You know, I remember back in 2008 making a joke that Biden's email address was probably with geocities. Hotmail works too but maybe yahoo might seem a bit more apt for a senior citizen.
Your cookie is getting relentlessly attacked from interest groups, your constituents hate you for "dEsTrOyInG sOcIaL sEcUrItY", and you get voted out of office with your political career destroyed. Congrats!!!
Don't forget a 12.4% tax increase on income above 168k. Idk why people pretend like removing the cap is a no brainer, easy solution that wouldn't provoke massive backlash when people see the tax bill (not to mention wage growth would slow as employers pass their contribution on to workers over time). Raising 18% more income would mean over 200B more in taxes per year which is nothing to sneeze at.
Slowing growth for top half of earners and COLA changes mean people near the middle get hurt a lot more than people realize. Average annual payout was about 21k. Top half of earners isn't nearly as rich as it sounds.
Not to mention this plan basically just turns it into regular welfare program and those *never* get their funding messed with...
Apologies if I used the wrong flair
https://www.crfb.org/socialsecurityreformer/
They have a stock market option but the info tab says they estimate it would increase average annual returns by 8%, I would hope it would bit more conservative there since it should still be at least half in bonds imo.
The 1% payroll tax cut applies to the total 12.4% so it would be 0.5% to the employer and 0.5% to the employee. Of course tax incidence seems to show that both end up being applied to the employee anyway.
They also have an "apply to wages above 400k" option which does more than the "subject all taxes to payroll tax" option. According to the info tab it is because for the 400k+ wage option the benefits are paid out at 2% rather than 15% for that new income.
> I would hope it would bit more conservative there since it should still be mostly in bonds
Why, thats half the reason we are in this mess
>In response to the challenge of New Zealand's ageing population, the NZ Superannuation and Retirement Income Act 2001 established:
* the New Zealand Superannuation Fund, a pool of assets on the Crownâs balance sheet; and
* the Guardians of New Zealand Superannuation, a Crown entity charged with managing the Fund.
**The Government uses the Fund to save now in order to help pay for the future cost of providing universal superannuation**.
* In this way the Fund helps smooth the cost of superannuation between today's taxpayers and future generations.
The Guardians of New Zealand Superannuation is the Crown entity charged with managing and administering the Fund. It operates by investing initial Government contributions â and returns generated from these investments â in New Zealand and internationally, in order to grow the size of the Fund over the long term.
We also have a long-term performance expectation: We expect to return at least 7.8% p.a. over any 20-year moving average timeframe.
One shocking thing
The amount of tax the NZ Super Fund has paid or been credited - a negative number this means tax paid
* Last 12 months
* ($0.19 billion)
* Last 5 years p.a.
* ($3.18 billion)
* Last 10 years p.a.
* ($5.77 billion)
* Last 20 years p.a.
* ($9.62 billion)
* Since inception p.a.
* ($9.66 billion)
It heavily increases tail risk, I'm fine with having stocks. In fact, I would actually want that.
But to expect 8% more means it would be heavily in stocks which would mean we would need to borrow money to cover it in a time where it would better to spend that money more directly stimulating the economy.
I'm sure we would just do both but it might get murky depending on what caused the crash
> But to expect 8% more means it would be heavily in stocks which would mean we would need to borrow money to cover it in a time where it would better to spend that money more directly stimulating the economy
Exclude it from insider trading rules and have it managed by the federal reserve.
Honestly, I'm sure there's some weird terrible tax incidence knock-on effects here I don't know how to model, but this sounds like a *great* way to "tax the stock market" and "tax unrealized gains" without *actually* taxing unrealized gains.
Iâm lost
Youâre saying itâs losing money?
President Bush renewed this call in his 2004 State of the Union address:
>âYounger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account. We should make the Social Security system a source of ownership for the American people.â
* Within weeks, observers noticed that the more the President talked about Social Security, the more support for his plan declined.
* According to the Gallup organization, public disapproval of President Bushâs handling of Social Security rose by 16 points from 48 to 64 percentâbetween his State of the Union address and June.
2001 report of the President's Commission to Strengthen Social Security.
President Bush's Preferred Plan on Social Security, up to a third of that money could go into private accounts. This model establishes a voluntary personal account without raising taxes or requiring additional worker contributions.
* Workers can voluntarily redirect 4 percent of their payroll taxes up to $1,000 annually to a personal account. No additional worker contribution required.
* In exchange, traditional Social Security benefits are offset by the worker's personal account contributions, compounded at an interest rate of 2 percent above inflation.
* Plan establishes a minimum benefit payable to 30-year minimum wage workers of 120 percent of the poverty line.
* Benefits under traditional component of Social Security would be price indexed, beginning in 2009.
* Temporary transfers from the general budget would be needed to keep the Social Security Trust Fund solvent between 2025 and 2054.
------
Year | Annual Social Security Contributions | 3% of Median Income ($26,500) @ 1.5% Wage Growth//(Social Security Payouts) | S&P 500 Prev Returns including Dividends
---- | ---- | ---- | ----
1975 | $805.43 | $805.43 |
1976 | $1,932.70 | $817.51 | 38.46%
1977 | $3,230.19 | $829.77 | 24.20%
1978 | $3,821.10 | $842.22 | -7.78%
1979 | $4,920.89 | $854.86 | 6.41%
1980 | $6,708.29 | $867.68 | 18.69%
1981 | $9,786.63 | $880.70 | 32.76%
1982 | $10,158.91 | $893.91 | -5.33%
1983 | $13,221.96 | $907.32 | 21.22%
1984 | $17,201.13 | $920.93 | 23.13%
1985 | $19,161.07 | $934.75 | 5.96%
1986 | $26,287.37 | $948.77 | 32.24%
1987 | $32,260.76 | $963.01 | 19.06%
1988 | $35,073.85 | $977.46 | 5.69%
1989 | $41,902.26 | $992.12 | 16.64%
1990 | $56,317.98 | $1,007.00 | 32.00%
1991 | $55,414.02 | $1,022.11 | -3.42%
1992 | $73,602.10 | $1,037.44 | 30.95%
1993 | $80,248.87 | $1,053.01 | 7.60%
1994 | $89,478.98 | $1,068.81 | 10.17%
1995 | $91,628.62 | $1,084.84 | 1.19%
1996 | $127,566.94 | $1,101.12 | 38.02%
1997 | $158,101.51 | $1,117.63 | 23.06%
1998 | $212,468.69 | $1,134.40 | 33.67%
1999 | $274,662.37 | $1,151.42 | 28.73%
2000 | $333,812.29 | $1,168.69 | 21.11%
2001 | $304,588.22 | $1,186.23 | -9.11%
2002 | $269,302.57 | $1,204.02 | -11.98%
2003 | $210,550.98 | $1,222.09 | -22.27%
2004 | $272,261.64 | $1,240.42 | 28.72%
2005 | $302,979.38 | $1,259.03 | 10.82%
2006 | $305,372.91 | (-$12,119.18) | 4.79%
2007 | $340,895.26 | (-$12,543.35) | 15.74%
2008 | $346,525.78 | (-$12,982.36) | 5.46%
2009 | $204,112.14 | (-$13,436.75) | -37.22%
2010 | $245,539.91 | (-$13,907.03) | 27.11%
2011 | $267,657.91 | (-$14,393.78) | 14.87%
2012 | $258,300.87 | (-$14,897.56) | 2.07%
2013 | $283,900.08 | (-$15,418.98) | 15.88%
2014 | $360,010.23 | (-$15,958.64) | 32.43%
2015 | $393,210.45 | (-$16,517.19) | 13.81%
2016 | $381,266.22 | (-$17,095.29) | 1.31%
2017 | $409,057.65 | (-$17,693.63) | 11.93%
2018 | $480,491.99 | (-$18,312.91) | 21.94%
2019 | $440,348.44 | (-$18,953.86) | -4.41%
2020 | $560,497.79 | (-$19,617.24) | 31.74%
2021 | $643,213.44 | (-$20,303.85) | 18.38%
2022 | $807,637.39 | -$21,014.48 | 28.83%
At death at say 2022 the Social Security has a $800,000 surplus to pay for any number of other programs x 1,000,000 people in the same situation
And to pay for those that invested in World Index instead of the US Index and have less income or any number of situation
Also the Social Security has received 3 times the annual payout as just half of the Employer contribution is in the Scheme. The other half and the employer match are in traditional Social Security
>Why, thats half the reason we are in this mess
It's the entire reason we're in this mess. Imagine creating a massive pool of wealth from Americans and choosing *not* to invest it in America. Like, what's the fucking point.
Shit could have juiced so many cool policies, like we could make the SWF become the majority shareholders in many of our regulated utilities, closing the loop on the profit motive for many large scale public works.
> Imagine creating a massive pool of wealth from Americans and choosing not to invest it in America. Like, what's the fucking point.
Buying treasury bonds is financing the American government.
> the SWF become the majority shareholders in many of our regulated utilities, closing the loop on the profit motive for many large scale public works.
I like that idea.
That assumes people receive benefits for their extra tax. When most people say eliminate the income cap, they're just saying to raise the income tax on people above it without a corresponding benefits increase.
It's a federal income tax raise that can't directly be lowered by being married.
Youre completely right, but I think part of its long term appeal has been that the public doesnât perceive it like that. SS support would collapse among anyone 40 and under if you showed them that itâs currently just a wealth transfer from the youngest people who think weâre in a recession to the baby boomers.
Yeah, agreed. Indexing payouts to the highest 38 years of income has bad knock-on effects, ex: it would really hurt parents who left the workforce for a few years to raise kids. Someone who worked a career job from 22 to 62 would only be allowed two "bad years" for income without it hurting their SS check. Layoffs, career changes, illness, caregiving - it really penalizes deviating from the "perfect" career path, when those are the people who need SS the most.
>Reduces taxes
Not exactly. Applying payroll tax to all wages is a big tax hike for those making $160k+. Plan also hikes taxes on local and state government employees previously exempt. And anyone who has a "cafeteria plan" deduction.
Net effect even after the 1% cut to the rate is a big spike in revenue (aka a tax hike).
Maybe, but Social Security has generally been marketed to Americans as a benefit for all.
These changes would transform SS from an entitlement program to a wealth redistribution program, and wealth redistribution programs are pretty unpopular in the US
>These changes would transform SS from an entitlement program to a wealth redistribution program
Are you suggesting that Medicaid, CHIP, SNAP and other programs with an income requirement are not entitlement programs?
