Clark Favors Raising the $87K Wage Cap on Social Security Taxes!

[DoveTurnedHawk]

I don't know any other candidate who has supported this! It is both bold and progressive.

http://yin.blog-city.com/read/231503.htm

DTH

[hayu_lol]

1. Yup...thats the answer that has been needed for a long time

What the heck...the very wealthy wont even notice the increase.

[teryang]

2. This is bad move

The wealthy make their money from corporate income and dividends not salaries. For example, subchapter S income is not subject to FICA. This is a tax on the middle class. I have worked all my life to get past this regressive flat tax. (Never succeeded) Now the bar is being raised once again to fuck middle class hard working people.

It won't affect the very wealthy at all. It will be divisive to divide white collar middle class salaried professionals from working class voters. He's making a serious blunder here. If FICA taxes are unlimited and apply to income in the hundreds of thousands regardless of its character, then I will support it.

[Journeyman]

3. Agreed, teryang. . .

I bust my ass nearly everyday of the year and very, very little of my earnings are dividends or interest income. As I'm self-employed, I pay double the FICA that a salaried person pays. Because my wife works for me for no wages, our maxing out on FICA enables us to recoup some of the double-tax we pay. As for those who believe my earnings make me "wealthy," divide the maximum wage cap between the two of us and you'll see we fall below the mean wage of a vast percentage of the populous. And, of course, I pay double the FICA percentage of my income that the majority pays.

Oh, yeah. Clark's got a bold and progressive fuckwich going for me and mine.

[yankeedem]

14. You don't pay double someone else

An employee's wage is effectively diminished by the employer contribution to FICA.

edit to change employee to employer

[papau]

5. No Wage cap is a very good idea

A no wage cap ends any "problem" in Social Security (Medicare already has no wage cap - but as tax only only applies to wages -teryang is correct that much of the earnings of the very very wealthy excapes).

With the wage cap gone we have the beginning of fairness between those making over $85,000 per year and those under that amount. It is likely the actually SS payroll tax rate would come down, since the extra money is not needed now.

Clinton post 1995 has had this position, and Dean spoke to Clinton and adopted this position shortly after Dean made his 1995 raise the retirement age (above the Reagan 67) agreement with a previous speaker comment. All of those running as Dems now embrace the idea - if only to consider.

Just as SS is now integrated in the income tax return (if you have over paid SS the excess counts against your FIT income tax obligation), the FIT return could easily pick up the tax that should be charged against investment income.

However all this assumes Dem control - the GOP would never allow a true flat tax to raise the tax of the wealthy.

[Renew Deal]

16. 87,000 is not a middle class salary.

That's about 33,000. I understand if you are the sole wage earner, but then again we are talking about perserving social security. $87,000 is probably a number that needs to be reviewed. I applaude him for considering this and considering cutting defense at the same time. No one else is saying this. Remember, he is a master economist.

[Superfly]

20. It is if you live/work in DC

"87,000 is not a middle class salary"

[salin]

23. so most teachers, policemen, firemen, etc. earn this in DC

if so, things have really changed since I lived in DC in the mid-eighties.

Or are those no longer middle class jobs?

In the nineties in the Bay Area (which by then had exceeded the cost of living in DC - in part due to the tech explosion and the sharp increase in market values of housing which escalated in 1997 on) - those in the service professions still made in the 30s - unless they had a whole lot of years in the business, or if they worked (for police and fire) a great deal of overtime. It was so bad for public schools that deals were attempted to lure folks into teaching such as low interest loans for homes (I seem to remember this being attempted but discontinued due to problems that I can not remember).

I think sometimes we measure the salaries that peers make and deem it 'average middle class' - while neglecting a whole lot of professionals in the public sector who earn a great deal less.

[Kathy in Cambridge]

32. If you live in Boston or NYC it is

87K for two people is difficult, a family of four would be struggling.

[not systems]

33. well

To buy a little tract house in a bad neighborhood costs
350000 dollars here.

You need to make 130000+ dollars to "afford" the
median house.

Your right $87000 is upper working poor.

[Fescue4u]

45. $33k isnt middle class.

