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Thread: Social Security Cap

  1. #1
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    Social Security Cap

    Should we get rid of the cap and tax 100 percent of earnings?

    http://www.youdebate.com/DEBATES/TAX_SOCIALSECURITY.HTM

  2. #2
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    The tax is imposed on the INCOME OF EVERY INDIVIDUAL AND DEDUCTED AS A GIVEN PERCENTAGE OFTHEIR WAGES! [26 USC 3101 a & b]

    Social Security is merely the world's largest Ponzi Scheme (a.k.a. Pyramid Acheme).


    QUOTE=admin]Should we get rid of the cap and tax 100 percent of earnings?

  3. #3
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    Yes. In my entire working life (and I made a good salary), there was only one year I did not pay all year (that year was when the entire company I worked for got bonuses which looked like lump sum income!)........... why not have all those making over $100,000 paying on every cent they make? [I believe it is above the cap of $68,500 quoted in the article, as the last 2 years I worked, I made more than that, but still paid all year] Even so, why not take taxes until the top of the income, or at least put it at the current % to $1 million income!

  4. #4
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    The Social Security Tax is the most the regressive tax we have. If you earn $90,000 a year you pay around 6.2% of your income in Social Security Taxes and your employer matches that. If you earn $900,000 you pay about 0.62% in Social Security Taxes (and your employer matches that). If you earn $9,000,000 a year (Bill Gates, Warren Buffet and the like earn considerably more than that) you pay 0.062% in Social Security Taxes (and your employer matches that). Imagine the stimulus to the economy if the laws were changed and there was no cap, simply a tax rate (say 1.5%) on all income (which employers would NOT have to match).

  5. #5
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    Quote Originally Posted by Howard Beale
    The Social Security Tax is the most the regressive tax we have. If you earn $90,000 a year you pay around 6.2% of your income in Social Security Taxes and your employer matches that. If you earn $900,000 you pay about 0.62% in Social Security Taxes (and your employer matches that). If you earn $9,000,000 a year (Bill Gates, Warren Buffet and the like earn considerably more than that) you pay 0.062% in Social Security Taxes (and your employer matches that). Imagine the stimulus to the economy if the laws were changed and there was no cap, simply a tax rate (say 1.5%) on all income (which employers would NOT have to match).
    Why don't you quote the earnings cap on SS contributions to display a apples to apples comparison?

    And how would that stimulate the economy? Allow administration even more trust money to plunder?
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  6. #6
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    Georged,
    Why don't you quote the earnings cap on SS contributions to display a apples to apples comparison?
    I don't think I understand what you are asking. Please give me an example of "a apples to apples comparison". Are my figures incorrect?

    And how would that stimulate the economy? Allow administration even more trust money to plunder?
    Employers’ contributions would end thereby relieving businesses of that huge expense. The government would still have the same amount of money to plunder.

  7. #7
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    Quote Originally Posted by Howard Beale
    Georged, I don't think I understand what you are asking. Please give me an example of "a apples to apples comparison". Are my figures incorrect?

    Employers’ contributions would end thereby relieving businesses of that huge expense. The government would still have the same amount of money to plunder.
    You're after redistribution of wealth from those individuals earning over $90k/yr. The percentage of withholding is the same for everyone to the $90k cap. Your example is deceptive in that it appears a high income individual is paying less than a lower income individual.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  8. #8
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    Yo, Georged
    You're after redistribution of wealth from those individuals earning over $90k/yr.
    Thank you for the astounding insight into my simplistic mind. I did not realize that I was such a simpleton and in communication with such a superior being – one who can discern my inner most thoughts and motives by simply reading three sentences I wrote.

    Your example is deceptive in that it appears a high income individual is paying less than a lower income individual.
    I hate to burst the bubble of such a superior being as yourself, but a high income individual does pay less (in FICA Taxes) than a lower income individual. You may not like them, but the figures I gave are accurate.

    A bit of history (which I am sure you already know): In 1937-38, the first year of the FICA Tax, the average per capita income in the US was $500. In 2004 it was $41,000. In 1937 the FICA Cap was $3,000 over 6 times the average income. In 2004 it was $84,000, a bit over 2 times the average income. If we simply stayed on the same ratio, the cap today should be $250,000.