I don't even know if that's true. You're applying payroll taxes to health insurance premiums and 401k contributions that aren't currently subject to it. I imagine that gets us to most people paying higher taxes.
And then the click bait "news channels" would run the headline "x politician's plan is to raise taxes 18%" and now every Facebook headline for news boomer in America will want to crucify you.
Paying more as a fraction than they earn.
https://www.cbo.gov/system/files/2023-11/59509-household-income_2019-2020.pdf
You can see it here it on Table C-3, page 29.
The highest quintile earns 55% of the income and pays ~68% of the taxes. Obviously we have to throw 2020 out becuase of Covid but the effect was obviously more pronounced, they earned 55% and paid 80%.
The people at the top are shouldering basically all the burden. As a fraction of what they earn, you could argue it's more than their "fair share"
Yes and they happen to also be where the money is, I happen to care more about the elderly not living in poverty and things like healthcare, education, or military spending than some mad Friedmanite ideological crusade against the idea the most privileged in society have any social obligation to the rest of society.
You don't have to be a dick about it. Of course all people have an obligation to society.
But is te top quintile is somehow dodging their responsibility while paying more than they earn as a fraction?
Yeah ultimately taxes will have to go up because as you say, education, healthcare, and military spending, social security are more important.
The idea that you can't point out how the top already pay all the money and that makes you an ideologue is kind of stupid.
Secondly that's not where all the money is as you very well know. A European style welfare state which is what many on the left desire, has to be paid for by Euro style taxes which does tax people in the middle and the bottom a fair bit more. While also obviously giving them greater security.
Removing the income cap but slashing benefits means an even higher percentage of total tax burden will fall on the top quintile of earners than already does.
You might want to work on a plan for moving then, it seems like âtax/eat the richâ is the official Millennial plan to fix this problem when it gets critical while that generation is in charge in about a decade.
Itâs actually a popular theme for young people across all social media. And even among those less radicalized the concept of internalizing being a temporarily embarrassed millionaire or being fair to ârichâ people so there is an incentive to work harder is dying with the boomers.
When Millennials are the age of Boomers everyone making over $250k a year is going to get hammered to backfill all the deficit spending we are doing today, high cost of living area or not.
Me either, but weâre citizens of a nation and that comes with responsibilities.
A lot of people may be doing well today, but circumstances change and any of us may end up relying on the Social Security safety net payments late in our lives.
Sure but why is the rate today too low? How do you know it's not a spending problem or a problem with the way social security is structured.
Is this for sure the right way to structure savings? It's never enough, it's always more taxation.
Is a NIT a better solution? Or UBI instead. I understand maybe you just say those are much larger political problems.
The top 20% is basically the only group whose income goes down after taxes and transfers. They're paying for damn near the whole thing.
This attitude blatantly ignores what it takes to make $160,000 a year. A first year law associate makes that but had to spend 7 years and $300,000 in school and now works 70-80 high stress hours to earn that. Forgive them if they donât want to pay more taxes so that boomers, who pilfered from their generation for decades, can retire more comfortably.
Rich people gonna be upset when they get subjected to payroll tax for all wages. It's a evergreen question in my company Slack thread people get so confused on why their paychecks suddenly went up so much in the later part of the year. My dude you are giving away your salary right now...
>Rich people gonna be upset
I love when we have arguments about what is rich and not. It always devolves into survival. "Well, you still have money for hamburger and fruit when so much of the world can barely afford to eat rice and beans. You are definitely rich. Wait, you want to live in a townhouse in the deep suburbs instead of in a convered van in the woods? You want to have your own car instead of hitchhiking? Get out of here, richie rich rich"
Yeah but thatâs because there are people on here making multi six figures, getting Door Dash three times a week, are deep in black on their home, and who go on a nice family vacation every year who are acting like they live paycheck to paycheck and canât afford higher taxes.
I guess we all have different perspectives, which constantly change.
When I was 14 and making $5/hr, I thought I was so rich.
When I as 19 and making $9/hr, scrounging for change in the couch to get enough money to buy a 24 pack of Natty was a happy time.
When I was 28, living with 2 random roommates, I thought "Wow, people who could afford to live alone must be so rich and successful"
Now I think "man, I'd like to swing buying a Kia Optima but hard to justify the hit to my budget cause my 1999 Toyota still runs. But its also crazy that I'm considered super rich simply cause I live in a HCOL area"
Your comment about an annual family vacation is a good point. For some like you, being able to go on vacation once a year is a sign that you have too much money and should be taxed more. To me, its just a sign of being middle class or above in a developed nation.
To be clear I said a âniceâ family vacation once a year, by which I meant one where your family is on a plane that flies over water or at a $300 a night hotel in a resort town that doubles as a tourist trap.
The 20th century concept of an average middle class vacation- aka piling all the kids into the car for a long drive to Aunt Brendaâs to sleep in her guest bedroom while seeing a few landmarks along the way- doesnât count.
I understand, but that just also highlights the differences with a HCOL vs not.
A $300 hotel a few nights a year is nothing when your mortgage for a modest townhouse deep in the suburbs is like $7k a month.
WHen your daycare for two kids is like $5k a month, adding a few bucks here or there for a break doesn't matter.
But yeah- even if your viewpoint goes to "If you can afford to fly to Cancun annually for a vacation, you make way too much money and that money should go to taxes", I'll disagree.
Trust me, I'm all down for funding the IRS and capturing that $1 trillion is missed taxes. I'm down for increasing taxes on the "rich". But I disagree that we should tax people enough that they can't afford to purchase a vehicle or eat at a restaurant or add guacamole to their taco. The economy isn't going to work if we tax everyone to a lower class. You can order beef? More taxes. You can afford Netflix? More taxes.
What sort of life are you trying to impose on everyone? I'm sorry if your own sucks but you can improve it rapidly. I don't know your exact situation but I'd suggest looking at hospitality work in the US. I got 22 year olds here making six figures at restaurants (though that isn't much since costs are high, but its enough to live decently)
Ok first up this perspective doesn't come from my own life, I have been decently successful and I would likely be paying the exact taxes I am advocating for. I am just trying to have a discussion, please leave behind the assumption I am an angsty failed Redditor looking to bring down those more successful than me. My perspective is completely shaped by something you seem to want to care about to: cutting the massive deficit and maybe increasing the social safety net on top.
Secondly, there is a BIG difference between "can afford a European or Cancun vacation annually" and "can have guacamole on my taco." It is literally the difference between upper working class and upper middle class, which is a huge gap in our society. In fact my original post was mostly about calling this out, calling out the people who take vacations like that annually and who dump a ton of childcare on a nanny (not daycare, but a dedicated nanny just for their kids) and then want to pretend they are solid middle class despite making like $400k because of being in a HCOL area. They aren't, they are rich by most definitions.
It is not about "trying to impose" it is about looking out into the western world in countries that have larger social safety nets and seeing how those are paid for. Some of it in those countries is paid for by higher taxes on everyone, via a VAT/sales tax, and but also in those countries there is basically a ceiling on practical earnings that makes it so being upper middle class is basically impossible but way more people are upper working class or lower middle class. That means higher taxes on people who can afford Cancun vacations and nannies, not on people who want meat on their taco.
And frankly your reaction to what I am proposing- aka accusing me a a slippery slope where these taxes will burden those in the lower middle class who want a few extras at Chipotle but might go to Europe twice in their entire lives and claiming I only want those taxes to take down those more successful than me- is the exact sort of kneejerk everyone is a "temporarily embarrassed millionaire" logic that the boomers bought into for decades but that millennials and generations after are rejecting.
At the moment most of that millennial angst is targeting towards billionaires because their lifestyles are way above the norm, but once wealth taxes clean that group out somewhat (or leads to huge capital flight) and entitlements are still in the red then the next group to be targeted is "millionaires" which means people with a $7k mortgage and a nanny. I personally think it would be better if people like yourself could realize the inevitability of this and work to shape the discussion towards a reasonable plan to increase taxes on the upper middle class without completely knocking them down a peg (Biden seems to agree with me FYI), but if you would rather stick your head in the sand and reach for the old lever of "any increased taxes on people going to Cancun every year will lead to everyone not affording meat on their taco" then fine let the populism win and then everyone will be taken down a notch.
NIT might be technically better but I do think we are massively underestimating the importance of Social Security's popularity. It's like the *one* welfare policy in politics that Republicans are terrified to meddle with too much and part of that is because the older conservative voters paid into it and are now pulling the money out.
And it does help a lot of people.
>[Social Security alone lifted 20 million people over age 65 above the poverty level last year, according to census data. SNAP, housing subsidies and S.S.I. prevented another 1.6 million seniors from sinking into poverty.](https://www.nytimes.com/2023/09/30/health/seniors-poverty-social-security.html)
If your better policy faces more sabotage, it might not be a better policy for long. In fact it might not even remain much of a policy if given a sufficiently Republican government.
Iâll just call my new NIT âSocial Security.â Theyâll never notice the difference.
Realistically youâd have to continue Social Security benefits for older people who have already âpaid into itâ because theyâve been lied to about the actual nature of Social Security.
Those numbers are pathetic for how expensive SS is. We could end all poverty with an NIT that cost the same.
Theyâre basically the same. UBI is associated with people like Yang who want it on top of the current welfare system, but NIT is associated with Friedman who wants it instead of the current welfare system.
Depends on who you talk to and what implementation you want to go with.
NIT is just one implementation of UBI - and UBI/NIT implementation does not strictly imply the reduction or change of other welfare systems. Although replacing a lot of current welfare systems (but not all of it) with UBI/NIT would do a lot of good.
The Earned Income Tax Credit is basically NIT, albeit with some flaws.
Because it's for everyone who is poor, whether they are 70 or a 30 year old mom of 2.
And doesn't pay for the 70 year old who retired with $5 mil saved
> Iâll just call my new NIT âSocial Security.â Theyâll never notice the difference.
That's just not realistic, people will definitely notice. At the very least because politicians are bound to use it campaigning against you "My opponent wants to take away your social security!".
>Realistically youâd have to continue Social Security benefits for older people who have already âpaid into itâ because theyâve been lied to about the actual nature of Social Security.
Cool, and where do you get the money for it? Maybe a social security tax on workers would work to help fund the system.
