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Basically he wants to see the very well-paid folks pay the payroll tax the way the rest of us do.

http://news.yahoo.com/s/ap/20080613/ap_on_el_pr/obama_social...

Democratic Sen. Barack Obama on Friday called for higher payroll taxes on wage-earners making more than $250,000 annually, a step that would affect the wealthiest 3 percent of Americans.

The presidential candidate told senior citizens in Ohio that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on only "a very small percentage of their income."

The 6.2 percent payroll tax is now applied to all wages up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to wages between that amount and $250,000. But all annual salaries above the quarter-million-dollar amount would be taxed under his plan, Obama said.
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cliff
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it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on only "a very small percentage of their income."

It's plenty fair now because the benefits are capped along with the tax.

Think of it like car insurance. You pay $500/year to cover car X. A really rich person pays $500/year to cover car X. Is that unfair? Should he pay more for the same coverage just because he has more? So why should he pay more for the same SS benefits just because he has more? While we're at it, why not make rich people pay double the sales tax?

Same old Democratic claptrap--there's a whole lot of exploitation of class envy going on.

--fleg
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<B?it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on only "a very small percentage of their income."

It's plenty fair now because the benefits are capped along with the tax.

Think of it like car insurance. You pay $500/year to cover car X. A really rich person pays $500/year to cover car X. Is that unfair? Should he pay more for the same coverage just because he has more? So why should he pay more for the same SS benefits just because he has more? While we're at it, why not make rich people pay double the sales tax?

Same old Democratic claptrap--there's a whole lot of exploitation of class envy going on.

--fleg

Kinda like it's fair that I pay school taxes when I have no (and never had, never will have) children in school? I actually benefit by keeping their mangy asses off the street for at least a portion of the day. Similar: I benefit by keeping the aged poor off the streets. They are sooooo unsightly!

Don't even start with the sales tax. The poor pay a much higher percent of their income on sales tax than do the rich.

cliff
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Kinda like it's fair that I pay school taxes when I have no (and never had, never will have) children in school?

That's a silly example since an educated populace is a societal necessity as much as roads and courts. I have no kids, either, but don't object to taxes for schools (except insofar as they're doing a crappy job). Educated kids go on to become good taxpayers, and the taxes they pay in the future will help keep us all afloat.

Don't even start with the sales tax. The poor pay a much higher percent of their income on sales tax than do the rich.

I didn't start with the sales tax--you did. The poor pay a much higher percent of their income for everything than do the rich. It's so unfair. Let's charge the rich more for car insurance and use the extra money to lower insurance for the poor. Let's charge the rich double for their corn flakes so others can have free corn flakes (the ones who aren't already getting food stamps). When you make the gov't the great equalizer, things can get out of hand. With all the travel you do, I suspect you're above average in income and assets. Be careful--there are people out there with less than you have and there are other people who want them to have your stuff in the name of fairness (those people are called liberals).

As far as eliminating the cap on SS, it won't do much good anyway:

http://www.heritage.org/Research/SocialSecurity/CDA01-07.cfm...

Based on SSA's own projections, Heritage analysts found, however, that eliminating the cap on wages subject to the OASI payroll tax would generate only enough revenue to delay the date of the system's insolvency by a few years. Moreover, by 2035, the OASI program would have enough revenue on hand to pay only 87 cents on every promised dollar in benefits. 10

Yet the cost of this change would be substantial. It would require the largest tax increase in U.S. history, 11 subjecting millions of American families to a massive hike in their payroll taxes and further reducing an already dismal rate of return. 12 This change would harm America's economic prospects by slowing economic growth and reducing employment opportunities.
_______________________________________________________________________

I suspect your motivation isn't to fix the system anyway but to punish the evil rich for having more than you do. Tell me where I'm wrong on this and I'll take it back.

--fleg
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I suspect your motivation isn't to fix the system anyway but to punish the evil rich for having more than you do. Tell me where I'm wrong on this and I'll take it back.

--fleg


What makes you say this? You don't know me. You've been drinking too much of Rush's kool aid.

cliff
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I can also address the rest of your diatribe.:

I suspect you're above average in income and assets. Be careful--there are people out there with less than you have and there are other people who want them to have your stuff in the name of fairness (those people are called liberals).

As far as eliminating the cap on SS, it won't do much good anyway:

http://www.heritage.org/Research/SocialSecurity/CDA01-07.cfm......

You are correct that we are above average in income and assets. Time magazine used the expression "Merely rich" to describe people like us. We have no yachts, we live in a nice house in a modest neighborhood, and we drive inexpensive cars. Our newest vehicle is the 2001 Chevy instalation van we need for my wife's business*. Shoot, we don't even have an RV!

