News What Are Payroll Tax Supported Programs to You?

[russ_watters]

What it means is to confront reality.

The problem with the math of Social Security is something most people have been hearing their entire working life. While it's fun for members of the AARP (and anyone else getting remotely close to retirement age) to claim that the government has to live up to the promises they made when they created Social Security, I wonder how many have spent their working years really believing those promises would be kept.

A pension plan that you're contributing money to means that money is being invested, saved, etc, and that it's there the entire time it's being accumulated. When the money you're 'investing' is actually being used to support the generation that retired before you, then that sounds like a tax, regardless of the words that were used to sell that tax.

To be honest, the only reason there's any possibility of Social Security fulfilling the promises it made to the baby boom generation is that there's a whole bunch of us and we'll elect Congressmen that care more about making sure we get our money than things that will happen to the country after we're dead. And that still doesn't sound like your traditional pension plan.

Yes, Bob, thank you. That's the point I'm driving at. It is my perception that people are unwilling to confront the realities regarding SS. It irritates me plenty when I see in this forum people saying 'we can't cut SS, that's my money - I paid in my whole life!' That's the other side of the coin to this thread and '...but we still should consider this when deciding of our tax rates are progressive enough' is where I drew the line in the sand. People who favor SS and/or a more progressive tax structure almost never look at the two sides of the issue at the same time.

 

[russ_watters]

I didn't clearly address your OP in my first post, so here goes:

I agree with this, and I think that what needs to be done is to stop considering SS as a "pay-out based on what you pay-in investment/insurance program". However it won't be completely divorced from the pay-in because a person would have to have paid in a certain minimum amount, as well as pass a means test, in order to qualify for what I think should become a subsistence level flat payment. That is, consider the SS tax as a tax like any other tax, and treat SS as a welfare program.

Ultimately, we may end up with that, but I fear that older people are going to suck the program dry and drive the country into the ground - to Greece style bankruptcy - before such restructuring happens.

What that blow-up of SS would mean for the future tax structure, I'm not sure, but if it turns into a subsistence-level welfare program, I would assume the program (and of course the total taxes collected) would be massively reduced (as you said later).

 

[russ_watters]

If I pay in and don't get out, then I will certainly consider it a tax, who wouldn't? None the less, I expect some kind of means test will have to be imposed as well as a delay in the retirement age. A problem with the means test is that I have been contributing to my 401K. If that money is considered 'means', then I was robbed.

The money you pay into the 401k is your money in your 401k account. Certainly, if someone raids that, you were robbed. But SS funding is just a tax that can be used for whatever the government wants and shouldn't be tied to what you paid in...right?!

 

[ThomasT]

My neighbor and I make a strange pair. We always earned exactly the same amount every year. The only difference is that he lived it up spending every dime while I lived like a monk and saved up in my 401k. Now we are retiring. He with a SS pension, and me with none. I was robbed.

Isn't your 401K money significantly more than what you get from SS? So, won't you enjoy a more comfortable retirement than your neighbor? Anyway, the way things are now, don't you get both? You haven't been robbed yet, have you?

 

[ThomasT]

Ultimately, we may end up with that, but I fear that older people are going to suck the program dry and drive the country into the ground - to Greece style bankruptcy - before such restructuring happens.

Considering Congress's record, your fears are well founded. It will be interesting to see what actually transpires. I hope they don't let things slide too far. The solutions are there. It just takes the will to implement them.

 

[Jack21222]

It's a little more specific than that: it's [supposed to be] earmarked for the person who paid it. Does that change it any for you? I have never once heard anyone complain that they pay more into their 401k than their neighbor at work, while paying the same for health insurance. Have you?

No, it doesn't change anything for me, because social security has very little in common with a 401k. A 401k is MY money, and I can have access to it whenever I'd like. Sure, there's a tax penalty, but if I'm unable to afford food, or I'm late on my mortgage, or my gas and electric is about to be shut off, I can pull money out of the 401k. Additionally, the 401k is voluntary, and if contributing to the 401k would cause me to go without food for a week, I could cancel my contributions until my finances improve.

With social security, money gets taken out whether I want it to be or not, and whether I can afford it or not. I have no access to my money at all, and whether I actually see my money is entirely dependent on the whims of the government. They could easily push the age of retirement back beyond my life expectancy, or reduce the monthly payments, or cancel the whole program altogether. That cannot happen with a 401k, I can always get my money out.

 

[ThomasT]

What that blow-up of SS would mean for the future tax structure, I'm not sure, but if it turns into a subsistence-level welfare program, I would assume the program (and of course the total taxes collected) would be massively reduced (as you said later).

To me it makes sense to increase the SS tax by a few percentage points, while at the same time reducing the SS program by making it a subsistence level flat payout to means tested qualifiers. Even with wise spending, the government is going to need increasingly more revenue to deal with future problems other than SS and healthcare.

 

[Jimmy Snyder]

I know it's a tax - it says so right there on my paystub. That's not the issue.