In many citys you'd be lucky to have a leaky roof over your with only $33k

[Nlighten1]

4. Great

[slothrop]

6. I agree with this

Since the money collected is being used to fund the operations of the gov't, those who earn over the cap are getting a free ride. Either stop using the money in the general fund or eliminate the cap. Also no reason not to apply it to all income.
Also if there is an income cap on collecting, why is there no cap on the distribution side?

[lindashaw]

7. The words "wage cap" make us take pause, but...

capping SS at $87K would help so much. Not only would it leave more in the paycheck during a bad patch, it could make the difference in a small business about to close its doors. Matching SS is the ball-breaker for small business with, say, 4-8 employees. Think of what they could do with those savings.

[OneTwentyoNine]

8. Huh??

SS is capped at 87K per employee right now. If you own a small business with 4-8 employees chances are that your matching ALL their SS right now--unless you have a hell of a business and have employee's making over 87,000 per year.

So...someone makes 80-87K per year and gets nailed on SS on every dime they make while Limbaugh makes 25 Million per year and only pays in on the first 87K.

Yeah,thats REAL fair.....


David

[OneTwentyoNine]

9. Works for me....

I've been self-employed since 1976--which means I get to pay double the SS as some one who is employed and their boss matches their other half.

I can still remember years ago when SS was capped around 30K. I paid in on every fucking penny I made while others making 100 grand or 100 million got a free ride after 30,000.

Its total BS IMO,tax people on their TOTAL income or don't tax anyone. When turning 65 people who made more,paid in more, would of course get more from SS. I've got no problem with that,but the way its set up now is grossly unfair.


David

[Romberry]

10. What they need to do...

...is apply FICA to income, not wages.

[SOS]

22. Exactly Romberry!

Total income, no cap.
And raise the standard deduction to $25,000.

[TacticalPeek]

11. I'd like to see numbers crunched on various sub-issues within this.

There are some self-interest v common good angles here, perhaps. Like Journeyman and teryang say, hitting mid-upper-mid folks is probably counterproductive, and a solution to that is bringing more income (ie, non-earned) into the mix. With that, I would think the rate could probably be lowered to offset the hit on mid earners/small business. You could maybe have 2 or 3 rates going in, and may also have to adjust the payout tables so you don't push the low-wage guys out of the benefits.

This last is important because we are becoming increasingly stratified in income and wealth, which I think has deleterious effects on overall economic strength, with not much change in sight (only worsening). FICA policy can be somewhat of a counter to this.

To know the good and bad paths here, we really need to see numbers, projections, etc. of the various effects.

[Donna Zen]

12. Many good points being made

BTW, I don't think that Clark indicated that the rise in the cap would be to eliminate it all together. But if there is an area that can be played with and still be palatable, this maybe it.

The other options are: (from the link)(1) raise the retirement age; (2) cut benefits; (3) raise the payroll tax (either the rate or the amount of income taxed); or (4) some combination of two or all three.  Some people might think it is better to cut benefits, say, to the wealthy elderly by means-testing.  Some might think we should all suffer a little and cut benefits across the board.  But I give Gen. Clark immense credit for being, as far as I can tell, the first of the major candidates to select from that unpalatable menu.

It really is going to be difficult to find an answer. I suggest that anyone who has strong opinions should email or snail mail the office...you want grassroots...

[Renew Deal]

13. Only candidate that would increase this and cut defense.

This is very very impressive.

[cally]

15. Great News

Something bold is needed to enable social security to survive the baby-boom retirees. Either make benefits needs based or collect more revenues. I would also support including more of income in the tax.

BTW, I also am a Small Business owner so I know about matching the employers contribution. What's worse is disability and workmen's comp costs. Those are extremely high.

[Rose Siding]

17. Dean supports it

MR. EDWARDS: Thank you, Senator. (Applause.)

Governor Dean, about those high earners, the nonpartisan Center on Budget and Policy Priorities has suggested using revenue from the estate tax as a progressive way to help bolster Social Security. Should wealthy Americans be contributing more to Social Security?