I will take my chances with the evil tax-and-spend liberals before I will with the eviler borrow-and-spend conservatives.

I do not consider the Heritage Foundation a good source of unbiased opinion, any more than I would the John Birch Society.

That said, they admit that the SS system is solvent for the next 16 years, even with the present structure. If the borrow-and-spend conservatives would stop looting the till, and let SS get a decent return on the bonds held, that would also change. I have heard some ===> True <=== conservatives suggest allowing people to invest the money in the stock market. Why not let OASI do that?

The question is not "How can we kill Social Security?" (Which seems to be the conservative position), but "How can we fix Social Security?" I have several thoughts, maybe you do, but I get the feeling that all you want is to kill it completely.

Removing the limit on income subject to the payroll tax will help. I advocate reducing benefits, especially at the higher end. <Gasp! What an evil liberal idea!> This would likely affect me, and you, and AM. SS was not originally intended to provide more than subsistence to the elderly poor.

Actually, I advocate stopping the charade that SS is somehow "different" from any other tax. The money is used in the general budget. Let's eliminate that smoke and mirrors issue, and just collect it from the general income tax. The only reason I hesitate to do that is that SS is one of the few taxes that big business can't avoid. They gotta pay their half of the payroll tax. Maybe that's why the conservative think tanks are trying so hard to kill SS. "Don't tax me! Tax the poor! Tax anybody but me!"

If you have any actual thoughts on the subject, let's hear them. Right wing spew is not "thoughts"

regards,
cliff
*That business provides a lot of freqwuent flyer miles we use in our travels. We charge a lot of our purchases on a airline-mile credit card.
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So why should he pay more for the same SS benefits just because he has more?

It is called redistribution of wealth and is a concept that any civil society should have. Poor people often lack adequate food and shelter and education and health, which keeps them from leading the kind of life that everyone values. Why should the rich keep getting richer at the expense of the middle-class and the underprivileged. In my opinion there is a strong moral obligation to assist people. The main factor that contributes to poverty is distribution and this is one way in correcting this problem.
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I will take my chances with the evil tax-and-spend liberals before I will with the eviler borrow-and-spend conservatives.

You've got to get your terminology straight. Those were Republicans, not conservatives, who did the borrowing and spending. Real conservatives don't behave that way. BTW, I am neither a Republican nor a conservative as the word is used today.

If the borrow-and-spend conservatives would stop looting the till, and let SS get a decent return on the bonds held, that would also change.

SS holds no real bonds. The lockbox contains nothing but IOUs. All SS benefits are paid out of current tax collections. Right now collections run higher than benefits paid. The excess--which is supposed to be stashed away in the lockbox and invested in bonds--is spent by the gov't on whatever else it wants. This has been going on throughout many administrations. As time marches on, the excess by which collections exceed benefits will be getting smaller and smaller. At the 16-year point, benefits will exceed collections.

I have heard some ===> True <=== conservatives suggest allowing people to invest the money in the stock market. Why not let OASI do that?

You don't want the gov't owning shares. Before long, it would be a major shareholder in many companies, unable to resist the temptation to mold corporate policy to fit whatever agenda is in power. What's wrong with individual empowerment? It's working well in Chile. Bush proposed individual accounts patterned after the federal employee retirement program. That program offers a small number of mutual funds with expenses as low as, if not lower than, Vanguard. Today's young people are going to get a negative return on their SS payments. 12.4% of their income invested in real investments instead of a Ponzi scheme would make a huge difference for their futures.

The question is not "How can we kill Social Security?" (Which seems to be the conservative position), but "How can we fix Social Security?" I have several thoughts, maybe you do, but I get the feeling that all you want is to kill it completely.

I want to see it fixed by being privatized. That will kill it from the standpoint of it being another failed socialist program. I say failed, because the return would be so much better if it had been private, providing retirees a much more comfortable existence. The problem is, we're so far down the track that it can't be privatized without some prohibitively expensive intermediate steps.

I advocate reducing benefits, especially at the higher end. <Gasp! What an evil liberal idea!> This would likely affect me, and you, and AM. SS was not originally intended to provide more than subsistence to the elderly poor

Means testing is inevitable. I hope they hold off on that for a couple of decades--we're going to need our SS payments to offset the coming tax hikes. Otherwise lower-income people like waiters and tradesmen and their helpers are going to suffer as millions of folks like us cut back on discretionary spending to absorb the higher tax payments.

Maybe that's why the conservative think tanks are trying so hard to kill SS. "Don't tax me! Tax the poor! Tax anybody but me!"

Which conservative think tank said that? Did you know that the Bush tax cuts took a lot of low-income people off the tax rolls entirely and fattened their wallets with bigger EIC?

