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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8880  
Subject: Re: Dividend Tax Increase Date: 11/18/2012 8:42 AM
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But the big stuff is in Social Security and Welfare, Medicare/Medicaid as you said.

Social Security pays its own way--one of the few govt programs that hasn't added to the deficit, so it should be off the table for dealing with the deficit.

We should, however, raise the income cap faster to handle the future, similar to how we increased the FICA tax rate and made SS income taxable during the Reagan Administration to cover the future shortfall of baby boomer retirement. I've read that if we followed the Greenspan Commission's full recommendations, the income cap today would be $180k, not $110.

Start increasing (full eligibility) retirement age

Already done as far as it should go IMO. Employers generally do not want employees over 60 (or in many cases over 55 or even over 50!), let alone over 65. Over half the population over 60 has experienced a significant decrease in cognitive powers and energy levels that interfere with high performance on the job. This is even more true of people with physically demanding jobs.

increase the tax base way above the current $113K salary

Yes!

means test

In what way? We already means test by taxing 50% and 85% of SS income over certain income levels. And we will lose even more support for SS from the top 20% if we greatly reduce or eliminate their SS income.

A better way to reduce SS outgo might be to phase out the non-earning/lower-earning spouses's automatic 50% benefit while both spouses are still living. I know many wives of high-earning men who never worked for pay (eg, Ann Romney) but get a much higher SS benefit than women who worked hard for decades--IMO this isn't right. These days the vast majority of women work for pay, unlike the 30s when SS was designed and few women worked outside the home (except for poor women who often took in washing, did babysitting, laundry and house cleaning and so forth--but they didn't know about setting up to pay SS).

Signal to people that they better save more too.

We do this already, but can do better. But it's kind of cruel when the paychecks of the first 3 income quintiles are stagnant while expenses rise. But many people, including some who post elsewhere on TMF, live on incomes of $30k or less. As an RVer I read numerous full-timer RV blogs, and some of those folks live on $24k or even $12k.

Welfare: maybe the payments should not get any COLA adjustment so they become less valuable and there is more incentive to fend for yourself.

If corporate America hadn't off-shored so many jobs, if govt hadn't gotten rid of so many jobs (esp state & local govt), if the middle class weren't so poorly paid, which causes fewer small businesses to succeed, this might be a reasonable plan. I note that it's almost impossible to get welfare unless you have children in the home.

Plenty of people have snuck across our border and worked their butts off in dirty jobs, no reason a lot others could not work just as hard.

They tried that when Alabama pushed out its Mexican agricultural workforce. Black and white Americans alike could not stand up to the physical strain of harvesting crops for a living. Don't know why.

How about a transition where you can pay someone less then min wage for 6 months while you train them for full min-wage jobs and beyond.

I strongly disagree with this. If businesses can;t afford to pay someone minimum wage, how will they afford it 6 months later? Anyway, minimum wage has not kept up with inflation so it's already been cut severely. You used to be able to support yourself on a full-time minimum wage job (I know this because I did it myself in the 70s).

Medicare: you have 50 states, try 50 experiments to see what might be more efficient.

Medicare is already highly efficient, much more so than any private plan, with one exception: it should be able to negotiate drug prices like the VA does. W adding the huge drug benefit without this parameter (along with huge payouts to keep dying old people alive for an additional month or two) are what's causing Medicare to fall short. Also, the tax rate funding the program has been grossly inadequate for decades.
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