Sorry, I thought it was the issue. It was in the first sentence in the OP. "what taxes to include in an accounting of peoples' tax burden". If it was already known from the start that SS taxes are taxes, then what does it mean to discuss whether or not to include them?

 

[WhoWee]

WhoWee:

Never once in any of my posts have I ever said the millionaire "deserves" only 10% of his or her income. I would really appreciate it if you'd actually read what I wrote as opposed to making up things you wish I had said.

You are correct Jack - you didn't use the word "deserve" - but as Russ stressed in the OP - your meaning was clear.
"Even if we taxed every dollar of somebody who makes 1,000,000 per year at 90%, they'd still clear 100,000 per year. If somebody here wants to say a person cannot survive on clearing 100k per year, I'd like to hear it. "

 

[Jack21222]

You are correct Jack - you didn't use the word "deserve" - but as Russ stressed in the OP - your meaning was clear.
"Even if we taxed every dollar of somebody who makes 1,000,000 per year at 90%, they'd still clear 100,000 per year. If somebody here wants to say a person cannot survive on clearing 100k per year, I'd like to hear it. "

I agree, my meaning was clear, but you still don't get it.

I posed an absurd situation in which somebody making 1,000,000 per year was taxed at 90% for all of it. I repeat, that is an absurd situation. It would be horribly unfair, and I would never support such a heavy tax.

Have I made that clear enough?

Then, I posed a more plausible situation, where a person making 15k per year is taxed at 2% on all of it. I'm talking net, not gross, by the way. This takes into consideration all taxes and all tax credits. He loses 2% per year.

It is my argument that the person being taxed at 2% in this scenario is being taxed more harshly than the person being taxed at 90%, based on the impact it has on their ability to live.

Both people are being taxed harshly in this situation. Neither situation is fair in my eyes.

Am I still being clear? I never once advocated that taxing millionaires at 90% is a good idea. It's a terrible idea, in fact. I never said they only "deserve" only 10%. This comes entirely from your imagination. Again, I ask you to read what I actually wrote instead of what you wish I had wrote. Setting up straw man arguments to tear down is a logical fallacy, and I'm sorry if you feel I'm being rude by pointing that out (that's usually your next step in these threads, is to accuse people of being rude for pointing out your mistakes.)

 

[WhoWee]

I agree, my meaning was clear, but you still don't get it.

I posed an absurd situation in which somebody making 1,000,000 per year was taxed at 90% for all of it. I repeat, that is an absurd situation. It would be horribly unfair, and I would never support such a heavy tax.

Have I made that clear enough?

Then, I posed a more plausible situation, where a person making 15k per year is taxed at 2% on all of it. I'm talking net, not gross, by the way. This takes into consideration all taxes and all tax credits. He loses 2% per year.

It is my argument that the person being taxed at 2% in this scenario is being taxed more harshly than the person being taxed at 90%, based on the impact it has on their ability to live.

Both people are being taxed harshly in this situation. Neither situation is fair in my eyes.

Am I still being clear? I never once advocated that taxing millionaires at 90% is a good idea. It's a terrible idea, in fact. I never said they only "deserve" only 10%. This comes entirely from your imagination. Again, I ask you to read what I actually wrote instead of what you wish I had wrote. Setting up straw man arguments to tear down is a logical fallacy, and I'm sorry if you feel I'm being rude by pointing that out (that's usually your next step in these threads, is to accuse people of being rude for pointing out your mistakes.)

Again, no need to be rude - or arrogant. I'll invite others to comment as to what they thought you meant. As for mistakes - have I provided enough information regarding small businesses to help you understand the definition of one yet?

 

[WhoWee]

I agree, my meaning was clear, but you still don't get it.

I posed an absurd situation in which somebody making 1,000,000 per year was taxed at 90% for all of it. I repeat, that is an absurd situation. It would be horribly unfair, and I would never support such a heavy tax.

Have I made that clear enough?

Then, I posed a more plausible situation, where a person making 15k per year is taxed at 2% on all of it. I'm talking net, not gross, by the way. This takes into consideration all taxes and all tax credits. He loses 2% per year.

It is my argument that the person being taxed at 2% in this scenario is being taxed more harshly than the person being taxed at 90%, based on the impact it has on their ability to live.

Both people are being taxed harshly in this situation. Neither situation is fair in my eyes.

Am I still being clear? I never once advocated that taxing millionaires at 90% is a good idea. It's a terrible idea, in fact. I never said they only "deserve" only 10%. This comes entirely from your imagination. Again, I ask you to read what I actually wrote instead of what you wish I had wrote. Setting up straw man arguments to tear down is a logical fallacy, and I'm sorry if you feel I'm being rude by pointing that out (that's usually your next step in these threads, is to accuse people of being rude for pointing out your mistakes.)