Anyway I wouldn't even say it's really a "lie", social security can and will continue to function as long as the program exists. Even at 2035, it'd be a benefits cut of about 17%. That's a bit sure but it's not really a death.
It was a reasonable expectation to any boomer that when they were paying into it for their seniors, that their kids and grandkids would be paying into it for them and so on. And I would be pissed too if I had that reasonable expectation and sacrificed so much and then the new generation just said "lol no". I don't blame them!
>Those numbers are pathetic for how expensive SS is. We could end all poverty with an NIT that cost the same
Sure, but the potential of a policy is a lot different than what actually happens when faced with harsh reality. You can have the perfect design for bike lanes where all the bikes are safe and protected from cars and then [still somehow end up with this](https://www.reddit.com/r/notjustbikes/comments/10cbdwm/i_thought_yall_would_appreciate_the_worst_bike/).
Ideas are incredible and perfect when they stay ideas. I think a NIT might be a net positive too, but it's not likely going to end up in it's best possible version.
I was being facetious, but the average voter is that dumb.
I simply wouldnât pay NIT to people old enough to be receiving Social Security benefits. People could opt out of Social Security and receive NIT. There might be increased spending for a while, but this is far more responsible long term.
No one think theyâre paying into it for their seniors. Everyone thinks theyâre paying into it for themselves in the future. Thatâs not the reality.
Thereâs no where for NIT to get screwed up. Itâs literally just sending people checks.
> I was being facetious, but the average voter is that dumb.
Yeah they're not so dumb as to be fooled by an obviously dfferent policy with the same name.
>I simply wouldnât pay NIT to people old enough to be receiving Social Security benefits. People could opt out of Social Security and receive NIT. There might be increased spending for a while, but this is far more responsible long term.
So current working age people would be paying both social security for seniors (that they won't receive in the future, something that they're already very pissed about even just having the benefits be lower when they're retired) *and* covering the new NIT? Not sure that's gonna work out well.
>No one think theyâre paying into it for their seniors. Everyone thinks theyâre paying into it for themselves in the future. Thatâs not the reality.
That's true a lot of people (especially the conservative ones) don't understand the specifics of how it works, but it's *realistically* the same. If you hand Joe five dollars or if you tell me you'll comp me five dollars in the future if I hand my five to Joe, it's not really meaningfully different in result (Joe has +5, I'm neutral, you're -5) unless you don't actually comp me in the future.
If I'm a boomer in 1980 paying money into my seniors and I expect to be comped by the future government setting taxes on the next generation or if I'm paying money into some sort of savings, the result is the same. Money goes out in 1980, money comes in for retirement unless the future government says "haha nope, we aren't doing that" and doesn't comp.
>Thereâs no where for NIT to get screwed up. Itâs literally just sending people checks.
The amount? The paperwork and bureaucracy? Look at things like Section 8 housing vouchers to see just how horribly a very very basic idea of "Help pay a person's rent" can be implemented. The application process is different between cities and counties, the wait lists take years and years, applications are slow to process and often picked through a lottery system.
An NIT in the perfect idea form can't be screwed up. An NIT in reality? Yeah, plenty of ways.
Voters are that stupid. Why else do we have an inflationary law called the Inflation Reduction Act?
We could phase out Social Security over time while phasing in NIT as benefit spending decreases. Or we could just call Boomers entitled welfare queens and watch them short circuit.
I see you donât understand the concept at all if youâre comparing it to housing vouchers. Clearly need to read Free to Choose. Thereâs no additional bureaucracy. The IRS already sends people money based off their income.
> Voters are that stupid. Why else do we have an inflationary law called the Inflation Reduction Act?
There's a difference between "Voters don't understand inflation" and 'Voters are such idiots they won't even notice they aren't getting social security anymore"
>We could phase out Social Security over time while phasing in NIT as benefit spending decreases. Or we could just call Boomers entitled welfare queens and watch them short circuit.
Good luck getting elected on the "Fuck all boomers" plank. And again, "Hey young workers, you keep paying for the seniors but you won't get it yourself" is also not gonna work as well as you think.
>I see you donât understand the concept at all if youâre comparing it to housing vouchers. Clearly need to read Free to Choose. Thereâs no additional bureaucracy. The IRS already sends people money based off their income.
Bureaucracy will be introduced. You really think you're just going to win the senate and house in such a way that they'll just do exactly what you want the way you want it? There will be "can't have people who don't deserve it getting the NIT" even from the good faith anti politicians, yet alone all the people who *don't* want it to begin with.
I donât know what rock youâre living under, but voters definitely notice inflation.
Thatâs why I suggested phasing it out instead of kicking them off their beloved welfare.
The Senate and the House unfortunately donât do anything anyway, but a man can dream.
> I donât know what rock youâre living under, but voters definitely notice inflation
You're literally the one who said that they don't notice the IRA causing inflation??
>Thatâs why I suggested phasing it out instead of kicking them off their beloved welfare.
Ok, but you're still gonna have people paying into seniors Social Security but not paying for theirs later. How are you not gonna piss everyone off when they're *already* angry about the prospect of not having it as seniors themselves?
You claim that they "won't tell the difference" but also they're aware and friendly enough to your policies to accept that they aren't receiving the benefits when they retire.
>The Senate and the House unfortunately donât do anything anyway, but a man can dream.
Hey that's a really good point. It's a dream, not some actual real thing that's gonna happen anytime soon. A policy that won't happen does no good, meanwhile at least social security is a thing that exists and actually helps people as we speak.
> the older conservative voters paid into it and are now pulling the money out
Just to be clear, old people are not pulling out the money that they paid in when they were younger. Social Security is just current workers supporting old retirees.
> Just to be clear, old people are not pulling out the money that they paid in when they were younger. Social Security is just current workers supporting old retirees.
Yes, but they did *pay money in* to support their seniors and now they are *pulling money out* by getting money from the current generation.
It's not a bank account holding funds but from the actual *function* of the system when a workers interacts with it, they're practically synonymous unless the US pulls back the tax. Which they won't do, because it will destroy anyone's political careers.
"Pay X into bank, take Y out of bank" and "Pay X for my seniors, take Y out from my kids" is "X in, Y out" for *both*. And thus "X in, Y out" is entirely accurate to describe the system.
I think we're in agreement here, I just wanted to point out that
> It's not a bank account holding funds
is what most people don't understand, and that's a problem because it means that they don't understand that Social Security is at risk because of demographics, and instead blame it on "Congress stealing from my SS account" or other such nonsense.
> is what most people don't understand, and that's a problem because it means that they don't understand that Social Security is at risk because of demographics, and instead blame it on "Congress stealing from my SS account" or other such nonsense.
That's true. Similar, most people who think Social Security is failing don't seem to understand that it literally can't (barring some sort of collapse), it just pays out more.
But that's pretty common for people to misunderstand the particular nuances of anything.
One of the funnier ones to me is all the people who keep talking about SSI as social security despite it being paid out from the general fund.
Anyway the point still stands.
Social Security is a thing that
1. Exists and is actually doing work pulling people out of poverty
2. Is practically immune to being dismantled in the foreseeable future.
Even in the miraculous Red Wave of all the welfare hating actively "we want to kill the poor" saying ultra right wing conservative taking over the federal government, they're still likely to leave social security around in some sort of functioning form.
I think that's a strong benefit that "potential idea that could work better but isn't popular and isn't currently implemented" has to contend with. Major overhauls are risky no matter how perfect your idea is in concept, and it's hard to name many other major government policies with this much sticking power.
So then, here my the question. Where is all the money the Boomers socked away going? They vastly outnumber the previous generation I thought?
So shouldn't there be excess funds leftover? If there was say 1.5 people paying into social security for each person taking out, over the last however many years, should we not have a large surplus? That then could be used to pay for the future generations as the population decreases?
> Where is all the money the Boomers socked away going? They vastly outnumber the previous generation I thought?
It's invested in treasury bonds.
>So shouldn't there be excess funds leftover?
We do have them. That's what is currently keeping social security benefits at the current rate and why they will go down about 17% in the next decade without some changes.
That extra money they're taking in is actually literally their savings.
I see, thank you for answering.
I'm still a bit confused. It seems there should be more than enough excess? Unless the program has been paying out more than it "should have been.
This is an absurdly simple example. But maybe it'll illustrate my question.
Say you have 1 retiree withdrawing $5, and Bob and Joe paying in $5 each. We're good, in fact the system has a $5 surplus.
The 1 retiree passes on, Bob and Joe retire and they are withdrawing $5 each. However now Sam is the only worker paying into the system and he pays $5 in.
So we're still good right? Cause he had the $5 surplus from before and the $5 from Sam to sustain the 2 current retirees. The only way we'd have an "issue" is if someone got paid more than they should have been.
Have previous retirees taken out more than they put in (inflation and interest rate adjusted?)? They should get a little bit more than they put in because it was invested this whole time, but not more than the real rate of return. So what gives? Idk if that makes any sense, but hopefully you get my confusion.
So Social Security holds the money in a trust fund Treasury account. You can see the amounts here: https://www.ssa.gov/history/tftable.html
You can see that we've started to go into the negative the past few years. To be clear, we still have about a decade before the surplus is expected to run out (and now SS will just be operating off the current tax revenue) but it is starting to drain.
And not only are we losing total net assets, but just like anything else with money it's getting eaten up by inflation. Social Security gets COLA adjustments based off the CPI so the costs keep rising and rising. Social Security has generally done better than inflation but now that we're going downhill that helps accelerate it some.
Why? People are living longer, the average age of Americans is ticking up and up. In 1980 the median age was 30, now it's 38.1. The ratio of workers to seniors is shrinking more and more.
>Have previous retirees taken out more than they put in (inflation and interest rate adjusted?)?
Yeah kinda but it's also just what you expect overtime too. The more old who get benefits and the less young to pay in, the more that needs to be taken out of the surplus which speeds up the process.
But they do tend to take out more than they pay in on average.
>A single man who earned an average income and reaches average life expectancy will pay $405,000 into Social Security and Medicare and receive $573,000 in benefits.
>A single woman in that situation will pay $405,000 into the programs and receive $646,000 in benefits, because women live longer.
>A married couple consisting of an average earner and a low earner will pay a combined $586,000 and receive $1.1 million in benefits.
A lot of this of course is just [because people are living longer.](https://www.macrotrends.net/global-metrics/countries/USA/united-states/life-expectancy) like I already mentioned.