Actually, I advocate stopping the charade that SS is somehow "different" from any other tax. The money is used in the general budget. Let's eliminate that smoke and mirrors issue, and just collect it from the general income tax.

Might as well.

Right wing spew is not "thoughts"

"Right wing spew" = anything cliff666 disagrees with?

--fleg
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Why should the rich keep getting richer at the expense of the middle-class and the underprivileged.

At the expense of? Can you give some specifics? Did my wife's high salary cause someone to go to bed without their supper?

In my opinion there is a strong moral obligation to assist people.

It's called charity. It's good when it's voluntary, not so good when it's coerced.

The main factor that contributes to poverty is distribution and this is one way in correcting this problem.

Whatever does this mean? I'd say that LBJ's War on Poverty was a main contributor to poverty. Its welfare programs caused the disintegration of the family structure among poor blacks. Today's >70% out-of-wedlock births among blacks is a legacy of big government. I see less government as a better way of correcting the situation than more government.

--fleg
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The main factor that contributes to poverty is distribution and this is one way in correcting this problem.

The main factor that contributes to poverty is the liberal agenda. Just take a long look at what liberalism has brought to other countries, and just take a loong look at all those folks who prefer to live and thrive in America.
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Just take a long look at what liberalism has brought to other countries, and just take a loong look at all those folks who prefer to live and thrive in America.


hmmm....

i just did that -- you're FOS


=
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Just take a long look at what liberalism has brought to other countries, and just take a loong look at all those folks who prefer to live and thrive in America.

hmmm....

i just did that -- you're FOS

No, no, jp. He is talking about downtordden, poverty stricken countries like France, Germany, Finland, Sweden, Denmark, or Japan. You know, really liberal countries. Nebbermind that their standard of living is higher than ours.

cliff
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Just take a long look at what liberalism has brought to other countries, and just take a loong look at all those folks who prefer to live and thrive in America.
------------
hmmm....

i just did that -- you're FOS
=========
No, no, jp. He is talking about downtordden, poverty stricken countries like France, Germany, Finland, Sweden, Denmark, or Japan. You know, really liberal countries. Nebbermind that their standard of living is higher than ours.



??

yes. those are the liberal countries. (i'd have added Canada)

and which are the countries who's people are streaming here? Mexico, Columbia, sanSalvador, Guatemala ...??
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jp: and which are the countries who's people are streaming here? Mexico, Columbia, sanSalvador, Guatemala ...??

That's different.

cliff
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fleg: I didn't start with the sales tax--you did.
http://boards.fool.com/Message.asp?mid=26732862

Hmmmm. I see http://boards.fool.com/Message.asp?mid=26731628
While we're at it, why not make rich people pay double the sales tax?

You seem confused. Maybe if you slow down and breadth deeply. Perhaps into this paper bag.

Service!

cliff
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I'd say that LBJ's War on Poverty was a main contributor to poverty.

One of the legacies of the past 8 years of the Bush administration was a dismantling of the economic/social infrastructure that originated in the "New Deal" era and expanded in the "Great Society" programs during the Kennedy/Johnson era - inspired by the War on Poverty. The Bush administration aimed to shrink the government and it's services and funneled our tax money into things like financing the war with a system of creating private contracts for administration cronnies like Halliburton. We're definitely in desperate need for change, for the "New New Deal for a Greater Society" - let's hope Obama can pull it off.
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One of the legacies of the past 8 years of the Bush administration was a dismantling of the economic/social infrastructure that originated in the "New Deal" era and expanded in the "Great Society" programs during the Kennedy/Johnson era

Link? Example? What are you talking about?

Perhaps you are confusing the last 8 years with the passage of welfare reform under Clinton, one of the very few times a terrible social program was partly undone, and very successfully at that.

Halliburton blah blah blah

It always seems to come back to Halliburton when there is nothing relevant or sensible to say. Did you even know that Bill Clinton gave Halliburton a no-bid contract during the Serbian unpleasantness? And that one of the things that made Halliburton a good choice for Iraq was all the experience it got working for the Clinton administration during his Yugoslavian escapade?

--fleg
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I feel like I'm getting in on this discussion kind of late. Oh well...

First off, I want to disagree with Obama's statement "it is unfair for middle-class earners to pay Social Security tax 'on every dime they make," while millionaires and billionaires pay it only on 'a very small percentage of their income.'"

Under the current system benefits are proportional to wages up to a cap. In the same way, the withholding is proportional wages up to a cap. Therefore, the current system seems fair to me. Possibly the fairest of any government program I can think of.