MR. DEAN: What wealthy Americans should be doing is paying their fair share of the payroll tax. Social Security cannot survive -- (scattered applause) -- on its present track. And the solution to that is simply to make wage-earners above $85,000 subject to the payroll tax, and that will cure the Social Security ills, if we can change presidents.

http://www.vote-smart.org/speech_detail.php?speech_id=M000017346&keyword=&phrase=social+security&contain=

[tokenlib]

21. Dean has expressed support for this

And it is one of the reasons I like Howard Dean.

There are tens of millions of us working class people who live paycheck to paycheck, have never had many frills in our lives, who have faithfully paid back our student loan mortgages, and have NEVER had the disposible income to put the money away like all the "experts" advise. If we had it, we would have put it away--but we don't have it to heed the "experts."

We will need a strong social security someday without benefit cuts and strings attached. We need the cap raised--the revenue secure to keep the system strong. Social Security will be the backbone of our retirement income--and I do not relish having to be a greeter for a irresponsible corporate whore like Walmart at 70 years old to put Ramen noodles on my table.

[DoveTurnedHawk]

27. Genuine Ignorance Here

This is news to me. I thought Dean supported raising the SS age for benefits. Thanks for the info!

DTH

[Demobrat]

29. I think he mentioned it once in 1992.

And somehow that became his positon. He talked about raising the cap in the Stephanopolis interview, for a moment. I was hoping he'd get into it more, but they cut away.

[Demobrat]

28. Yes, I do to, and I'm approaching that income level.

I'd rather pay it now when I can afford it, and have it there later when I need it.

[Nottingham]

18. I think this sucks! Why can't I see a candidate say Tax Big Business

:bounce: This will score big points with the populace

NOT!!!

[gulliver]

19. Move SS funding directly onto the income tax.

That's one I have not heard. That would make capital gains subject to SS tax too. It's funny to me that when Republicans are spending Social Security lockbox money to hide a big part of W's deficits, the money is all the "same color." But when it is time to pay the tax to support that spending, the money is all "worker green."

[tokenlib]

24. Oh--oh! Sounds like class warfare...

But then I think it is class warfare and the workers are getting whipped.. The rich should pay their fair share in a "progressive" system--in every way possible.

[Nikia]

25. Raise it

It generates more income which is needed. It is not a hardship for someone with that level of income to be taxed on a few more thousand dollars. It is a hardship for the working poor to be taxed on it at all. FICA is many of the working poor's biggest tax withholding.

[SoCalDem]

26. That will make a huge difference..

Thanks, Wes:)

BUT..it will only work if the "extra" is truly put aside for when the boomers retire.. If it's just handed out and used for currently retired, it only prolongs the agony of later :(

and it must start being applied to earnings of ALL kinds.. Can you imagine how much the SS could have had added if the boom of the 90's had been FICA-ed at an equivalent ratio??

There's "free money" floating around out there, and most of us under the "cap" never even see it.. It's all sheltered, and it should not be.. Earnings is earnings.. TAX it all..


The extra that the boomers paid in for 40 some years is long gone, and we only have about 10-15 years to "catch up"..

[Fescue4u]

36. Are you suggesting SS tax

on cap gains and Schedule C and E income as well?

Good god man thats alot of tax.

WHile I don't have schedule C income, I do have schedule E income.

If today I had to SS tax on schedule E, I would immediately raise the rents on my tenants by 15% to make up for it (employer and employee)

[Lydia Leftcoast]

39. Tax on Schedule C?

Schedule C lists profit or loss on business for free-lancers and sole proprietors. After it's all tallied up, any profit (after legitimate business expenses are deducted) goes on to a certain line of your Schedule A.

Estimated tax (the double-whammy FICA tax that the self-employed pay) is levied on approximately 93% of your profits. It is calculated on form ES and also listed on your Schedule A.

Therefore, there is no tax that is specifically "Schedule C." If you're a sole proprietor, it all ends of up on Schedule A.

It may be different for partnerships or corporations, but they don't use Schedule C anyway.

[MercutioATC]

30. It DOES raise...every year.

Based on cost of living. I just stopped paying it for the year and the bigger checks are nice, but I agree with eliminating the FICA cap. I also like Kerry's idea of exempting the forst $10k from FICA. THAT'S something that would truly help the working poor.