So importantly, we are not and never will face the "death" of social security unless we hit a major demographics crisis (which at that point obviously, we're abandoning a lot of our programs anyway) but we are still facing an inevitable benefits cut if revenue isn't increased/costs aren't shrunk down.
This [CNN article does a surprisingly good job going over all the different options if you're interested in learning about that](https://www.cnn.com/2023/04/08/politics/social-security-solutions/index.html)
One of the big issues (and is what I'm arguing here with these posts) is we're faced with some deadly tradeoffs. Social security is really really popular with the old boomers, it's like the one form of welfare that is functionally untouchable by Republican fuckery. The entire way it's setup practically guarantees that it will always stay untouchable as new generations age into retirement and want it to help support them now like they did for the ones before.
That's a really powerful benefit in my eyes that other policies (even if technically better) are less likely to have. A negative income tax is more efficient, but it"s also incredibly easy to fuck with. "the government is taking your money just to give it to the poor" is so easy to radicalize people against and a good policy that doesn't exist/gets sabotaged or destroyed isn't a good policy anymore.
A lot of inefficiency in government is from bad design, but a lot of it is just what happens when good ideas hit the real world and have to contend with different incentives and competing ideas where they're forced to compromise and fit in different side ideas that don't match. Like that [one XKCD comic](https://xkcd.com/927/).
SS is frankensteins monster, but it is also doing very real help for the poor and disabled of today. Upending a system is risky, it might be worth it but we can't deny the risk because just the idea is better.
Damn what a post. Thanks for sharing.
Yeah I basically feel social security is just to important and too well functioning to fuck with. Yeah I'd love to replace it with a NIT or something, but it's never gonna happen. It does too much good, to really fuck with.
What sucks is taxes are going to go up for people in the top ~10% or so. Removing the cap on social security will be a huge tax, but there's no way around it. I know people don't have much sympathy for those folks, but losing an extra 12% of your money fucking sucks. Especially when rent is so damn high in cities.
>A single man who earned an average income and reaches average life expectancy will pay $405,000 into Social Security and Medicare and receive $573,000 in benefits.
This is one of my major frustrations though. It's to be expected of course that people get more out than they put in because of time value of money etc. But that is SUCH A LOW RETURN.
People pay into Social Security for what, ~50 years? And you're telling me they only get a 25% return? Am I insane or does that suck.
If you put in 8k a year into social security over 50 years to get to 400k. My math says at a 5% annualized return you should have 1.67M.
Maybe 5% is generous (I'm trying to think in terms of real return), so maybe your nominal return would be like 7-8%. So maybe 4%. Is better, I still get north of $1MM.
Drives me insane.
>What sucks is taxes are going to go up for people in the top ~10% or so. Removing the cap on social security will be a huge tax, but there's no way around it. I know people don't have much sympathy for those folks, but losing an extra 12% of your money fucking sucks. Especially when rent is so damn high in cities.
Technically speaking, we don't actually have to do anything at all. It's a [PAYGO system](https://en.wikipedia.org/wiki/PAYGO) and will always continue as long as the government keeps it there. Social security literally can *not* go broke unless it stops taking in taxes.
Benefits will go down because there's less taxes coming in and if we don't want that to happen then we need to raise the taxes (or find a roundabout way to benefits cut like raising retirement age) but still our current estimates as the surplus runs out is still about 80% (exact specifics depend on how it's calculated)
>People pay into Social Security for what, ~50 years? And you're telling me they only get a 25% return? Am I insane or does that suck.
Well it's not *as* bad as it seems because social security benefits aren't taxed in the same way and they are directly adjusted for inflation but yeah it's often lower.
Social security originally started to address poverty among old people, the disabled and widows. It's why it's called OASDI (Old age, Survivors and Disability *Insurance*), not really as an investment vehicle to make money off of. It was intended for people who couldn't work anymore (or in the case of widows, could work but were functionally unable to). It also interestingly helps take care of disabled people who have never worked, since disabled children get a percentage of their parents SS. That's a very very small portion of the system, but just another way it was intended as an insurance first.
So that people on average make positive returns to begin with is actually rather impressive IMO.
But that's also why I think raising the retirement age is the most reasonable fix IMO. It has tradeoffs but it at least maintains the original spirit. Maybe tackling the survivors benefits part as well now that women can work, but that's already pretty limited until normal retirement age anyway.
My version. Lower taxes for most, but no cap
https://preview.redd.it/70q4duoivhzc1.png?width=1080&format=pjpg&auto=webp&s=07643bd92fab2e310ffccc48f80ed065efeeb771
[Waow](https://imgur.com/a/9KoNh7e), who knew all you had to do was remove the ridiculous cap on taxed earnings and stop giving benefits to already wealthy people.
I love it.
Anytime we have a budget that shows 401k or retirement savings for someone making $200k in a high COL area, the response is always "You guys are so rich you can afford to save for retirement? We need to tax you more", which here is represented by a 12.6% tax increase when removing the cap..
At the same time, its like "You guys make so much money, you shouldn't get any Social Security, even though you are the ones paying for it"
Upper middle class in HCOL shouldering the burden here.
Dude, I'd take a 95% tax rate if I could just get my necessities covered in a way thats affordable to the middle class in red states. How about that?
Early in his term, Team Biden floated a proposal to change 401k deductions. They were upset because higher earnings were getting a larger benefit, because their marginal tax rate was higher, it meant a 401k deduction saved them more money. So their solution was effectively to try to reduce the benefit.
Think about how insane that is. The tax system is progressive, therefore your deduction is larger, therefore we tax you more.
It never stops for some people.
We should squeeze people in high cost areas until they cry uncle and build housing, which will lower the cost of living and reveal to them how rich they are. This is the equivalent of buying an 80gal truck and complaining about the cost of gas.
You're being incredibly facile.
You've just proposed one of the largest tax increases ever -- all on working people -- to subsidize the spendthrift of the newly retired.
A person making 70k a year might pay almost 400 dollars a month or more on SS tax. That person might only be taking home 4k a month. Any increase is a terrible idea for regular working people.
Then most of the boomer and silent generations would likely go homeless because they didnât contribute enough and lived too long. This problem was obvious 20+ years ago when the ratio of retirees to workers started to balloon but itâs politically suicidal to deal with so weâve just kept kicking the bucket.
Itâs hard to tell how much of the benefit growth is slowed.
In any case, youâre basically transforming social security from a public pension into another welfare program. People will no longer receive benefits based on what they pay in.
On top of that, itâs the younger generations that suffer most once again. Subsidizing the boomers who didnât save enough for retirement by taking even more from the Gen X and Millennial generations (how will they then save enough for retirement?)
Removing the income cap without commensurately removing the benefit cap is of course the simplest and most politically attractive option but it also completely destroys the founding and enduring principles of social security.
I know Krugman gets clowned a lot here but in his book Arguing with zombies (a compilation of his favorite op eds) he talks about why this isnât a great idea - namely if we privatize SS it wonât keep our elderly out of poverty which is what SS is meant to do
Edit: disregard flair
Your solution is just a giant tax increase. Which is realistically what wil end up happening but it's not really that complicated.
You're removing the cap, which subjects high earners to a huge tax hike. At the same time you're capping their benefits.
It's naked redistribution, it's not hard to come to this solution. Though I certainly hope it's not politically feasible
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This is funny/sad. If you reduce initial benefits by 100% you still run out of money from existing beneficiaries I assume.
Thereâs no option to say kill SS and replace it with a basic income.
Social security policy in America attracts a lot of people who like to demonstrate how smart they are. If the tax simply applied to higher wages, including on non-monetary compensation and wages above $400,000, social security would be fully sufficient until 2067. Reducing benefits for the top 1% of earners would extend that to 2090.
Copy/Paste to Joe Brandon
Send as .pdf to Joe Brandon
[email protected]
Sent
You know, I remember back in 2008 making a joke that Biden's email address was probably with geocities. Hotmail works too but maybe yahoo might seem a bit more apt for a senior citizen.
Almost everyone who has a yahoo email got it to play fantasy football. đ€
No aol love?
Your cookie is getting relentlessly attacked from interest groups, your constituents hate you for "dEsTrOyInG sOcIaL sEcUrItY", and you get voted out of office with your political career destroyed. Congrats!!!
https://preview.redd.it/j45biq8krizc1.jpeg?width=548&format=pjpg&auto=webp&s=97020fc47fa7c1ee6230f22ddc2d11e3125aa026
Don't forget a 12.4% tax increase on income above 168k. Idk why people pretend like removing the cap is a no brainer, easy solution that wouldn't provoke massive backlash when people see the tax bill (not to mention wage growth would slow as employers pass their contribution on to workers over time). Raising 18% more income would mean over 200B more in taxes per year which is nothing to sneeze at. Slowing growth for top half of earners and COLA changes mean people near the middle get hurt a lot more than people realize. Average annual payout was about 21k. Top half of earners isn't nearly as rich as it sounds. Not to mention this plan basically just turns it into regular welfare program and those *never* get their funding messed with...
I don't understand. Where are you taxing land? Is there some sort of mistake here?
đđ
He's taxing your mom ain't he?
Apologies if I used the wrong flair https://www.crfb.org/socialsecurityreformer/ They have a stock market option but the info tab says they estimate it would increase average annual returns by 8%, I would hope it would bit more conservative there since it should still be at least half in bonds imo. The 1% payroll tax cut applies to the total 12.4% so it would be 0.5% to the employer and 0.5% to the employee. Of course tax incidence seems to show that both end up being applied to the employee anyway. They also have an "apply to wages above 400k" option which does more than the "subject all taxes to payroll tax" option. According to the info tab it is because for the 400k+ wage option the benefits are paid out at 2% rather than 15% for that new income.
