Another thought on Social Security ...

[ThomWV]

All I'm doing here is to try and make the system a little more progressive. So this isn't meant to "fix" anything other than that the current system is sort of merciless to those with low incomes.

I can live with the cap, I guess. What is it now, $106,800? The thing I don't understand is why it has to kick in with the first dollar of income? Why not cut the poor a little break and keep the same $107K but make it a bracket and move it up a little bit. What I mean by that is let's not collect any social security taxes (or have the employer pay in any) until earnings have reached something like $30,000, and then raise the top end by the same amount, to $137,000. The amount collected would remain the same. Oh, and just to make it more digestible do a phase in beginning at the $30 grand number (and rapidly reaching parody, say by $50K) and if that means having to raise the top end of the cap a little bit more, so be it.

How's that sound?

[scarletwoman]

1. We should definitely raise the cap, but if low wage earners don't pay in they'll be accused

of freeloading when it comes time for them to collect their benefits.

It's not supposed to be a welfare program, it's an insurance program. You pay into it in order to draw benefits out of it later.

If we aren't all paying into Social Security, it will make it that much easier to argue for killing it.

sw

[sinkingfeeling]

4. +1

[BeFree]

6. yep

But times they are a'changing.

What we need now is a 'welfare' program that takes care of this aging population. Everyone should get a base level of support no matter who they are or what they did or do.

We can afford to do so. We can't afford not to.

[dkf]

2. The less you pay the less you get.

If you look at your social security statement they show every dollar you paid social security taxes on. That is what determines your final benefit.

[MousePlayingDaffodil]

11. That isn't exactly true . . . .

Generally speaking, the amount a person receives in monthly Social Security benefits is derived from a formula that takes into account the amount of that person's pre-retirement wages, not how much that person actually may have paid in payroll taxes. And so, while it is correct that one's Social Security statement shows every dollar one has paid taxes on, it is the amount of those "dollars," not the amount of the taxes paid, that is used to calculate one's ultimate benefit.

So, it isn't precisely accurate to say that, under the current system, the "less you pay, the less you get." Rather, it is the "less you made, the less you get."

[dkf]

12. Same difference.

Or is he saying you get credit for the entire amount even if you didn't pay on the first 20k? Will the top end only get credit up to the old cap then? Or will we just obligate SS to pay out more for both.

[MousePlayingDaffodil]

13. I'm not sure . . . .

. . . what the original poster had in mind, as it wasn't clear (to me, anyhow) that he/she had given the point you raise any particular consideration. My assumption, however, had been that he/she was proposing an approach (which, of course, is quite a radical departure from the basic underpinnings of what Social Security has already constituted) under which lower wage earners would be given "credit" for even those wages on which they paid no Social Security taxes.

[sinkingfeeling]

3. No, the amount collected wouldn't remain the same. Because the

number of people making $137,000 is not equal to the number of people making $30,000 or less.

[ThomWV]

7. Oh, I'm sorry, so maybe it would lead to a little better funding of the system too.

I fail to see your point. If you tax 107k of a person's sallary you come up with the same total tax no matter who you get it from, all that happens with bracket creep is you take it in faster when you collect more of it from larger earners. Its not the total that changes, its the rate at which its collected that changes.

[sinkingfeeling]

9. Ok, let's make this easier. If you have 100 people making $30K a year, they are

currently paying in $1860/yr. each, so $1860 times 100 equals $186,000. If you raise the rate on everything above $100K to, let's say 10%, then on a $137K income, one would pay in $9900/yr. ($100K * .062 = $6200 plus $37,000 * .10 = $3700). To make up the difference between losing the $186,000, you would need to have 19 people making $137,000 for every 100 making $30K. ($186,000/9900).

That's not the reality in the USA.

[Uben]

5. Not good

Everyone must be vested in the program, even the poor, or it will be portrayed as a give-away. As long as the poor pay in, they cannot be "dropped" because they don't pay, and you can bet your ass that's exactly what the republicans would attack. There have been a lot smarter folks than you or I that have tried to solve the SSI debacle, but the real problem has been getting any support for any legislation that touches SSI. It's political taboo. It will remain so until we get a congress that cares more about the people than their re-elections, and as we both know, that aint gonna happen!

[ThomWV]

8. Then phase it in from the first dollar of income - very slowly

Put Parity somewhere up around where the cap is now and raise the cap as high as necessary so that's there's no net loss or gain to the system. Then the argument that the poor don't pay in evaporates and there is no cost. That leaves the only argument left against it that the rich should't be taxed because they are rich, the rich in this case being those additional people who would continue paying above the current cap to the new one.

[DURHAM D]

10. I think you are missing the basic point of post #2 above. nt