance any more, but they continue to pay.
they die. if this is you, what are you going to say when the guy from state farm comes by and says, sorry kids, i know your parents paid all their life, and expected to leave you this gift. but i gave your check to the folks down the street who didn't have your parents good luck. they need it more.
i'm a good lefty, so i might even buy into such a system. but you ain't gonna sell that policy to most people. and i especially think you would have a revolt on your hands if you passed a law that everyone had to buy such a policy.

[BlueEyedSon]

51. Maybe in all the noise in this thread I missed your "solution".

[mopinko]

52. how about

it ain't broke, don't fix it.
seriously. i did offer a solution- post 17
if i have the problem wrong, please straighten me out.
the problem is that when the boomers retire, there will be too few wage earners to pay benefits. you could do few things.
use al gore's lock box. it's the sucking up of ss payments by revenue deficits that is what is REALLY broken right now.
elect democrats who will grow the economy. the projected shortfall is based on certain growth projections that i suspect would be exceeded without the rape and pillage of the rest of the whole entire pie. bill did it with the federal deficit.
stop the race to the bottom. raise the minimum wage to a real living wage. presto. more income to the system.
invest in educated workers. presto again.
and lastly, if we need more workers, let them in. they are stacked up at all the borders. when the boomers leave their jobs, many will still have money, and will still be consuming. they will need people to take care of them. we will need people to fill their old jobs. i don't see how we can keep the economy running at all without allowing in more workers.
i'm not an economist, i can't swear these things are true.
but you just can't destroy this system. it is one of the best things we have ever done as a country.

[Blue Wally]

57. We need to undo

what our own Democratic senators and congressmen screwed up a few years back. Social security must be taken off budget. It must have its own, very visible budget (not a fictional "lock box" which wouldn't have fared any bewtter under Gore). Each year a public report must be written on the viability of the program. Yeah, the program can invest in federal bonds, but there would be strit accounting.

[mopinko]

60. you got that straight

[shawcomm]

19. It's not insurance in the normal sense at all...

It's a social program, with benefits based on income and need. It should remain that way.

[mopinko]

23. absolutely wrong

need is not part of the equation, except for ssi, which is a very, very tiny part of it.
it is insurance. period. government administered. and forced, yes. like most states make you insure your car. but it is your money, your account. period. and yes it is my money, and my account. maybe i would give you some, cuz i am nice. but try that with most people, and they will kill this program so fast it will make your head spin.
it is precisely this ownership that has kept is safe from the constant attempts to destroy it from day one.

[shawcomm]

40. I'd agree that it's like insurance in that you

pay a premium with the expectation of a certain amount paid should something happen to you. But, it's not equitable insurance. A person's money paid in isn't actually sitting in an account somewhere, it's already been used to pay current receivers. Otherwise there wouldn't be any worry over how long SS will last.

I've known a few people who receive SS (after retirement) who have no need for it at all. I just think SS should be reserved for those who need it.The country should provide a backup to those who aren't as priveleged. I guess I'm saying that we should stop pretending that SS is an insurance/retirement account and call it what it is, a social program to provide for those unable to provide their own retirements. Just call it what it is, a tax, and tell the wealthier people who object to it then, "tough."

[BlueEyedSon]

46. You don't "have" to do anything of the sort.

If you were running a private insurance company, and you saw that you could not provide the intended benefits with the current premium income structure, you would fix it.

No one said anything about changing the benefits.

[dweller]

5. read this and figure

out why 2018 is the year of 'crisis' according to the *moron in chief.

http://www.csmonitor.com/2005/0127/p09s01-coop.htm


dp

[nuxvomica]

10. Great explanation of the situation

Thanks for posting.

[dweller]

11. Please pass on the link, thanks. n/t

dp

[sally343434]

7. It already is a flat tax

It just stops taxing at $87,900. Every dollar below that is taxed at 12.4%. If you're self-employed, you pay it all. If you're an employee, you pay half and the employer pays half. But you really end up paying it all anyway, since the employer's half is considered part of your "potential wage."

Also, this tax is only on wages, so those who make all their income from "investments," like campaign contributions, pay nothing at all.

The obvious solution here is to remove or raise the cap.

[tk2kewl]

8. right, but the fact theat there is a cap makes it regressive

the more money you earn, over the cap, the smaller percentage of your overall income you pay.

[mopinko]

13. it may be obvious, but it is wrong

wrong, wrong, wrong.

[w4rma]

24. Oh yeah? Where would *you* set the cap at that is fair, since you love it

so much?

Just remove the blasted thing.