I'd like to invite everyone to read Jack's post above - then read his original post below - and share what you think he meant. my bold
""Even if we taxed every dollar of somebody who makes 1,000,000 per year at 90%, they'd still clear 100,000 per year. If somebody here wants to say a person cannot survive on clearing 100k per year, I'd like to hear it. ""

Given his challenge - it seems he was quite sincere about the 90% tax - doesn't it?
BTW - All of my posts tie back to the OP - if anyone thinks I've put up a strawman - please indicate.

 

[WhoWee]

Setting up straw man arguments to tear down is a logical fallacy, and I'm sorry if you feel I'm being rude by pointing that out (that's usually your next step in these threads, is to accuse people of being rude for pointing out your mistakes.)

my bold
Please support - "usually" implies more than once - perhaps even often. If you can't support - please retract.

 

[Jack21222]

have I provided enough information regarding small businesses to help you understand the definition of one yet?

You've now gone from straw man to red herring. The definition of small business has absolutely nothing to do with the topic of this thread.

http://www.infidels.org/library/modern/mathew/logic.html#herring (from the stickied thread in this forum)

Please support - "usually" implies more than once - perhaps even often. If you can't support - please retract.

Surely you can go through your own posts just as easily as I can. I was right, wasn't I? That was your next step.

 

[WhoWee]

You've now gone from straw man to red herring. The definition of small business has absolutely nothing to do with the topic of this thread.

http://www.infidels.org/library/modern/mathew/logic.html#herring (from the stickied thread in this forum)



Surely you can go through your own posts just as easily as I can. I was right, wasn't I? That was your next step.

Interesting response Jack - as for the small business definition you posted:
"Don't be so thick. If a business owner makes a million dollars a year in salary, it's not a small business."
My response was to provide the Government's definition of a small business that clearly supported my post. Then, after I asked you not to be rude, you attempted to taunt me with:
"Wow, you seriously can't tell the difference between a business's net income and an owner's annual salary. Plus, even if it IS a "small business owner" who employs people and yada yada yada like you said, could you please explain to me how that would have any relevance at all on the point I made?"
Then you objected to the word "deserves" and here we are.

I will support my comments all day long and admit when I'm wrong - apologize as well.

You were not right when you posted this personal attack:
"(that's usually your next step in these threads, is to accuse people of being rude for pointing out your mistakes.)"

You need to either support your post specifically or retract it and quit playing games.

 

[Jack21222]

You need to either support your post specifically or retract it

I need to do neither, and you're going to get this thread locked with repeated off-topic posts.

 

[WhoWee]

I need to do neither, and you're going to get this thread locked with repeated off-topic posts.

Support or retract - put up or shut up sir!

 

[Mech_Engineer]

This thread has moved pretty fast, but I wanted to go back real fast and address a post Jimmy Snyder made:

As for the point that I might actually have to make, it might be clearer if I referred to the phrase in the Constitution that seems to negate the rest of the document: "Promote the general welfare". I am asking if the SS program promotes the general welfare. If not, then it should be abolished as unconstitutional. If it does, then perhaps it should be considered a tax. I didn't have a point, I merely asked a question.

The "general welfare clause" in the U.S. Constitution is not an enumerated power, it is a qualification to describe the limited power the federal government has for the purpose of taxation. Like the mention of "the general welfare" in the preamble, it is included as a descriptive modifier.

Unlike some other countries' constitutions which do provide a specific enumerated power for general legislation for the "general welfare," the US Constitution provides no such power.

 

[daveb]

This thread has moved pretty fast, but I wanted to go back real fast and address a post Jimmy Snyder made:



The "general welfare clause" in the U.S. Constitution is not an enumerated power, it is a qualification to describe the limited power the federal government has for the purpose of taxation. Like the mention of "the general welfare" in the preamble, it is included as a descriptive modifier.

Unlike some other countries' constitutions which do provide a specific enumerated power for general legislation for the "general welfare," the US Constitution provides no such power.

To add in what was said, even though it isn't an enumerated power, the supreme sourt has held that it can be used as an aid to determine the applicability of certain enumerated powers, such as eminent domain in the 5th amendment (see Ellis v City of Grand Rapids). Much as I detest using Wikipedia for a source, it actually has a good treatment of how the courts have used the preamble. http://en.wikipedia.org/wiki/Preamble_to_the_United_States_Constitution"

 

[mheslep]

This thread has moved pretty fast, but I wanted to go back real fast and address a post Jimmy Snyder made:
The "general welfare clause" in the U.S. Constitution is not an enumerated power, it is a qualification to describe the limited power the federal government has for the purpose of taxation. Like the mention of "the general welfare" in the preamble, it is included as a descriptive modifier.

Unlike some other countries' constitutions which do provide a specific enumerated power for general legislation for the "general welfare," the US Constitution provides no such power.

While I agree with that interpretation, that is not the Hamiltonian view or the view held by SCOTUS since the New Deal cases. If the view stated here held, SS would have been rejected on constitutional grounds in the 30s.