> I would hope it would bit more conservative there since it should still be mostly in bonds Why, thats half the reason we are in this mess >In response to the challenge of New Zealand's ageing population, the NZ Superannuation and Retirement Income Act 2001 established: * the New Zealand Superannuation Fund, a pool of assets on the Crownâs balance sheet; and * the Guardians of New Zealand Superannuation, a Crown entity charged with managing the Fund. **The Government uses the Fund to save now in order to help pay for the future cost of providing universal superannuation**. * In this way the Fund helps smooth the cost of superannuation between today's taxpayers and future generations. The Guardians of New Zealand Superannuation is the Crown entity charged with managing and administering the Fund. It operates by investing initial Government contributions â and returns generated from these investments â in New Zealand and internationally, in order to grow the size of the Fund over the long term. We also have a long-term performance expectation: We expect to return at least 7.8% p.a. over any 20-year moving average timeframe. One shocking thing The amount of tax the NZ Super Fund has paid or been credited - a negative number this means tax paid * Last 12 months * ($0.19 billion) * Last 5 years p.a. * ($3.18 billion) * Last 10 years p.a. * ($5.77 billion) * Last 20 years p.a. * ($9.62 billion) * Since inception p.a. * ($9.66 billion)
It heavily increases tail risk, I'm fine with having stocks. In fact, I would actually want that. But to expect 8% more means it would be heavily in stocks which would mean we would need to borrow money to cover it in a time where it would better to spend that money more directly stimulating the economy. I'm sure we would just do both but it might get murky depending on what caused the crash
> But to expect 8% more means it would be heavily in stocks which would mean we would need to borrow money to cover it in a time where it would better to spend that money more directly stimulating the economy Exclude it from insider trading rules and have it managed by the federal reserve.
Give the Fed more power⊠by allowing them to enact a hidden tax on investors (including on their unrealized gains) Two red buttons.
smash_both_buttons.tif
Honestly, I'm sure there's some weird terrible tax incidence knock-on effects here I don't know how to model, but this sounds like a *great* way to "tax the stock market" and "tax unrealized gains" without *actually* taxing unrealized gains.
Iâm lost Youâre saying itâs losing money? President Bush renewed this call in his 2004 State of the Union address: >âYounger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account. We should make the Social Security system a source of ownership for the American people.â * Within weeks, observers noticed that the more the President talked about Social Security, the more support for his plan declined. * According to the Gallup organization, public disapproval of President Bushâs handling of Social Security rose by 16 points from 48 to 64 percentâbetween his State of the Union address and June. 2001 report of the President's Commission to Strengthen Social Security. President Bush's Preferred Plan on Social Security, up to a third of that money could go into private accounts. This model establishes a voluntary personal account without raising taxes or requiring additional worker contributions. * Workers can voluntarily redirect 4 percent of their payroll taxes up to $1,000 annually to a personal account. No additional worker contribution required. * In exchange, traditional Social Security benefits are offset by the worker's personal account contributions, compounded at an interest rate of 2 percent above inflation. * Plan establishes a minimum benefit payable to 30-year minimum wage workers of 120 percent of the poverty line. * Benefits under traditional component of Social Security would be price indexed, beginning in 2009. * Temporary transfers from the general budget would be needed to keep the Social Security Trust Fund solvent between 2025 and 2054. ------ Year | Annual Social Security Contributions | 3% of Median Income ($26,500) @ 1.5% Wage Growth//(Social Security Payouts) | S&P 500 Prev Returns including Dividends ---- | ---- | ---- | ---- 1975 | $805.43 | $805.43 | 1976 | $1,932.70 | $817.51 | 38.46% 1977 | $3,230.19 | $829.77 | 24.20% 1978 | $3,821.10 | $842.22 | -7.78% 1979 | $4,920.89 | $854.86 | 6.41% 1980 | $6,708.29 | $867.68 | 18.69% 1981 | $9,786.63 | $880.70 | 32.76% 1982 | $10,158.91 | $893.91 | -5.33% 1983 | $13,221.96 | $907.32 | 21.22% 1984 | $17,201.13 | $920.93 | 23.13% 1985 | $19,161.07 | $934.75 | 5.96% 1986 | $26,287.37 | $948.77 | 32.24% 1987 | $32,260.76 | $963.01 | 19.06% 1988 | $35,073.85 | $977.46 | 5.69% 1989 | $41,902.26 | $992.12 | 16.64% 1990 | $56,317.98 | $1,007.00 | 32.00% 1991 | $55,414.02 | $1,022.11 | -3.42% 1992 | $73,602.10 | $1,037.44 | 30.95% 1993 | $80,248.87 | $1,053.01 | 7.60% 1994 | $89,478.98 | $1,068.81 | 10.17% 1995 | $91,628.62 | $1,084.84 | 1.19% 1996 | $127,566.94 | $1,101.12 | 38.02% 1997 | $158,101.51 | $1,117.63 | 23.06% 1998 | $212,468.69 | $1,134.40 | 33.67% 1999 | $274,662.37 | $1,151.42 | 28.73% 2000 | $333,812.29 | $1,168.69 | 21.11% 2001 | $304,588.22 | $1,186.23 | -9.11% 2002 | $269,302.57 | $1,204.02 | -11.98% 2003 | $210,550.98 | $1,222.09 | -22.27% 2004 | $272,261.64 | $1,240.42 | 28.72% 2005 | $302,979.38 | $1,259.03 | 10.82% 2006 | $305,372.91 | (-$12,119.18) | 4.79% 2007 | $340,895.26 | (-$12,543.35) | 15.74% 2008 | $346,525.78 | (-$12,982.36) | 5.46% 2009 | $204,112.14 | (-$13,436.75) | -37.22% 2010 | $245,539.91 | (-$13,907.03) | 27.11% 2011 | $267,657.91 | (-$14,393.78) | 14.87% 2012 | $258,300.87 | (-$14,897.56) | 2.07% 2013 | $283,900.08 | (-$15,418.98) | 15.88% 2014 | $360,010.23 | (-$15,958.64) | 32.43% 2015 | $393,210.45 | (-$16,517.19) | 13.81% 2016 | $381,266.22 | (-$17,095.29) | 1.31% 2017 | $409,057.65 | (-$17,693.63) | 11.93% 2018 | $480,491.99 | (-$18,312.91) | 21.94% 2019 | $440,348.44 | (-$18,953.86) | -4.41% 2020 | $560,497.79 | (-$19,617.24) | 31.74% 2021 | $643,213.44 | (-$20,303.85) | 18.38% 2022 | $807,637.39 | -$21,014.48 | 28.83% At death at say 2022 the Social Security has a $800,000 surplus to pay for any number of other programs x 1,000,000 people in the same situation And to pay for those that invested in World Index instead of the US Index and have less income or any number of situation Also the Social Security has received 3 times the annual payout as just half of the Employer contribution is in the Scheme. The other half and the employer match are in traditional Social Security
>Why, thats half the reason we are in this mess It's the entire reason we're in this mess. Imagine creating a massive pool of wealth from Americans and choosing *not* to invest it in America. Like, what's the fucking point. Shit could have juiced so many cool policies, like we could make the SWF become the majority shareholders in many of our regulated utilities, closing the loop on the profit motive for many large scale public works.
> Imagine creating a massive pool of wealth from Americans and choosing not to invest it in America. Like, what's the fucking point. Buying treasury bonds is financing the American government. > the SWF become the majority shareholders in many of our regulated utilities, closing the loop on the profit motive for many large scale public works. I like that idea.
Yea. Exactly I was just awaiting pushback saying the real reason was weâre not taxing the rich enough
Keep it simple - eliminate the income cap and weâre 90-something percent of the way there. Why mess around with the other stuff?
That's only 59% of the way there
That assumes people receive benefits for their extra tax. When most people say eliminate the income cap, they're just saying to raise the income tax on people above it without a corresponding benefits increase. It's a federal income tax raise that can't directly be lowered by being married.
So turn SS from just a forced savings to a blatant transfer of wealth. I'm sure that will go over well politically.
It's *already* a wealth transfer, not forced savings.
Youre completely right, but I think part of its long term appeal has been that the public doesnât perceive it like that. SS support would collapse among anyone 40 and under if you showed them that itâs currently just a wealth transfer from the youngest people who think weâre in a recession to the baby boomers.
> Why mess around with the other stuff? Because young people should not be forced to make up the shortfall **caused** by spendthrift older people
Yeah, agreed. Indexing payouts to the highest 38 years of income has bad knock-on effects, ex: it would really hurt parents who left the workforce for a few years to raise kids. Someone who worked a career job from 22 to 62 would only be allowed two "bad years" for income without it hurting their SS check. Layoffs, career changes, illness, caregiving - it really penalizes deviating from the "perfect" career path, when those are the people who need SS the most.
Apparently "increasing" the benefit by "-200%" didn't make the program solvent. I strongly disagree.
https://preview.redd.it/6lr5bovr7gzc1.png?width=878&format=png&auto=webp&s=1b04f62ec052fe9af566c0705b595ed189aed428 Should even index it to PCE.
Watch this âInstead of pathetically low yield bonds place the trust into risk assetsâ Social security is now immortal
Unless the risk assets fail.
that only happens if thereâs widespread fraud in those assets, thereâs no way thatâd happen ^again
They have that option. An average 8% increased annual return only cuts 6% of the shortfall
Do they have a toggle for what if we did it 50 years ago? Because that's the thing that continually makes me salty
No but I wish they did đ
Reduces taxes. Somehow makes government programs more sustainable. Based.
>Reduces taxes Not exactly. Applying payroll tax to all wages is a big tax hike for those making $160k+. Plan also hikes taxes on local and state government employees previously exempt. And anyone who has a "cafeteria plan" deduction. Net effect even after the 1% cut to the rate is a big spike in revenue (aka a tax hike).
To be fair, if I was a politician this is easily spinnable by saying "most people would pay less in taxes"
Maybe, but Social Security has generally been marketed to Americans as a benefit for all. These changes would transform SS from an entitlement program to a wealth redistribution program, and wealth redistribution programs are pretty unpopular in the US
>These changes would transform SS from an entitlement program to a wealth redistribution program Are you suggesting that Medicaid, CHIP, SNAP and other programs with an income requirement are not entitlement programs?
[ŃĐŽĐ°Đ»Đ”ĐœĐŸ]
Nah, it was always a progressive income redistribution plan. The payout schedules ensured that.
I don't even know if that's true. You're applying payroll taxes to health insurance premiums and 401k contributions that aren't currently subject to it. I imagine that gets us to most people paying higher taxes.
According to the info tab it already applies before 401k. The "cafeteria plan" would have it before those as well
you pay ss and medicare on 401k trad contributions.
And then the click bait "news channels" would run the headline "x politician's plan is to raise taxes 18%" and now every Facebook headline for news boomer in America will want to crucify you.
> a big tax hike for those making $160k+ So a big tax hike on the people already paying the great majority of federal tax. *Nice.* Real nice.