[Bread and Circus]

31. This is how it works for me.....

I have 3 employees, they pay 6.2% on FICA, I match 6.2%

They are all well below the current $75,000 limit, so if
Clark changes it, their taxes and my taxes would not change.

Because I am self-employed/sole proprietor, I don't pay FICA
taxes at all. I pay Federal income, State income, and a few
other random taxes as well. Clark's changes wouldn't affect
me.

However, if I were an "employed" physician making $150K per
year the max FICA would go from 75,000 to 87,000, meaning
an extra 12,000 would be taxed per year = $744 of additional
revenue per year per indiviual making more than 87,000 bucks.

In effect, it makes FICA taxes more progressive and shouldn't
affect individuals making less than $75,000 per year.

I am no CPA, so maybe I have this wrong, but I think that's
how it would work.

Anyway, it's one option. People know I am a Clark supporter
so I am not going to cheerlead here but I didn't see anyone
break it down this way. Certainly though, you have to consider
not a bad idea "for a general". It's something I haven't thought
about.

Don't forget, Clark was an economics professor at West Point.
He might have a trick or two up his sleeve. God I hope he doesn't
blow this next debate.

:kick:

[Fescue4u]

34. ouch.

That a big tax hike that I cant afford.

Does he also support raising the SS benefits in porportion? That is, you pay more in, get more out?

[Fescue4u]

35. Im against raising the SS Cap, but would support

a "luxury" SS tax.

I other words, keep the SS tax from 0 to about $87k as it is now.

Then kick it in again at about $500k

I dont have a problem with the rich paying ss taxes, but I do have a problem with raising the SS tax cap on the poor.

Doubling SS cap to say $160k would represent a massive tax hike that I cannot afford.

For this reason, I won't support Dean or Clark.

[NNN0LHI]

37. "For this reason, I won't support Dean or Clark."

Does that mean you would vote for Bush if either Clark or Dean are nominated?

Don

[Fescue4u]

38. Let me choose my words carefully...

How does "HELL NO" work :)

Once we are past the nomination, I reserve the right to retract that statement. Or maybe if a viable 3rd part candidate..

I think you are accusing me of being a 'publican. Sometimes my support of the 2nd ammendment and aversion to taxes give folks that impression buts its simply not the case.

[Lydia Leftcoast]

40. $160,000

is not poor, not even in New York or San Francisco.

[Fescue4u]

44. Well thats true...

But the cap is currently $87k.

Nonetheless, neither $87k, nor $160k is rich...its pretty much entrinched middle class.

[Nikia]

50. It is great that you make money above the cap

Many of your fellow Americans do not, however. Based upon the living standards that you are used to along with the cost of things like housing in your area, $87,000 might seem like not a lot. Unfortunately, many truly poor Americans that work very hard, are being taxed FICA from their very first dollar earned. You say that you cannot afford to not get bigger checks at the end of the year. Many of us never reach that cap. Some people are in major financial trouble if they need new tires or if they get sick. Some people cannot afford to buy such luxury items as brautwerst unless it is on sale. I know that people will disagree about what is the definition of rich and poor. My husband and I make close to $50,000 togther and we are not poor because I know what it is like to be poor and have friends that are. We can buy nearly whatever we want at the grocery store, pay our bills on time, buy several lower price things we want but don't need every month, and do not overly fear an unexpected few hundred dollar expense. We are both college educated. $87,000 is rich in that it is enough to buy the things one needs and many things that one wants. If you have difficulty with your lifestyle if your income above this amount is taxed, perhaps you should reevaluate your needs and wants. To say that you need your income untaxed more than the person making half or a third of that amount, is an insult to those less fortunate than you. It is just something to think about. I know that making $87,000 or even $160,000 will not allow anyone to have real economic power (like being able to buy a medium sized business) but it allows a comfortable lifestyle in which one can get what they need and what they truly want.

[burr]

51. so what???

my point is raise the income cap to have more paying an equal percent..while keeping Social Security solvent.

