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Reply #131: The reason they don't mention it is because it wouldn't work. [View All]

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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-27-06 10:50 PM
Response to Reply #104
131. The reason they don't mention it is because it wouldn't work.
You have to do the math. It's not that difficult. Let's take 2005 for our reference year. The grand total for all wages paid that year was $5,374,177,421,625.56. Of that, $4,558,220,071,211.57 was subject to the OASDI Payroll Tax. That's 84.8% of the Grand Total payroll for the country. (It should be remembered that HI (e.g. Medicare) taxes are assessed without a cap.)

So, about 85% of all wages (and 94% of all workers) are already being taxed at the maximium rate.

Let's look at this graphically:

.

Now, it's necessary to look thoughtfully at this graph. It portrays every person who earned wages from one or more jobs in 2005. All 151,603,359 workers. Of these, 142,585,304 workers (94.1%) paid OASDI Payroll taxes on their entire wages. Only 5.9% received wages above the 'cap.'

Now, what about that "bottom 94%"?? This is where DUers have to pay attention to the "war on the middle class" ... which is visually depicted by the sag in the curve. The amount that curve sags is measured by the Gini Ratio. A Gini Ratio of 1.00 would mean that everyone in the country worked for nothing except one person - that person collected all the money. A Gini Ratio of 0.00 would mean that everyone in the country earned the same wages. Once upon a time in America (in the 70s), this particular Gini Ratio was around 0.35 to 0.40. As recently as 1990, it was 0.509, even after much of the decimation of the middle class by Reagan/Bush.

The higher the Gini Ratio, the more inequitable the distribution of wages.

What does this mean? It means that corporations are not only giving their executives bigger and bigger salaries, it also means that much of what they're not paying their employees is being paid out in dividends, stock options, and other payments to the "ownership class." (Think in terms of consultants, vertical ownership, holding companies, and conglomeration. Realize that when a corporation pays for the 'services' of an outside consultancy or agency, those companies are usually structured to create retained earnings in another private corporation - one which may be incorporated offshore to avoid taxes; one which is designed to benefit an "ownership class" crony.

It's VERY important to realize that dividends and capital gains are taxed at less than half the rate of wages and salaries. In other words, our federal tax policies are encouraging corporations to reduce paying earned income and increase paying unearned income.

The most visible suppression of working class wages is the federal minimum wage, which hasn't been increased in about nine years.

Let's get a 'feel for what that "lower 94%" are being paid. The average wage in 2005 was $35,448.93. But 65.8% of all workers earned LESS than the average! (Get the idea that 'average' means 50-50 out of your head. That's 'median.') The median wage in 2005 was $23,962.20!

It doesn't take a brain surgeon to realize that there's plenty of 'headroom' in those wages before they get up to the 'cap.'


So, the real "supply side" answer to making the Social Security System more sound is to return to the more equitable distribution of wages. Increase the pay of the "lower 94%"!! Start by increasing the minimum wage. Immediately.

When you raise the "belly' of that sagging curve, every single dollar of increased wages is subject to the payroll tax as it currently exists!!

All of us MUST realize that the Social Security system is one of the BEST indicators of the whether the working class in this country are being fairly compensated! Any suggestion that the tax rate needs to be raised or the 'cap' raised merely indicates that the working class will continue to get screwed royally!