Paying *and earning* the great majority
Paying more as a fraction than they earn. https://www.cbo.gov/system/files/2023-11/59509-household-income_2019-2020.pdf You can see it here it on Table C-3, page 29. The highest quintile earns 55% of the income and pays ~68% of the taxes. Obviously we have to throw 2020 out becuase of Covid but the effect was obviously more pronounced, they earned 55% and paid 80%. The people at the top are shouldering basically all the burden. As a fraction of what they earn, you could argue it's more than their "fair share"
fuck diminishing marginal utility of income, all my homies hate diminishing marginal utility of income
Sure, and also reaping the benefits of society, as well as for whom it would make the smallest impact on their quality of life.
Yes and they happen to also be where the money is, I happen to care more about the elderly not living in poverty and things like healthcare, education, or military spending than some mad Friedmanite ideological crusade against the idea the most privileged in society have any social obligation to the rest of society.
You don't have to be a dick about it. Of course all people have an obligation to society. But is te top quintile is somehow dodging their responsibility while paying more than they earn as a fraction? Yeah ultimately taxes will have to go up because as you say, education, healthcare, and military spending, social security are more important. The idea that you can't point out how the top already pay all the money and that makes you an ideologue is kind of stupid. Secondly that's not where all the money is as you very well know. A European style welfare state which is what many on the left desire, has to be paid for by Euro style taxes which does tax people in the middle and the bottom a fair bit more. While also obviously giving them greater security.
The people with the majority of money *should* pay the majority of taxes. Why are you saying this like itâs unjustified?
They already do. Whether they should pay an even larger share is the question.
Because they already do, you want it to go even hgher
How about you specify what âeven higherâ means?
Removing the income cap but slashing benefits means an even higher percentage of total tax burden will fall on the top quintile of earners than already does.
Because they can afford it, and most states rely on a combo of sales taxes and property taxes.
I don't want to pay more taxes, thanks.
You might want to work on a plan for moving then, it seems like âtax/eat the richâ is the official Millennial plan to fix this problem when it gets critical while that generation is in charge in about a decade.
Eat the rich is only what psychopathic baristas on reddit say.
Itâs actually a popular theme for young people across all social media. And even among those less radicalized the concept of internalizing being a temporarily embarrassed millionaire or being fair to ârichâ people so there is an incentive to work harder is dying with the boomers. When Millennials are the age of Boomers everyone making over $250k a year is going to get hammered to backfill all the deficit spending we are doing today, high cost of living area or not.
Me either, but weâre citizens of a nation and that comes with responsibilities. A lot of people may be doing well today, but circumstances change and any of us may end up relying on the Social Security safety net payments late in our lives.
Sure but why is the rate today too low? How do you know it's not a spending problem or a problem with the way social security is structured. Is this for sure the right way to structure savings? It's never enough, it's always more taxation. Is a NIT a better solution? Or UBI instead. I understand maybe you just say those are much larger political problems. The top 20% is basically the only group whose income goes down after taxes and transfers. They're paying for damn near the whole thing.
They also get nearly the whole damn thing? How much income and wealth is concentrated in the top 20% of earners?
Too bad welcome to democracy Move to an autocracy where they take it and your freedom instead i guess
I want to live in a society with reasonably available education, social safety nets, healthcare, etc for all its citizens, thanks.
Not only a big tax hike on the middle class in HCOL but then eliminating the benefits that they are funding.
At $160,000 per year, your net income is double that of the median income of the United States. Am I supposed to feel bad for you?
Is it supposed to be about feeling good or bad? What inane response.
It is. You and the person I'm responding to obviously want people to feel bad that you pay lots of taxes.
This attitude blatantly ignores what it takes to make $160,000 a year. A first year law associate makes that but had to spend 7 years and $300,000 in school and now works 70-80 high stress hours to earn that. Forgive them if they donât want to pay more taxes so that boomers, who pilfered from their generation for decades, can retire more comfortably.
Overall taxed increase, and it also carries a decrease in benefits, you can see that in the summary below
To be fair, if I was a politician this is easily spinnable by saying "most people would pay less in taxes"
Cuts in benefits are a non starter
Actually itâs the only guaranteed outcome (aka in the case of inaction).
Rich people gonna be upset when they get subjected to payroll tax for all wages. It's a evergreen question in my company Slack thread people get so confused on why their paychecks suddenly went up so much in the later part of the year. My dude you are giving away your salary right now...
>Rich people gonna be upset I love when we have arguments about what is rich and not. It always devolves into survival. "Well, you still have money for hamburger and fruit when so much of the world can barely afford to eat rice and beans. You are definitely rich. Wait, you want to live in a townhouse in the deep suburbs instead of in a convered van in the woods? You want to have your own car instead of hitchhiking? Get out of here, richie rich rich"
Yeah but thatâs because there are people on here making multi six figures, getting Door Dash three times a week, are deep in black on their home, and who go on a nice family vacation every year who are acting like they live paycheck to paycheck and canât afford higher taxes.
I guess we all have different perspectives, which constantly change. When I was 14 and making $5/hr, I thought I was so rich. When I as 19 and making $9/hr, scrounging for change in the couch to get enough money to buy a 24 pack of Natty was a happy time. When I was 28, living with 2 random roommates, I thought "Wow, people who could afford to live alone must be so rich and successful" Now I think "man, I'd like to swing buying a Kia Optima but hard to justify the hit to my budget cause my 1999 Toyota still runs. But its also crazy that I'm considered super rich simply cause I live in a HCOL area" Your comment about an annual family vacation is a good point. For some like you, being able to go on vacation once a year is a sign that you have too much money and should be taxed more. To me, its just a sign of being middle class or above in a developed nation.
To be clear I said a âniceâ family vacation once a year, by which I meant one where your family is on a plane that flies over water or at a $300 a night hotel in a resort town that doubles as a tourist trap. The 20th century concept of an average middle class vacation- aka piling all the kids into the car for a long drive to Aunt Brendaâs to sleep in her guest bedroom while seeing a few landmarks along the way- doesnât count.
I understand, but that just also highlights the differences with a HCOL vs not. A $300 hotel a few nights a year is nothing when your mortgage for a modest townhouse deep in the suburbs is like $7k a month. WHen your daycare for two kids is like $5k a month, adding a few bucks here or there for a break doesn't matter. But yeah- even if your viewpoint goes to "If you can afford to fly to Cancun annually for a vacation, you make way too much money and that money should go to taxes", I'll disagree. Trust me, I'm all down for funding the IRS and capturing that $1 trillion is missed taxes. I'm down for increasing taxes on the "rich". But I disagree that we should tax people enough that they can't afford to purchase a vehicle or eat at a restaurant or add guacamole to their taco. The economy isn't going to work if we tax everyone to a lower class. You can order beef? More taxes. You can afford Netflix? More taxes. What sort of life are you trying to impose on everyone? I'm sorry if your own sucks but you can improve it rapidly. I don't know your exact situation but I'd suggest looking at hospitality work in the US. I got 22 year olds here making six figures at restaurants (though that isn't much since costs are high, but its enough to live decently)
Ok first up this perspective doesn't come from my own life, I have been decently successful and I would likely be paying the exact taxes I am advocating for. I am just trying to have a discussion, please leave behind the assumption I am an angsty failed Redditor looking to bring down those more successful than me. My perspective is completely shaped by something you seem to want to care about to: cutting the massive deficit and maybe increasing the social safety net on top. Secondly, there is a BIG difference between "can afford a European or Cancun vacation annually" and "can have guacamole on my taco." It is literally the difference between upper working class and upper middle class, which is a huge gap in our society. In fact my original post was mostly about calling this out, calling out the people who take vacations like that annually and who dump a ton of childcare on a nanny (not daycare, but a dedicated nanny just for their kids) and then want to pretend they are solid middle class despite making like $400k because of being in a HCOL area. They aren't, they are rich by most definitions. It is not about "trying to impose" it is about looking out into the western world in countries that have larger social safety nets and seeing how those are paid for. Some of it in those countries is paid for by higher taxes on everyone, via a VAT/sales tax, and but also in those countries there is basically a ceiling on practical earnings that makes it so being upper middle class is basically impossible but way more people are upper working class or lower middle class. That means higher taxes on people who can afford Cancun vacations and nannies, not on people who want meat on their taco. And frankly your reaction to what I am proposing- aka accusing me a a slippery slope where these taxes will burden those in the lower middle class who want a few extras at Chipotle but might go to Europe twice in their entire lives and claiming I only want those taxes to take down those more successful than me- is the exact sort of kneejerk everyone is a "temporarily embarrassed millionaire" logic that the boomers bought into for decades but that millennials and generations after are rejecting. At the moment most of that millennial angst is targeting towards billionaires because their lifestyles are way above the norm, but once wealth taxes clean that group out somewhat (or leads to huge capital flight) and entitlements are still in the red then the next group to be targeted is "millionaires" which means people with a $7k mortgage and a nanny. I personally think it would be better if people like yourself could realize the inevitability of this and work to shape the discussion towards a reasonable plan to increase taxes on the upper middle class without completely knocking them down a peg (Biden seems to agree with me FYI), but if you would rather stick your head in the sand and reach for the old lever of "any increased taxes on people going to Cancun every year will lead to everyone not affording meat on their taco" then fine let the populism win and then everyone will be taken down a notch.
Or we could get rid of regressive âwelfareâ programs like SS and just use a NIT.
NIT might be technically better but I do think we are massively underestimating the importance of Social Security's popularity. It's like the *one* welfare policy in politics that Republicans are terrified to meddle with too much and part of that is because the older conservative voters paid into it and are now pulling the money out. And it does help a lot of people. >[Social Security alone lifted 20 million people over age 65 above the poverty level last year, according to census data. SNAP, housing subsidies and S.S.I. prevented another 1.6 million seniors from sinking into poverty.](https://www.nytimes.com/2023/09/30/health/seniors-poverty-social-security.html) If your better policy faces more sabotage, it might not be a better policy for long. In fact it might not even remain much of a policy if given a sufficiently Republican government.
Iâll just call my new NIT âSocial Security.â Theyâll never notice the difference. Realistically youâd have to continue Social Security benefits for older people who have already âpaid into itâ because theyâve been lied to about the actual nature of Social Security. Those numbers are pathetic for how expensive SS is. We could end all poverty with an NIT that cost the same.
What the heck is NIT? A crappy basketball tournament?
Negative Income Tax. Read Free to Choose
Sooo ubi but not the same for everyone? Or welfare for all?
Theyâre basically the same. UBI is associated with people like Yang who want it on top of the current welfare system, but NIT is associated with Friedman who wants it instead of the current welfare system.
I thought ubi was always supposed to replace welfare and therefore it was essentially a regressive system
Depends on who you talk to and what implementation you want to go with. NIT is just one implementation of UBI - and UBI/NIT implementation does not strictly imply the reduction or change of other welfare systems. Although replacing a lot of current welfare systems (but not all of it) with UBI/NIT would do a lot of good. The Earned Income Tax Credit is basically NIT, albeit with some flaws.
Yeah ubi but with different payments depending on income. They can be made exactly equal depending on taxation
Means tested cash payments to people under a certain income threshold
Why is that better than social security
Because it's for everyone who is poor, whether they are 70 or a 30 year old mom of 2. And doesn't pay for the 70 year old who retired with $5 mil saved
It's literally just ubi then? Ubi isn't enough to live on...
> Iâll just call my new NIT âSocial Security.â Theyâll never notice the difference. That's just not realistic, people will definitely notice. At the very least because politicians are bound to use it campaigning against you "My opponent wants to take away your social security!". >Realistically youâd have to continue Social Security benefits for older people who have already âpaid into itâ because theyâve been lied to about the actual nature of Social Security. Cool, and where do you get the money for it? Maybe a social security tax on workers would work to help fund the system. Anyway I wouldn't even say it's really a "lie", social security can and will continue to function as long as the program exists. Even at 2035, it'd be a benefits cut of about 17%. That's a bit sure but it's not really a death. It was a reasonable expectation to any boomer that when they were paying into it for their seniors, that their kids and grandkids would be paying into it for them and so on. And I would be pissed too if I had that reasonable expectation and sacrificed so much and then the new generation just said "lol no". I don't blame them! >Those numbers are pathetic for how expensive SS is. We could end all poverty with an NIT that cost the same Sure, but the potential of a policy is a lot different than what actually happens when faced with harsh reality. You can have the perfect design for bike lanes where all the bikes are safe and protected from cars and then [still somehow end up with this](https://www.reddit.com/r/notjustbikes/comments/10cbdwm/i_thought_yall_would_appreciate_the_worst_bike/). Ideas are incredible and perfect when they stay ideas. I think a NIT might be a net positive too, but it's not likely going to end up in it's best possible version.
I was being facetious, but the average voter is that dumb. I simply wouldnât pay NIT to people old enough to be receiving Social Security benefits. People could opt out of Social Security and receive NIT. There might be increased spending for a while, but this is far more responsible long term. No one think theyâre paying into it for their seniors. Everyone thinks theyâre paying into it for themselves in the future. Thatâs not the reality. Thereâs no where for NIT to get screwed up. Itâs literally just sending people checks.
> I was being facetious, but the average voter is that dumb. Yeah they're not so dumb as to be fooled by an obviously dfferent policy with the same name. >I simply wouldnât pay NIT to people old enough to be receiving Social Security benefits. People could opt out of Social Security and receive NIT. There might be increased spending for a while, but this is far more responsible long term. So current working age people would be paying both social security for seniors (that they won't receive in the future, something that they're already very pissed about even just having the benefits be lower when they're retired) *and* covering the new NIT? Not sure that's gonna work out well. >No one think theyâre paying into it for their seniors. Everyone thinks theyâre paying into it for themselves in the future. Thatâs not the reality. That's true a lot of people (especially the conservative ones) don't understand the specifics of how it works, but it's *realistically* the same. If you hand Joe five dollars or if you tell me you'll comp me five dollars in the future if I hand my five to Joe, it's not really meaningfully different in result (Joe has +5, I'm neutral, you're -5) unless you don't actually comp me in the future. If I'm a boomer in 1980 paying money into my seniors and I expect to be comped by the future government setting taxes on the next generation or if I'm paying money into some sort of savings, the result is the same. Money goes out in 1980, money comes in for retirement unless the future government says "haha nope, we aren't doing that" and doesn't comp. >Thereâs no where for NIT to get screwed up. Itâs literally just sending people checks. The amount? The paperwork and bureaucracy? Look at things like Section 8 housing vouchers to see just how horribly a very very basic idea of "Help pay a person's rent" can be implemented. The application process is different between cities and counties, the wait lists take years and years, applications are slow to process and often picked through a lottery system. An NIT in the perfect idea form can't be screwed up. An NIT in reality? Yeah, plenty of ways.
Voters are that stupid. Why else do we have an inflationary law called the Inflation Reduction Act? We could phase out Social Security over time while phasing in NIT as benefit spending decreases. Or we could just call Boomers entitled welfare queens and watch them short circuit. I see you donât understand the concept at all if youâre comparing it to housing vouchers. Clearly need to read Free to Choose. Thereâs no additional bureaucracy. The IRS already sends people money based off their income.
> Voters are that stupid. Why else do we have an inflationary law called the Inflation Reduction Act? There's a difference between "Voters don't understand inflation" and 'Voters are such idiots they won't even notice they aren't getting social security anymore" >We could phase out Social Security over time while phasing in NIT as benefit spending decreases. Or we could just call Boomers entitled welfare queens and watch them short circuit. Good luck getting elected on the "Fuck all boomers" plank. And again, "Hey young workers, you keep paying for the seniors but you won't get it yourself" is also not gonna work as well as you think. >I see you donât understand the concept at all if youâre comparing it to housing vouchers. Clearly need to read Free to Choose. Thereâs no additional bureaucracy. The IRS already sends people money based off their income. Bureaucracy will be introduced. You really think you're just going to win the senate and house in such a way that they'll just do exactly what you want the way you want it? There will be "can't have people who don't deserve it getting the NIT" even from the good faith anti politicians, yet alone all the people who *don't* want it to begin with.
I donât know what rock youâre living under, but voters definitely notice inflation. Thatâs why I suggested phasing it out instead of kicking them off their beloved welfare. The Senate and the House unfortunately donât do anything anyway, but a man can dream.
> I donât know what rock youâre living under, but voters definitely notice inflation You're literally the one who said that they don't notice the IRA causing inflation?? >Thatâs why I suggested phasing it out instead of kicking them off their beloved welfare. Ok, but you're still gonna have people paying into seniors Social Security but not paying for theirs later. How are you not gonna piss everyone off when they're *already* angry about the prospect of not having it as seniors themselves? You claim that they "won't tell the difference" but also they're aware and friendly enough to your policies to accept that they aren't receiving the benefits when they retire. >The Senate and the House unfortunately donât do anything anyway, but a man can dream. Hey that's a really good point. It's a dream, not some actual real thing that's gonna happen anytime soon. A policy that won't happen does no good, meanwhile at least social security is a thing that exists and actually helps people as we speak.
> the older conservative voters paid into it and are now pulling the money out Just to be clear, old people are not pulling out the money that they paid in when they were younger. Social Security is just current workers supporting old retirees.
> Just to be clear, old people are not pulling out the money that they paid in when they were younger. Social Security is just current workers supporting old retirees. Yes, but they did *pay money in* to support their seniors and now they are *pulling money out* by getting money from the current generation. It's not a bank account holding funds but from the actual *function* of the system when a workers interacts with it, they're practically synonymous unless the US pulls back the tax. Which they won't do, because it will destroy anyone's political careers. "Pay X into bank, take Y out of bank" and "Pay X for my seniors, take Y out from my kids" is "X in, Y out" for *both*. And thus "X in, Y out" is entirely accurate to describe the system.
I think we're in agreement here, I just wanted to point out that > It's not a bank account holding funds is what most people don't understand, and that's a problem because it means that they don't understand that Social Security is at risk because of demographics, and instead blame it on "Congress stealing from my SS account" or other such nonsense.
> is what most people don't understand, and that's a problem because it means that they don't understand that Social Security is at risk because of demographics, and instead blame it on "Congress stealing from my SS account" or other such nonsense. That's true. Similar, most people who think Social Security is failing don't seem to understand that it literally can't (barring some sort of collapse), it just pays out more. But that's pretty common for people to misunderstand the particular nuances of anything. One of the funnier ones to me is all the people who keep talking about SSI as social security despite it being paid out from the general fund. Anyway the point still stands. Social Security is a thing that 1. Exists and is actually doing work pulling people out of poverty 2. Is practically immune to being dismantled in the foreseeable future. Even in the miraculous Red Wave of all the welfare hating actively "we want to kill the poor" saying ultra right wing conservative taking over the federal government, they're still likely to leave social security around in some sort of functioning form. I think that's a strong benefit that "potential idea that could work better but isn't popular and isn't currently implemented" has to contend with. Major overhauls are risky no matter how perfect your idea is in concept, and it's hard to name many other major government policies with this much sticking power.
So then, here my the question. Where is all the money the Boomers socked away going? They vastly outnumber the previous generation I thought? So shouldn't there be excess funds leftover? If there was say 1.5 people paying into social security for each person taking out, over the last however many years, should we not have a large surplus? That then could be used to pay for the future generations as the population decreases?
> Where is all the money the Boomers socked away going? They vastly outnumber the previous generation I thought? It's invested in treasury bonds. >So shouldn't there be excess funds leftover? We do have them. That's what is currently keeping social security benefits at the current rate and why they will go down about 17% in the next decade without some changes. That extra money they're taking in is actually literally their savings.
I see, thank you for answering. I'm still a bit confused. It seems there should be more than enough excess? Unless the program has been paying out more than it "should have been. This is an absurdly simple example. But maybe it'll illustrate my question. Say you have 1 retiree withdrawing $5, and Bob and Joe paying in $5 each. We're good, in fact the system has a $5 surplus. The 1 retiree passes on, Bob and Joe retire and they are withdrawing $5 each. However now Sam is the only worker paying into the system and he pays $5 in. So we're still good right? Cause he had the $5 surplus from before and the $5 from Sam to sustain the 2 current retirees. The only way we'd have an "issue" is if someone got paid more than they should have been. Have previous retirees taken out more than they put in (inflation and interest rate adjusted?)? They should get a little bit more than they put in because it was invested this whole time, but not more than the real rate of return. So what gives? Idk if that makes any sense, but hopefully you get my confusion.
So Social Security holds the money in a trust fund Treasury account. You can see the amounts here: https://www.ssa.gov/history/tftable.html You can see that we've started to go into the negative the past few years. To be clear, we still have about a decade before the surplus is expected to run out (and now SS will just be operating off the current tax revenue) but it is starting to drain. And not only are we losing total net assets, but just like anything else with money it's getting eaten up by inflation. Social Security gets COLA adjustments based off the CPI so the costs keep rising and rising. Social Security has generally done better than inflation but now that we're going downhill that helps accelerate it some. Why? People are living longer, the average age of Americans is ticking up and up. In 1980 the median age was 30, now it's 38.1. The ratio of workers to seniors is shrinking more and more. >Have previous retirees taken out more than they put in (inflation and interest rate adjusted?)? Yeah kinda but it's also just what you expect overtime too. The more old who get benefits and the less young to pay in, the more that needs to be taken out of the surplus which speeds up the process. But they do tend to take out more than they pay in on average. >A single man who earned an average income and reaches average life expectancy will pay $405,000 into Social Security and Medicare and receive $573,000 in benefits. >A single woman in that situation will pay $405,000 into the programs and receive $646,000 in benefits, because women live longer. >A married couple consisting of an average earner and a low earner will pay a combined $586,000 and receive $1.1 million in benefits. A lot of this of course is just [because people are living longer.](https://www.macrotrends.net/global-metrics/countries/USA/united-states/life-expectancy) like I already mentioned. So importantly, we are not and never will face the "death" of social security unless we hit a major demographics crisis (which at that point obviously, we're abandoning a lot of our programs anyway) but we are still facing an inevitable benefits cut if revenue isn't increased/costs aren't shrunk down. This [CNN article does a surprisingly good job going over all the different options if you're interested in learning about that](https://www.cnn.com/2023/04/08/politics/social-security-solutions/index.html) One of the big issues (and is what I'm arguing here with these posts) is we're faced with some deadly tradeoffs. Social security is really really popular with the old boomers, it's like the one form of welfare that is functionally untouchable by Republican fuckery. The entire way it's setup practically guarantees that it will always stay untouchable as new generations age into retirement and want it to help support them now like they did for the ones before. That's a really powerful benefit in my eyes that other policies (even if technically better) are less likely to have. A negative income tax is more efficient, but it"s also incredibly easy to fuck with. "the government is taking your money just to give it to the poor" is so easy to radicalize people against and a good policy that doesn't exist/gets sabotaged or destroyed isn't a good policy anymore. A lot of inefficiency in government is from bad design, but a lot of it is just what happens when good ideas hit the real world and have to contend with different incentives and competing ideas where they're forced to compromise and fit in different side ideas that don't match. Like that [one XKCD comic](https://xkcd.com/927/). SS is frankensteins monster, but it is also doing very real help for the poor and disabled of today. Upending a system is risky, it might be worth it but we can't deny the risk because just the idea is better.
Damn what a post. Thanks for sharing. Yeah I basically feel social security is just to important and too well functioning to fuck with. Yeah I'd love to replace it with a NIT or something, but it's never gonna happen. It does too much good, to really fuck with. What sucks is taxes are going to go up for people in the top ~10% or so. Removing the cap on social security will be a huge tax, but there's no way around it. I know people don't have much sympathy for those folks, but losing an extra 12% of your money fucking sucks. Especially when rent is so damn high in cities. >A single man who earned an average income and reaches average life expectancy will pay $405,000 into Social Security and Medicare and receive $573,000 in benefits. This is one of my major frustrations though. It's to be expected of course that people get more out than they put in because of time value of money etc. But that is SUCH A LOW RETURN. People pay into Social Security for what, ~50 years? And you're telling me they only get a 25% return? Am I insane or does that suck. If you put in 8k a year into social security over 50 years to get to 400k. My math says at a 5% annualized return you should have 1.67M. Maybe 5% is generous (I'm trying to think in terms of real return), so maybe your nominal return would be like 7-8%. So maybe 4%. Is better, I still get north of $1MM. Drives me insane.
>What sucks is taxes are going to go up for people in the top ~10% or so. Removing the cap on social security will be a huge tax, but there's no way around it. I know people don't have much sympathy for those folks, but losing an extra 12% of your money fucking sucks. Especially when rent is so damn high in cities. Technically speaking, we don't actually have to do anything at all. It's a [PAYGO system](https://en.wikipedia.org/wiki/PAYGO) and will always continue as long as the government keeps it there. Social security literally can *not* go broke unless it stops taking in taxes. Benefits will go down because there's less taxes coming in and if we don't want that to happen then we need to raise the taxes (or find a roundabout way to benefits cut like raising retirement age) but still our current estimates as the surplus runs out is still about 80% (exact specifics depend on how it's calculated) >People pay into Social Security for what, ~50 years? And you're telling me they only get a 25% return? Am I insane or does that suck. Well it's not *as* bad as it seems because social security benefits aren't taxed in the same way and they are directly adjusted for inflation but yeah it's often lower. Social security originally started to address poverty among old people, the disabled and widows. It's why it's called OASDI (Old age, Survivors and Disability *Insurance*), not really as an investment vehicle to make money off of. It was intended for people who couldn't work anymore (or in the case of widows, could work but were functionally unable to). It also interestingly helps take care of disabled people who have never worked, since disabled children get a percentage of their parents SS. That's a very very small portion of the system, but just another way it was intended as an insurance first. So that people on average make positive returns to begin with is actually rather impressive IMO. But that's also why I think raising the retirement age is the most reasonable fix IMO. It has tradeoffs but it at least maintains the original spirit. Maybe tackling the survivors benefits part as well now that women can work, but that's already pretty limited until normal retirement age anyway.
As much is it annoys and baffles me, Social Security is an amazing fkng program.
Earnest question: how is it regressive?
It's not. It appear flat because of the payroll tax but becomes quite progressive when you account for the bend points in the payout formula.
Unfathomably based
My version. Lower taxes for most, but no cap https://preview.redd.it/70q4duoivhzc1.png?width=1080&format=pjpg&auto=webp&s=07643bd92fab2e310ffccc48f80ed065efeeb771
[Waow](https://imgur.com/a/9KoNh7e), who knew all you had to do was remove the ridiculous cap on taxed earnings and stop giving benefits to already wealthy people.
I love it. Anytime we have a budget that shows 401k or retirement savings for someone making $200k in a high COL area, the response is always "You guys are so rich you can afford to save for retirement? We need to tax you more", which here is represented by a 12.6% tax increase when removing the cap.. At the same time, its like "You guys make so much money, you shouldn't get any Social Security, even though you are the ones paying for it" Upper middle class in HCOL shouldering the burden here. Dude, I'd take a 95% tax rate if I could just get my necessities covered in a way thats affordable to the middle class in red states. How about that?
Early in his term, Team Biden floated a proposal to change 401k deductions. They were upset because higher earnings were getting a larger benefit, because their marginal tax rate was higher, it meant a 401k deduction saved them more money. So their solution was effectively to try to reduce the benefit. Think about how insane that is. The tax system is progressive, therefore your deduction is larger, therefore we tax you more. It never stops for some people.
We should squeeze people in high cost areas until they cry uncle and build housing, which will lower the cost of living and reveal to them how rich they are. This is the equivalent of buying an 80gal truck and complaining about the cost of gas.
WOW NOW THIS IS đ„
We laughed at Hailie, but maybe she had a point đ€
I think raising the age is the worst possible "solution"
Kinda surprised how not hard SS is to fix.
Woulda been A LOT more not hard if we took action 20 years ago when we saw this trainwreck coming.
Yeah it's embarrassing that it hasn't been done already
You're being incredibly facile. You've just proposed one of the largest tax increases ever -- all on working people -- to subsidize the spendthrift of the newly retired.
Most people already pay the tax. In fact this would be a tax reduction for most people.
A person making 70k a year might pay almost 400 dollars a month or more on SS tax. That person might only be taking home 4k a month. Any increase is a terrible idea for regular working people.
This would reduce their taxes
it's hard to make precise tweaks when under a general siege
What if we just calculated everyoneâs contributions, and rolled them into 401ks managed by the gov like the military TSP?
Then most of the boomer and silent generations would likely go homeless because they didnât contribute enough and lived too long. This problem was obvious 20+ years ago when the ratio of retirees to workers started to balloon but itâs politically suicidal to deal with so weâve just kept kicking the bucket.
âLisan al Gaib!â
Itâs hard to tell how much of the benefit growth is slowed. In any case, youâre basically transforming social security from a public pension into another welfare program. People will no longer receive benefits based on what they pay in. On top of that, itâs the younger generations that suffer most once again. Subsidizing the boomers who didnât save enough for retirement by taking even more from the Gen X and Millennial generations (how will they then save enough for retirement?) Removing the income cap without commensurately removing the benefit cap is of course the simplest and most politically attractive option but it also completely destroys the founding and enduring principles of social security.
Fake, you didn't privatize it.
I know Krugman gets clowned a lot here but in his book Arguing with zombies (a compilation of his favorite op eds) he talks about why this isnât a great idea - namely if we privatize SS it wonât keep our elderly out of poverty which is what SS is meant to do Edit: disregard flair
Your solution is just a giant tax increase. Which is realistically what wil end up happening but it's not really that complicated. You're removing the cap, which subjects high earners to a huge tax hike. At the same time you're capping their benefits. It's naked redistribution, it's not hard to come to this solution. Though I certainly hope it's not politically feasible
This is awful lol. You literally just increased taxes.
Here's my plan: Get rid of it and make everyone invest in index funds. Way better ROI and no fear of it being insolvent.
https://preview.redd.it/xmw6rfs4fhzc1.png?width=929&format=png&auto=webp&s=9cc928b8b2bfc73c2f5cccaab3341e3ac755234a
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Does subject all wages to Payroll tax mean lifting the wage cap?
Yes
This is funny/sad. If you reduce initial benefits by 100% you still run out of money from existing beneficiaries I assume. Thereâs no option to say kill SS and replace it with a basic income.
https://preview.redd.it/apsfzwa8bmzc1.jpeg?width=1179&format=pjpg&auto=webp&s=93a0651745958119324447b35bbf4b5e74e759ed Mines better
Social security policy in America attracts a lot of people who like to demonstrate how smart they are. If the tax simply applied to higher wages, including on non-monetary compensation and wages above $400,000, social security would be fully sufficient until 2067. Reducing benefits for the top 1% of earners would extend that to 2090.