[mopinko]

39. how much do you think the maximum payment should be?

work backwards from that. simple. straight line.

[Telly Savalas]

58. Many of us don't think there should be a maximum payment.

There aren't maximum payments or caps on taxes going towards other government programs, so why should Social Security be any different?

[mopinko]

14. the least the left can do

is stop proposing bad ideas to fix something that is not broken. understand the program people. it is not income redistribution. it works because it is insurance. people own it. if you start taking money from wealthier people to give to poor people, then who owns it?

[mdhunter]

21. Just a quick note

The principle of insurance works (best) because of income redistribution. It just is a matter of from whom to whom.

Insurance is pooled risk, and people pay premiums that, on average, they won't get that amount of services back. But they're happy to pay because, if they need more, they'll have it. Insurance now is about redistribution from the healthy to the sick.

It used to be, in the age of Blue Cross insurance dominance (and should be this way again, if you ask me) that money was also redistributed from rich to poor. Then, people were charged much similar premiums than they are now. The older people were paying practically the same as younger less established people. This method of pricing insurance is called community rating. You have one, or a very narrow band of rates. Then, when private cos. got into the insurance game, the recognized that young people made fewer claims and subsequently cost less to insure. So, they started offering lower premiums to attract clients - leaving the established companies without their young healthy base that was paying for the poor and old. Those people that were left were expensive to insure, and soon community ratings had to be abandoned.

All that to say that, though I see no need to draw attention to it, income redistribution is essential for health insurance - money has to be taken from one group and paid to another and there is a history of taking it from the more wealthy and giving to the less in this country.

[mopinko]

28. not the same thing

pooled risk, paying those that have losses, and income distribtion, taking from the have to give to the have nots are not the same. nobody knows who will have a loss, although there are educated guesses. rich people know who they are.

[mdhunter]

44. But

For the sake of argument, and this is true, that, let's say, poor black people are categorically in worse health than rich white people.

So, while nobody knows exactly which specific person will be drawing more benefits than they pay in, you can be sure, on average, lower income people take a larger percentage than they pay in. That situation, as was the case with community rating, was an effective transfer from the rich to the poor. The poor are both more in need of medical services and less able to pay for them.

The destitute poor have always had it tought when it came to health insurance. The working poor's health outcomes rose markedly up until the the private insurance companies entered the market and wanted to attract younger people with lower rates. Since that time, attainment has stagnated. That is directly related to the loss of funding, transfer, from the wealthy to the poor. What they're left with is a traditional insurance model that relies only on pooled individual risk, i.e., the transfer from healthy to the sick. They lost the pooled social risk, i.e., the transfer from the rich to the poor. As a result premiums go up, more people opt out, health outcomes go down.

Health insurance and Social Security should, in my opinion, emphasize the Social part of its name first. The system wasn't created, and shouldn't exist, for the purpose of benefits accruing to individuals. If that were the case, what's the point of a system at all? Why not let people keep all of their money and have them save for health and old age on their own?

One last thought. And, by the way, please don't read any of this as being contentious, just laying out what I know and have thought about on the subject... Everyone is prepared to accept that, via pooled risk, a transfer of wealth occurs - from the healthy to the sick. We're all ok with that, it's necessary for insurance to work. If we're ready to accept some transfer of wealth, why not more? Why not, like it used to be, from the rich to the poor... especially given that health outcomes improved more rapidly in that situation? It seems like the moral thing to do.

[mopinko]

53. this is wrong.

"you can be sure, on average, lower income people take a larger percentage than they pay in."

actually, this has been floated around, and it is not really true. they were talking about the alleged "black differential" on aar the other day. because the program pays disability as well as survivors benefits, there is a differential but it is very, very tiny.

[mopinko]

17. and, all you need is more taxpayers

which, last i checked, were stacked up at every american border. when the boomers are out of the work force, and in assisted living, there will be lots of jobs.
please, please, before you mess with the most effective social program ever, freakin understand it.

[w4rma]

33. So you want to increase immigration, also, to pay for this?

That is going to sink like a lead balloon if you try to sell that to Americans. That's extremely unpopular.

[mopinko]

36. so is taking money from people who earned it

to give it to people who didn't. or hadn't you noticed.
the boomers will be happy to let in enough immigrants to keep their asses wiped.

[Telly Savalas]

59. Isn't this the basis for all social assistance programs?

Should we abolish all of those, too?

If money a person puts into Social Security is their money to be used solely for their own benefit, then wouldn't it make sense to simply allow them to hang onto to it like that guy in the White House is proposing?