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Response to Hekate (Reply #59)

Mon Dec 10, 2012, 07:13 AM

60. How to really help SS

Say you double the cap. 12% on another 100k. Say the person works for nearly 2X as long as they withdraw (18-68, then 68-93). There's your means testing. Extra 12k*50 = 600k put in, around 2k/mo*12*25=600.

Doubling the cap would severly impact the top 1%-2% level, especially dual earners. If you raised the cap 100k, my wife and I would probably have our tax bill increase by $18k (including the employer 6%). A one year bump like that would be disruptive. The expiring tax cuts will cost us closer to $8k, so a 3 year phase in would work. Or just look at % of income captured, and how far that is from 90% and do a third or quarter per year until we get back to having a base of 90% of income.

If you were going to do this, you'd have to address unearned income. It seems like everyone wants to tax work, while 'investment income' is sacred. We need to raise cap-gains taxes to the point that there is less incentive to avoid income tax by 'reclassifying' income as cap gains. Maybe we need more brackets to highlight how much of the cap gains taxes are really going to the top 0.1%.

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