    You see, different than every other tax (Income Tax, Property Tax, Sales Tax, Lodging Tax, etc.), FICA is not allowed to increase in accordance with the increase in income over the decades. Sales Tax remains the same whether you pay $20 for your shoes or $100. Property Taxes remains the same whether your home is worth $100,000 or $1,000,000. Income tax does not decrease the more you earn either (although there are studies that indicate that many extremely wealthy individuals and corporations pay no income tax because of special tax shelters. These tax shelters require you to have money to take advantage of them.) Only the FICA Tax says you get taxed $5 on your shoes up to $80. If you buy a pair of shoes that costs $800, you still only have to pay $5 in taxes, you don’t have to pay taxes on $720 of the $800. That’s how it is. Seems like the FICA Tax burden is falling unfairly on the lower income population.

    Maybe what you are after is taking a higher percentage of money (which they have earned) away from people earning $90,000 or less by making them pay more taxes.

  9. #9
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    None of the other tax structures you mention have defined benefit returns based on taxes collected. Increase benefits accordingly for the higher contributions and you'll have a point. Otherwise, it appears as redistribution of wealth.

    Your figures are mathematically correct as a percentage of income paid in taxes, but since benefits are capped regardless of income, I repeat they are not a apples to apples comparison.

    Get some money together, take advantage of those tax shelters you mention and you won't be concerned about promoting legislation for redistribution of wealth.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  10. #10
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    Hey Georged,

    So we are in agreement: A person who makes $100,000 pays a ten times greater percentage of his income in FICA Taxes than a person who makes $1,000,000; in effect, that lower income individuals do pay a higher percentage of their income in FICA Taxes than a higher income individual. That is the textbook definition of a regressive tax.

    Can we also agree that if the 1937 cap of $3,000 was extrapolated to 2005 dollars it would be at $250,000? If you need to verify the stats, there are plenty of resources. Online you can start with “www.ssa.gov”. Not that the cap “should be” $250,000, but “would be” $250,000. That is simply a time value of money extrapolation.

    You then raise the issue of “redistribution of wealth”. I agree with your concern. Anytime the government takes anything of value from one citizen or entity and then uses it to benefit another citizen or entity, it is a matter of concern for all of us. For a long time now our government has taken from high income individuals and redistributed to lower income individuals. The government has also taken from lower income individuals and redistributed to higher income individuals. The question is, “which side has benefited more?” From my analysis, the higher income individual is winning this redistribution equation. I am curious about your thoughts on that.

  11. #11
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    We're in agreement only on your simple mathematics. You're still avoiding the defined benefit issue as a measure of contributory equality. Simple math grade A, deception grade A.

    Raising the cap will merely push more high income individuals towards deferred income structuring to utilize quarterly tax deposits and penalize lower income classes if they advance their income levels. Everyone would be seeking LLCs to distribute their income. Your only solution for future SS solvency is increasing the tax rate while lowering the benefit with perpetual actuary adjustment.

    Financial equality is not a realistic goal in a capitalist economy unless you're advocating a move to pure socialism using redistribution of wealth through taxation. Which would promote capital flight and defeat your objective.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  12. #12
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    Georged,
    Financial equality is not a realistic goal in a capitalist economy unless you're advocating a move to pure socialism using redistribution of wealth through taxation. Which would promote capital flight and defeat your objective.
    Before bothering to address the issues you raise, I am curious: what is my objective?

  13. #13
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    Quote Originally Posted by Howard Beale
    Georged,Before bothering to address the issues you raise, I am curious: what is my objective?
    I used first person as a convenience; I have no idea if what you post on a public forum is your personal objective, that of an organization or theoretical discussion.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  14. #14
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    Quote Originally Posted by Howard Beale
    Georged,Before bothering to address the issues you raise, I am curious: what is my objective?
    Just a guess, but how about "stimulating the economy"? (Whatever it means under these circumstances)
    Knowledge is power. Hide it well.

  15. #15
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    Georged,
    I used first person as a convenience; I have no idea if what you post on a public forum is your personal objective, that of an organization or theoretical discussion.
    I do not believe I have demonstrated a specific objective in my posts, be it a personal objective, a theoretical one or that of an organization. Have you discerned differently?

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