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  -Why is Privatized Social Security bad? puffthemagicdragon  Oct-26-06 09:45 PM   #0 
  - "They say..." you say. Who's "they"?  tuvor   Oct-26-06 09:48 PM   #1 
  - "They Say" . . . .  Suziq   Oct-27-06 12:44 PM   #103 
  - You know..."them."  haruka3_2000   Oct-28-06 01:10 AM   #133 
  - Social Security is an insurance policy, not an investment portfolio  Selatius   Oct-26-06 09:48 PM   #2 
  - Agreed  IndyBob   Oct-26-06 09:58 PM   #19 
  - And doesn't even take the devaluation of the dollar into account.  greyhound1966   Oct-27-06 11:52 AM   #93 
  - Agree. Consider This. What If You Are In An Accident,  loindelrio   Oct-26-06 10:48 PM   #39 
  - Aren`t those private retirement accounts called IRA`s  focusfan   Oct-27-06 07:32 AM   #74 
  - (Short essay response) I think there should be a combination...  originalpckelly   Oct-26-06 11:03 PM   #47 
  - Remove the cap, eliminate the problem. n/t  greyhound1966   Oct-27-06 12:18 PM   #98 
  - Yes, greyhound, the ONE solution that the financial columnists  Lydia Leftcoast   Oct-27-06 12:45 PM   #104 
     - Amazing that so many "experts" seem to always overlook this one, isn't it?  greyhound1966   Oct-27-06 01:36 PM   #116 
     - Sort of like the way health "experts" think of everything but  Lydia Leftcoast   Oct-27-06 01:40 PM   #117 
     - The reason they don't mention it is because it wouldn't work.  TahitiNut   Oct-27-06 10:50 PM   #131 
  - The answer to your essay is simple: Raise the FICA cap or eliminate it.  Selatius   Oct-27-06 09:16 PM   #128 
     - Nope. See my post above.  TahitiNut   Oct-27-06 10:53 PM   #132 
  - Many people in my generation are going to learn the hard way  bleedingheart   Oct-27-06 11:14 AM   #86 
  - Definitely Agreed. n/t  Megahurtz   Oct-27-06 02:14 PM   #121 
  - First, social security is not an investment. It's INSURANCE.  Warpy   Oct-26-06 09:51 PM   #3 
  - He will probably get much more back than he put in. Check his  SharonAnn   Oct-26-06 09:52 PM   #4 
  - because,.  cyclezealot   Oct-26-06 09:52 PM   #5 
  - to corporate america, individual insecurity=profit  lumberjack_jeff   Oct-26-06 09:57 PM   #17 
  - Even Bush has admitted that privatizing Social Security  ck4829   Oct-26-06 09:52 PM   #6 
  - SS is not a retirement plan  mitchtv   Oct-26-06 09:52 PM   #7 
  - and so you would like to push your idea of whats fair off on everyone else, huh  madokie   Oct-26-06 09:53 PM   #8 
  - Private companies without oversight....  madfloridian   Oct-26-06 09:54 PM   #9 
  - I can see the other side of the argument  TheFarseer   Oct-26-06 09:54 PM   #10 
  - Fish on.  lumberjack_jeff   Oct-26-06 09:54 PM   #11 
  - I actually pay 15% 12.4% is for SS  puffthemagicdragon   Oct-26-06 11:00 PM   #45 
  - oops, its actually up to 15.3% now  puffthemagicdragon   Oct-26-06 11:07 PM   #49 
     - And you get to deduct half of that amount on your 1040 or whatever form  havocmom   Oct-27-06 01:01 AM   #64 
  - First of all, you have to understand  SheilaT   Oct-26-06 09:55 PM   #12 
  - my dad  puffthemagicdragon   Oct-26-06 09:59 PM   #22 
  - Except his SS  SheilaT   Oct-26-06 11:02 PM   #46 
  - His property and investment income should have no bearing on his SS  Lydia Leftcoast   Oct-27-06 12:57 PM   #108 
  - Do some research before you post this stuff  LostinVA   Oct-27-06 01:41 PM   #119 
  - If this was not a pay as you go  TheFarseer   Oct-26-06 10:05 PM   #24 
     - The government owes workers $1.8 trillion  lumberjack_jeff   Oct-26-06 10:26 PM   #32 
  - there may not be a stock market by then  savemefromdumbya   Oct-26-06 09:55 PM   #13 
  - My opinion has to do with how secure it would be -  pinkpops   Oct-26-06 09:56 PM   #14 
  - thanks for all the responses  puffthemagicdragon   Oct-26-06 09:56 PM   #15 
  - Read the whole story  lumberjack_jeff   Oct-26-06 10:06 PM   #25 
  - Sounds like you need to pull yourself up by your bootstraps  me b zola   Oct-27-06 01:41 AM   #67 
  - Probably the same place I've heard it  BeachBuckeye   Oct-27-06 01:22 PM   #111 
  - Stop reading the financial "news", they are lying to you in order to  greyhound1966   Oct-27-06 12:30 PM   #101 
  - I'm self-employed, too, and I know how tough it can be  Lydia Leftcoast   Oct-27-06 01:14 PM   #109 
  - If you plan on making those type of big bucks...  kentuck   Oct-26-06 09:56 PM   #16 
  - A couple of points  ACK   Oct-26-06 09:57 PM   #18 
  - Do some research on England and their attempt to privatize  MadMaddie   Oct-26-06 09:58 PM   #20 
  - It was in the news when I was over there this past August  Lydia Leftcoast   Oct-27-06 01:15 PM   #110 
     - I saw a news segment on it last year...it was very  MadMaddie   Oct-27-06 08:47 PM   #127 
  - its entirely a scam to allow some connected companies skim a portion of  bullimiami   Oct-26-06 09:58 PM   #21 
  - Here are several reasons.  FloridaPat   Oct-26-06 10:01 PM   #23 
  - Given that many companies are not going to pay their employees  muntrv   Oct-26-06 10:09 PM   #26 
  - Because it takes the 'security' out!  boolean   Oct-26-06 10:10 PM   #27 
  - Go ahead and put all your spare change in the market.  realpolitik   Oct-26-06 10:11 PM   #28 
  - The one who stands to benefit if SS is privatized  Demobrat   Oct-26-06 10:15 PM   #29 
  - Don't forget, Social Security isn't only for seniors......  smokey nj   Oct-26-06 10:18 PM   #30 
  - Besides what Selatius says above, which is absolutely correct, ...  TahitiNut   Oct-26-06 10:25 PM   #31 
  - (Sometimes I don't know why I fucking bother.)  TahitiNut   Oct-27-06 12:04 AM   #52 
  - Sometimes, people don't respond...  lumberjack_jeff   Oct-27-06 09:41 AM   #78 
  - Pretty Charts Just Confuse Me ...  Crisco   Oct-27-06 10:50 AM   #80 
  - They will if you say they do.  TahitiNut   Oct-27-06 11:05 AM   #83 
  - You'll Love This  Crisco   Oct-27-06 11:08 AM   #84 
     - I can't type that much.  TahitiNut   Oct-27-06 11:10 AM   #85 
  - Me too! Lol! n/t  Megahurtz   Oct-27-06 02:26 PM   #123 
  - I loved the charts too!  puffthemagicdragon   Oct-27-06 11:44 AM   #91 
  - thanks for the charts and the research/posting.  uppityperson   Oct-27-06 12:20 PM   #99 
  - Think Enron  housewolf   Oct-26-06 10:31 PM   #33 
  - EXACTLY. nt  Red Right and BLUE   Oct-26-06 10:51 PM   #41 
  - Most people don't get any education on how to  HereSince1628   Oct-26-06 10:31 PM   #34 
  - I Suspect the Smarter Minds On Wall St Don't Want SS Investment Accounts  Crisco   Oct-26-06 11:04 PM   #48 
  - what will happen to the stockmarket as the babyboomers retire?  flaminbats   Oct-26-06 10:36 PM   #35 
  - this is what I lay awake thinking about  puffthemagicdragon   Oct-26-06 10:49 PM   #40 
     - A few simple things.  bperci108   Oct-27-06 12:06 AM   #53 
  - All of the post have made excellent points but I think 1 has been missed  left is right   Oct-26-06 10:38 PM   #36 
  - Many of the current programs allow pre-tax dollars for incentive...  HereSince1628   Oct-27-06 08:31 AM   #77 
  - In the first place it doesn't work.  Cleita   Oct-26-06 10:43 PM   #37 
  - It's bad because the GOP is for it  kingofalldems   Oct-26-06 10:44 PM   #38 
  - Is my pizza burning?  Red Right and BLUE   Oct-26-06 10:52 PM   #42 
  - Do you want another Enron?  judaspriestess   Oct-26-06 10:55 PM   #43 
  - If it were private it would not be Social Security....  whistle   Oct-26-06 10:56 PM   #44 
  - Why is turning over SS to Wall Street crooks bad, you ask?  skids   Oct-26-06 11:15 PM   #50 
  - Social Security Insurance is NOT broken.  TheGoldenRule   Oct-27-06 12:04 AM   #51 
  - yes, I guess that is it, he retired early  puffthemagicdragon   Oct-27-06 12:54 AM   #61 
     - You can't retire at 61  sandnsea   Oct-27-06 01:47 AM   #69 
  - Deleted message  Name removed   Oct-27-06 12:07 AM   #54 
  - The more things change...  bookman   Oct-27-06 12:15 AM   #55 
  - i'd want my money to go to they such as Warren Buffet, but i don't...  bridgit   Oct-27-06 12:17 AM   #56 
  - From your paycheck to a CEO's pocket. No waiting.  Porcupine   Oct-27-06 12:20 AM   #57 
  - Privatization is a right wing lie.  porphyrian   Oct-27-06 12:22 AM   #58 
  - puffthemagicdragon?  havocmom   Oct-27-06 12:33 AM   #59 
  - a cartoon from the 80's?  puffthemagicdragon   Oct-27-06 12:55 AM   #62 
     - LOL  havocmom   Oct-27-06 12:59 AM   #63 
        - I fully understand the meaning of Puff  puffthemagicdragon   Oct-27-06 01:32 AM   #65 
           - Fully understand?  havocmom   Oct-27-06 01:39 AM   #66 
              - not sure what is funny  puffthemagicdragon   Oct-27-06 01:41 AM   #68 
  - because private companies go bankrupt  pitohui   Oct-27-06 12:50 AM   #60 
  - kick!  Viva_La_Revolution   Oct-27-06 01:49 AM   #70 
  - Thanks again, I have learned a lot  puffthemagicdragon   Oct-27-06 02:11 AM   #71 
  - Most are getting squeezed now...  Sir Jeffrey   Oct-27-06 11:22 AM   #87 
     - Thank you Thank you finally  puffthemagicdragon   Oct-27-06 11:40 AM   #90 
        - No prob...  Sir Jeffrey   Oct-27-06 11:51 AM   #92 
        - I love her! Generation Debt is a great book!! for Xrs and Y's  puffthemagicdragon   Oct-27-06 11:58 AM   #95 
           - You sound like me: a worrywart...  Sir Jeffrey   Oct-27-06 12:15 PM   #96 
        - I could be your parent, but am concerned also  uppityperson   Oct-27-06 12:24 PM   #100 
  - What about the word "Social" don't you understand?  WinkyDink   Oct-27-06 02:12 AM   #72 
  - start talking to your dad over the next 5 years...  cap   Oct-27-06 05:48 AM   #73 
  - you dont get it - he makes TOO MUCH  puffthemagicdragon   Oct-27-06 10:48 AM   #79 
     - Okay, to retire at 61 he has to be on disability  Lydia Leftcoast   Oct-27-06 01:23 PM   #112 
  - Would you take all the money you saved for retirement to Las Vegas?  NNN0LHI   Oct-27-06 07:39 AM   #75 
  - SS is not retirement - I've been a SS recipient  SCDem   Oct-27-06 07:43 AM   #76 
  - Who would you rather have investing your S.S. money?  NewJeffCT   Oct-27-06 10:56 AM   #81 
  - I haven't paid into SS for three years now.  ileus   Oct-27-06 11:00 AM   #82 
  - So either you're not working or you're living overseas or  Lydia Leftcoast   Oct-27-06 01:25 PM   #114 
  - What happens when the stock market crashes?  Beelzebud   Oct-27-06 11:23 AM   #88 
  - Because corporatization will mean extra stress on the system...  Orsino   Oct-27-06 11:29 AM   #89 
  - You Grossly Misunderstand The System  ProfessorGAC   Oct-27-06 11:57 AM   #94 
  - Harsh reality.  greyhound1966   Oct-27-06 12:16 PM   #97 
  - IRA's, 401k's, and social security are all good programs.  lumberjack_jeff   Oct-27-06 12:41 PM   #102 
     - If they were, as advertised, voluntary and we were free to direct them,  greyhound1966   Oct-27-06 01:31 PM   #115 
        - You can invest an IRA in real estate.  lumberjack_jeff   Oct-27-06 03:29 PM   #124 
  - If you want to secure your retirement to a level you want to have  RGBolen   Oct-27-06 12:47 PM   #105 
  - You need to understand Wealth building  ItNerd4life   Oct-27-06 12:50 PM   #106 
  - Understand one thing:  Lydia Leftcoast   Oct-27-06 12:53 PM   #107 
  - To put it simply  mvd   Oct-27-06 01:24 PM   #113 
  - They say they say they say  LostinVA   Oct-27-06 01:40 PM   #118 
  - Are you fucking serious?  Megahurtz   Oct-27-06 02:12 PM   #120 
  - we need a big pool of shared cash to make sure everybody has a chance  librechik   Oct-27-06 02:26 PM   #122 
  - Is there a need to add "I am a young democrat..."?  brentspeak   Oct-27-06 04:01 PM   #125 
  - Thought that I'd just put my two-cents in ....  joeygirl   Oct-27-06 05:31 PM   #126 
  - Let's pick apart the proposal that the Republicanites are putting forth  Lydia Leftcoast   Oct-27-06 10:01 PM   #129 
  - If I sank my SS into Enron, I'd have nothing.  mdmc   Oct-27-06 10:04 PM   #130 
  - If only it was that simple  Mr_Spock   Oct-28-06 01:18 AM   #134 
 

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