Conservatives want you to believe that Social Security will go bankrupt. Their strategy is the usual. Let’s scare middle class Americans into doing what really benefits only the rich. Conservatives want to blame the so-called Baby Boom for Social Security insolvency, when bankruptcy has not and will not happen. We only need to be sensible and pay attention to the real numbers.
Conservative media pundits like Rush Limbaugh and Glenn Beck, and Republican politicians, like to use fear tactics to win their points. They consistently manipulate the statistics to persuade middle and lower class Americans that we should accept a cut in our Social Security benefits. We must resist!
The rich have been getting a free ride on Social Security taxes for years, and it is time that ends. It is true that we need to raise Social Security taxes, but not for most of us. 82.59% of us earn less than $100,000 per year, according to Wikipedia’s statistics on household incomes. That means that we pay 6.2% of our incomes to Social Security, because we are under the $106,800 threshold to be free from the tax.
The top 7.54% of Americans, who earn over $150,000 per year, pay an incredibly small portion of their income for Social Security. If you earn $250,000 per year, you are paying only 1.79% of your income for Social Security. If you earn $500,000 per year, you are paying only 0.89% of your income for Social Security. If you earned $1 million per year, you are only paying 0.45% of your income for Social Security. If you got a $100 million bonus for crashing the global economy, as many Wall Street investment bankers did, the amount of your income you paid in Social Security is so small as to be unnoticeable.
I ask you, how many yachts, cars, and second homes can you usefully have, without being gluttonously wasteful? It seems to me that those who benefit most from the structure of our American society should also be charged Social Security taxes like the rest of us.
6.37% of Americans earn 1/3 of all income in the United States. Why do they get to ride the rest of us, when we are paying 6.2% of our income in Social Security withholdings? [Note: Our Social Security tax in 2011 is 4.2% because of a special stimulus deal, which reverts to 6.2% in 2012. Many believe Republicans allowed this one-year tax reduction in order to make Social Security books look worse, so that they can scare us more and gut the program later.]
In his article “Budget Magic and the Social Security Tax Cap,” Economist Martin A. Sullivan points out that 50% of the projected shortfall would disappear if the tax cap were increased to $150,000 per year in income, and it would be 100% gone for at least the next 75 years if the tax cap were removed entirely.
So it’s time to stop being played for fools by Conservative Republicans, who want us to doubt the solvency of the Social Security System. The problem can be solved easily if rich people pay their fair share. If they are going to reap the benefits of our society, they should also share in the burdens. It’s certain the rest of us are! GOP scaremongers want us to give up our benefits, so that they can reap the rewards. What is wrong with this picture?
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Skip Conover is an International Executive, Author, and Artist. He has written a novel, a published current affairs book, and a published journal. He turned his long time interest in Jungian Archetype into the Archetype in Action™ Organization.
Skip
Your article “Myth of the Social Security Solvency Crisis” is very important. However there is a whole different set of issues that I can not find addressed any where. No where has anyone examined the related issues looking at both the tax code and Social Security at the same time.
When this is done some startling issues emerge. One of the most dramatic of these discoveries is, if only 1% of Social Security recipients were cut off from Social Security, Federal Tax revenues would be decreased by 50 billion dollars over 10 tears (and that is very conservative).
For individuals there is a 400% marriage tax penalty and they can end up paying more tax by getting less Social Security Income (based on today’s tax code). The list just keeps on going.
If any changes are made without first rectifying the existing issues the problems will only be exacerbated. I intentionally avoid taking sides and I am striving to insure that there will be a level playing field going forward.
At the end is a summary sheet prepared for the House Ways and Means committee at the request of Congressman Gary Peters office.
If any changes are made without first rectifying the existing issues the problems will only be exacerbated. I intentionally avoid taking sides and I am striving to insure that there will be a level playing field going forward.
At the end is a summary sheet prepared for the House Ways and Means committee at the request of Congressman Gary Peters office.
What I need is help from persons like yourself to get this information to persons who can act on it. It is not an argument about the validity of supposed deficits it is about looking at the whole picture. There is much more information at https://sites.google.com/site/ssincometaxandchang….
I hope to hear back from you.
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David Fromme
24105 Locust Street
Farmington Hills Michigan 48335
Social Security, Today’s Issues and Their Impact on the Future
Prepared at the request of Michigan Congressman Gary Peters office
Research into Social Security led to the discovery of many issues that distort the treatment of Social Security Income today. Unless these are addressed, any new actions could compound the problems.
The intent of the research is to assure that Congress is aware of existing problems so that the Social Security issue can be dealt with wisely. It is not intended to argue one way or another in any debate.
Much of the current discussion examines only payments into and out of the Social Security Trust Fund. When the scope is expanded to include the existing tax code, Federal tax revenues, the General Fund and Social Security payments a different picture emerges.
One of the most critical observations is that certain changes could DECREASE revenues that go into the General Fund. These could occur;
If both the retirement and early retirement ages are increased, this could also increase Social Security payments in the long run (when the 7% annual reduction for early retirees is considered);
If Social Security Income is reduced for “high income” earners.
These will occur not because of the changes, but because of the existing tax treatment of Social Security Income. Primarily due to irregularities that occur because of taxing of Social Security Income above 50% (the 50% represents employer payments into the Trust Fund that were not previously taxed). This compounded by an interrelationship with retirement ages.
The impact of existing law on individuals is just as critical.
A recipient with the same total income as another recipient but with less Social Security Income and more “other income” could have more of their Social Security Income taxed.
There can be up to a 500% increase in taxable Social Security income if two single recipients get married;
Effective marginal tax rates for recipients can be as high as 46%. A self employed Social Security Recipient can pay up to 64% on part of their income. Couples in the $80,000 to $100,000 income range are paying approximately a $4,000 penalty.
Again the root of this lies with the taxing of Social Security Income above 50%.
The IRS did a major study to project the impact of proposed changes that was used in developing The Tax Reform Act of 1986. A similar study should be done to place dollar figures on the issues raised.
It is not to say that fair change cannot be made.
Cola could be indexed against “other income” with minimal impact on recipients.
Medicare premiums could be changed to be a percentage of Social Security Income (why should a friend with lower Social Security pay a higher percentage?).
Even the additional 35% taxable Social Security Income could be justified if it went into the Trust Fund and was treated as a reinvestment should future income decrease significantly.
These and many other issues are addressed at — https://sites.google.com/site/ssincometaxandchang… and a case illustration is attached or contact David Fromme (former IRS Research Analyst) at dtfromme@gmail.com
Attachment illustrating the impact of the existing tax treatment on Social Security Income
The following case will provide a point of reference; it is based on two couples with $80,000 in gross income. For one couple SS Income is $10,000 less and is offset by a $10,000 increase in other income.
With $40,000 in Social Security and $40,000 in other income, the results were;
Income after SS Exclusion Taxable SS Income Final Tax
$59,600 $19,600 $2,500
With $30,000 in Social Security and $50,000 in other income, the results were;
Income after SS Exclusion Taxable SS Income Final Tax
$73,900 $23,850 $4,800
Federal taxes are almost doubled. There is $4,200 increase in taxable Social Security Income even though total SS Income is lower by $10,000.
SS Income is lowered, taxes go up and earnings on other income could be decreased. This compounding could overflow into our economy if it leads the growing number of seniors to reduce their spending to compensate for the reduced income.
If the couple chose to retire early they may not have been aware of the tax implications. If the early retirement age was increased the additional tax revenue would decrease.