[Nikia]

52. I think that the income cap should be raised

My post was referring to the poster who said that they could not afford their tax if the cap was raised and suggested that raising it would hurt the poor since to him/her $87,000 in income is poor.

[Yupster]

41. I'm okay with it as long as

the benefit gets raised too.

The payout is so progressive that the upper people wouldn't get more than a token extra benefit for even huge extra deductions, but I still think it's important to keep the benefit tied to the premiums paid to some degree.

[TacticalPeek]

42. The benefits already get raised 'naturally' with annual cost-of-living

increases (across the pool, a not unsubstantial sum).

"keep the benefit tied to the premiums paid to some degree"

Perhaps there is a way to keep a token reciprocity, on principle.

However, there does not exist a sweet way to save SS.

A thing to keep in mind: the exquisite sharpness of the thorns embedded in this problem is LARGELY DUE to over ten years of Congressional shirking and literal buck-passing. This dereliction of duty continues unabated, and has become a 'valiant' cause for certain radical ideologies.

[Yupster]

46. What I meant is

Currently the benefit payment formula is very progressive. If a person pays double the premiums into social security over another person, he does not ghet close to double the monthly benefit from social security. He gets more for his double premiums, but not commensurate with the double amount he's put in.

This is a nice compromise. The guy who paid in more gets more, but he also greatly subsidizes the guy who put in less.

My point is that if we ask a guy to pay tax on say his first $ 200,000 in income instead of his first $ 85,000 of income, his benefit check should go up to. It wouldn't go up in proportion to his payments, but at least he could be told he's getting something for the extra taxs he's paying.

For instance -- let's say a person who has paid the maximum premiums for his lifetime today gets $ 1,550 per month benefit at age 62 (just for example, but I think that's pretty close). Another person only averages $ 30,000 per year income all his years, and he currently gets $ 1,200 per month. Now, let's say we ask the better paid guy (actually a younger better paid guy) to pay premiums on $ 200,000 income instead of $ 85,000 income. I'd say that's okay, but then raise his benefit to $ 2,000 per month, so at least he gets some trivial benefit of the extra money he will have put in.

[burr]

43. A specific position I can agree with...

if he does not change his position, but releases more details on how he would phase this in...he may find an issue he can use to nail some of the other candidates.

Most of the answers he gave were impressive. Some left me wondering...like his response regarding anthrax. Nearly two years after Anthrax was mailed to Congress, we still have not been given the details of who sent the Anthrax and what was the source of it.

If we cannot explain this after two wars and thousands of deaths due to our nation's military responses, then it is essential that no further pre-emptive strikes be made until all evidence is presented openly to the public and to Congress. Then a decision for any action can be made based on facts, not promises or slanders.

Finally Clark states that the three top issues in this campaign are security, the economy, the the future of the Presidency. I believe these issues are essential but let's face it...Congress allocates the resources and passes the resolutions regarding national security, the economy will not prosper without blueprints for deficit reduction or healthcare reform, and the future of the people is far more important than the future of any single branch of government!

The top three issues should be healthcare reform, deficit reduction, and the future of American democracy. Unless the future of American democracy is addressed, why even worry about any other issues?

[carpetbagger]

47. I'm all for it...if I get my benefits when 2037 rolls around (pigs fly)

I'm not the highest-paid doctor in the world, but each year I enjoy the last few paychecks without OASDI taken out. I'm more worried about the whole system going broke than about any minor changes like age 70 or ending the caps. I'm planning on running out of money if I live to 82, so I'll need that so as to avoid eating dry dog food.

That having been said, I'm not real interested in "plans to save social security". It seems that Clinton and Gore had it right. Pay down the debt, pay today's bills, and then it leaves the next generation the option to rack up the debt to get over the hump if we can't fix it.

[Yupster]

48. While I've already opined on this proposal below, it

wouldn't help social security as much as another simple yet bold solution.

Bring teachers anfd other state workers who have been allowed to not be in social security back into the system. That would be a tremendous help.

Would any politician dare suggest this and take on the teachers' unions?

[MoonRiver]

49. Wes Clark is the gift that just keeps on giving!

His domestic policy positions are looking like the ticket we Americans can take straight out of * hell.
:bounce: