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Wed Dec 19, 2012, 10:42 PM

Raise the Social Security payroll tax cap from $110K to...

...those making up to $300K.

SOLVED!

See, it's that simple and no one gets hurt.


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33 replies, 1916 views

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Reply Raise the Social Security payroll tax cap from $110K to... (Original post)
SHRED Dec 2012 OP
Suich Dec 2012 #1
Kaleva Dec 2012 #2
Jeff In Milwaukee Dec 2012 #22
Kaleva Dec 2012 #23
KarenS Dec 2012 #3
jschurchin Dec 2012 #28
customerserviceguy Dec 2012 #4
Major Nikon Dec 2012 #8
customerserviceguy Dec 2012 #13
Major Nikon Dec 2012 #18
customerserviceguy Dec 2012 #25
exboyfil Dec 2012 #10
customerserviceguy Dec 2012 #14
exboyfil Dec 2012 #19
democrattotheend Dec 2012 #16
customerserviceguy Dec 2012 #26
democrattotheend Dec 2012 #29
customerserviceguy Dec 2012 #33
libdem4life Dec 2012 #30
Loudly Dec 2012 #5
gblady Dec 2012 #6
democrattotheend Dec 2012 #17
libdem4life Dec 2012 #31
Honeycombe8 Dec 2012 #7
Kaleva Dec 2012 #11
Honeycombe8 Dec 2012 #21
Pretzel_Warrior Dec 2012 #9
sanatanadharma Dec 2012 #12
Panasonic Dec 2012 #15
louis c Dec 2012 #20
meow2u3 Dec 2012 #24
Hoyt Dec 2012 #27
trocar Dec 2012 #32

Response to SHRED (Original post)

Wed Dec 19, 2012, 10:47 PM

1. That's what I've always thought,

but I rarely hear anyone suggest it.

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Response to Suich (Reply #1)

Wed Dec 19, 2012, 10:49 PM

2. Bills have been proposes in both chambers of Congress to eliminate the cap entirely..

but they get little support.

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Response to Kaleva (Reply #2)

Thu Dec 20, 2012, 08:43 PM

22. Something to remember...

Eliminating the cap would (obviously) bring in staggeringly higher revenues to the Trust Fund. That would allow the actual rate to be much lower. That would put money in workers pockets and cost employers less in payroll taxes. It's a stimulus and a nifty incentive for businesses to hire more employees.

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Response to Jeff In Milwaukee (Reply #22)

Thu Dec 20, 2012, 08:58 PM

23. IIRC, it would bring in an extra 100 billion a year.

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Response to SHRED (Original post)

Wed Dec 19, 2012, 10:52 PM

3. I disagree,,,, why continue to give those above $300 the break?? Just remove it. n/t

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Response to KarenS (Reply #3)

Thu Dec 20, 2012, 10:43 PM

28. +1000000000000. nt

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Response to SHRED (Original post)

Wed Dec 19, 2012, 10:53 PM

4. How do you deal with the fact

that the cap is tied to the maximum benefit? You'd see rich-ass bankers and such paying a few extra dollars for a few years, then getting hundreds of dollars a month more in benefits for the rest of their lives. And they'll live a lot longer than the poor folks who sacrificed their health for their wages.

Here's a better idea: Raise the cap modestly, but eliminate it on the employer's share of FICA. If some megabank wants to pay some idiot ten million dollars a year to run the thing into the ground, they can afford to pay FICA tax on all ten mil.

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Response to customerserviceguy (Reply #4)

Wed Dec 19, 2012, 11:12 PM

8. The problem is those who make ten mil per year don't work for wages

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Response to Major Nikon (Reply #8)

Thu Dec 20, 2012, 06:49 PM

13. It's a figure I pull out of the air

when I try to explain the concept. Many highly paid asshats do take home compensation packages for piss poor performance. And that's the other thing: Stop treating the stock options, etc. that they get as being exempt from employer FICA.

Any problem with that?

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Response to customerserviceguy (Reply #13)

Thu Dec 20, 2012, 06:57 PM

18. None at all

I've always believed that all income should be treated the same.

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Response to Major Nikon (Reply #18)

Thu Dec 20, 2012, 10:30 PM

25. I can see separating earned and unearned income

for differential treatment by payroll taxes, but the artfully designed compensation packages are just wages and salary by another name.

Thanks for your support of the concept, I've brought it up here dozens of times over the past couple of years, and all it's met with is yawns. It would seem to me that the President might take it up and champion it. He's been otherwise unafraid to go after the well to do with tax increases.

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Response to customerserviceguy (Reply #4)

Wed Dec 19, 2012, 11:15 PM

10. My proposal

Right now the folks making from $50K to $105K are carrying the system. Have incomes above the $105K approx. maximum withheld at a lower rate that reflects the lower percentage benefit of that income over $50K. The income will not enter into the calculations, but on the other hand it is taxed at a lower rate so it is just as fair as asking someone making $105K to pony up the full withholding amount.

It is only fair.

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Response to exboyfil (Reply #10)

Thu Dec 20, 2012, 06:50 PM

14. I used to be a tax accountant

with a passing knowledge of the monstrosity known as pension tax law, but I have trouble following you there.

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Response to customerserviceguy (Reply #14)

Thu Dec 20, 2012, 07:12 PM

19. It is based on the formula for calculating S.S. benefits

Income from about $50K to $105K uses 15%. The first two levels are 90% and 32%. True everone benefits from the first level. The second level is about a wash for payback. The third level (15%) supports the system. Our current S.S. law basically tells high income people that you only have a certain obligation to those who make less to $105K of your income. In other words the burden of subsidizing the system falls disproportionately on those making between $50 to $105K.

One argument is that you can't include $200M in income because it would skew the benefit formula. My argument is that you can either payroll tax fully like everyone else and hear the argument that you are paying but not getting benefits, or you set the withholding rate to make the subsidization on income level approximately what is faced on incomes from $50 to $105K. Lets say income over $105K is taxed at 4.2%/4.2% for example. That takes away the argument of not getting benefits.

Note the numbers are approximate and change yearly, but the general trend with using the adjustment table of income holds.

I also think we should lower withholding rates with this change to go to a pay as you go with eventual draw down of the trust fund. Rates adjusted asnnualy to maintain pay as you go with a suitable balance for contingencies. I have some other thoughts for if revenues are insufficient and the maximum we should ever expect anyone to withhold (7.5%/7.5%).

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Response to customerserviceguy (Reply #4)

Thu Dec 20, 2012, 06:55 PM

16. I don't like that idea at all

I would much rather see the cap rise on the employee share. Do it on the employer share and it will have a negative effect on the already sucky job market.

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Response to democrattotheend (Reply #16)

Thu Dec 20, 2012, 10:34 PM

26. Only for jobs that pay above the cap

It would have zero effect on jobs that pay under it, and that's where we need the most jobs. The big corporations that pay megabucks to some CEO wouldn't bat an eye at this, they'd just consider it part of the bloated compensation package that they will fork out in the vain hope that this particular dorkweed will somehow be their 'savior'.

It's low hanging fruit, why not pick it?

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Response to customerserviceguy (Reply #26)

Thu Dec 20, 2012, 10:45 PM

29. Then make it on incomes over $250,000

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Response to democrattotheend (Reply #29)

Thu Dec 20, 2012, 11:12 PM

33. Again

You have to come up with a solution that doesn't raise the maximum benefit too much (by limiting the employee cap) yet raises the maximum amount of revenue, which raising the employer cap to the sky does.

I've tried to think this out a bit.

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Response to customerserviceguy (Reply #4)

Thu Dec 20, 2012, 10:47 PM

30. They ALL cash their checks..."I paid in and I am getting it back." Disgusting.

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Response to SHRED (Original post)

Wed Dec 19, 2012, 10:56 PM

5. I'm ingrained against a cap. Do you have a reason to suggest that 300K is a just one?

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Response to SHRED (Original post)

Wed Dec 19, 2012, 11:11 PM

6. take the cap completely off.....

100% of my wages are taxed...
why shouldn't everybodys?

and I agree.....problem solved!

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Response to gblady (Reply #6)

Thu Dec 20, 2012, 06:56 PM

17. I thought Dems opposed turning it into a welfare program

Eliminating the cap does exactly that, unless you proportionately raise benefits.

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Response to democrattotheend (Reply #17)

Thu Dec 20, 2012, 10:49 PM

31. Welfare, in whose Reality?

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Response to SHRED (Original post)

Wed Dec 19, 2012, 11:12 PM

7. Social Security is NOT part of the budget problem. SS is SOLVENT. It should not be on the table. nt

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Response to Honeycombe8 (Reply #7)

Wed Dec 19, 2012, 11:17 PM

11. Not a reason to not eliminate the cap.

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Response to Kaleva (Reply #11)

Thu Dec 20, 2012, 08:26 PM

21. Yes, it is. SS should be handled separately and later. There's no rush. It's solvent. nt

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Response to SHRED (Original post)

Wed Dec 19, 2012, 11:14 PM

9. Exactly! There are ways.

 

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Response to SHRED (Original post)

Wed Dec 19, 2012, 11:55 PM

12. Eliminate the cap and lower the rate...

...currently up to the cap (around) $110,000, one pays full rate (what is it 6%, assumed for argument)
At $110,000 one pays 6% on earnings
At $220,000 one thus pays 3% on earnings
At $440,000 one thus pays 1.5% on earnings
At $880,000 one thus pays 0.75% on earnings

Carry out the math and you see that Romney get the max benefit at a severely discounted rate.
Yes, I understand that he will pay more total tax, but hey, the rich get more aggregate benefit (by huge factor) from being members of our social contract.

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Response to SHRED (Original post)

Thu Dec 20, 2012, 06:51 PM

15. Better yet, remove the cap entirely

 

and make everyone pay into it. Everyone gets their share.

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Response to SHRED (Original post)

Thu Dec 20, 2012, 07:13 PM

20. I've always agreed to that proposal, but

why stop at $300K? Let's go to at least $1,000,000,

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Response to SHRED (Original post)

Thu Dec 20, 2012, 09:39 PM

24. What about subjecting dividend income to FICA?

That will also raise more money for the Social Security trust fund--and the non-working Richie Riches who live off their dividends will also have to pay into the system.

But no, we can't have lazy billionaires paying taxes, can we?

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Response to SHRED (Original post)

Thu Dec 20, 2012, 10:37 PM

27. Problem is, rethugs won't be happy until they hurt poor.

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Response to SHRED (Original post)

Thu Dec 20, 2012, 11:00 PM

32. Yes yes yes yes

That's what I've been thinking also.

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