What Obama proposes is to have the wealthy subsidize the social security system. This would redistribute wealth from the rich to the poor. Setting aside whether or not that's a good idea, in my perfect world, I only wish people would just call something what it is.

Having said that, I do actually think that having higher income earners pay more into the SS system without increasing benefits might be a good way to keep the system solvent. I mean, we all know that entitlements are going to need more funding and this 6.2% flat tax looks a lot better to me that a massive increase on taxes on investments.

Personally, the "donut hole" between $102k and $250k that Obama leaves me scratching my head. Does this make sense to anyone? It seems like a flat payroll tax would be "cleaner."

CG
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Personally, the "donut hole" between $102k and $250k that Obama leaves me scratching my head. Does this make sense to anyone? It seems like a flat payroll tax would be "cleaner."

CG

You had me confused for a while, there, but I agree with you here. If we collectively find a benefit from continuing Social Security (I do), then it needs to be funded by something besides the smoke and mirrors system.

cliff
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Personally, the "donut hole" between $102k and $250k that Obama leaves me scratching my head. Does this make sense to anyone?

It makes sense only because Obama has said many times that he will not raise taxes on anyone who makes less than $250k per year. That has to include SS taxes. So if you make under $250k, you pay what you've been paying all along like everyone else--SS tax on income up to $102k. But if you make over $250k, then the SS tax kicks back in on everything you earn over $250k. So you pay SS tax on the first $102k plus everything over $250k.

What I haven't heard addressed is whether he intends to keep the taxes on cap gains and dividends the same for incomes under $250k. If not, that will leave toothmarks in a lot of retired butts.

--fleg
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Personally, the "donut hole" between $102k and $250k that Obama leaves me scratching my head. Does this make sense to anyone?

It makes political sense. There are a lot of people who make between $102 and $250K that would vote against it. It's much easier to pass laws that would hurt only a small minority of people.

One of the bigger problems of democracy is that the majority can trample over the rights of a minority.

Ted
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One of the bigger problems of democracy is that the majority can trample over the rights of a minority.

An even bigger problem is a mutual definition of "rights." I was appalled that the Wall Street Journal, long a bastion of conservative opinion, blathered about the "right to safety" in an editorial. Let's face it. If I want it it's a right. If you want it it's a privilege, which may or may not be justified.

In all these discussions there are facts and opinions.

Fact: Social Security was designed and funded to provide minimal assistance to bereft old people.

Opinion: The above fact should be called welfare for poor old people, but the politicians felt they couldn't sell it that way. Thus was born the fiction that each of us has a cubby hole in Baltimore where "my" money is stored until I get "my" benefits.

Fact: SS always has been a program which pays benefits in a lesser amount than the related tax collected. So far.

Fact: Over time SS benefits have morphed from a subsistence payment to a major part of retirement planning.

Opinion: The current tax and benefit scheme isn't sustainable. Something has to be done. (There actually is disagreement about this.)

Opinion: Boosting the FICA tax on high earners doesn't bother me. No doubt this is in large part because I'm not a high earner, but I also have no problem with a progressive tax system. I say this as someone who's firmly planted in the penultimate lowest income tax bracket yet makes charitable contributions realizing that there are those far worse off than I.

Phil
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system. I say this as someone who's firmly planted in the penultimate lowest income tax bracket yet makes charitable contributions realizing that there are those far worse off than I.

Phil

Good post, Phil, one with which I can agree. You are in the 15% bracket? Our planning for 2007 was that we would be in the 15% bracket. Then DW went nuts and sold a bunch of drapery (She is an interior decorator - designer if you prefer that word) and we wound up in the 28% bracket. Life is so unfair. I was planning to take a large withdrawal from my IRA and convert to Roth, but as the poet said, "The best laid plans ..." So for 2008 I am in RMD land. Actually, I would love for her to get really nutso and put us in the 33% bracket. But, why be a a piker? Why not 35%

cliff
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<<Personally, the "donut hole" between $102k and $250k that Obama leaves me scratching my head. Does this make sense to anyone? It seems like a flat payroll tax would be "cleaner."

CG

You had me confused for a while, there, but I agree with you here. If we collectively find a benefit from continuing Social Security (I do), then it needs to be funded by something besides the smoke and mirrors system.

cliff
>>


Don't increase taxes, means test benefits.

The problem isn't that taxes are too low, it's that too many upper middle class and upper class people receive benefits from this welfare program.


Why pay benefits to people thatr don't need them?



Seattle Pioneer
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Seattle Pioneer wrote: Don't increase taxes, means test benefits.

The problem isn't that taxes are too low, it's that too many upper middle class and upper class people receive benefits from this welfare program.


Why pay benefits to people thatr don't need them?


For one thing, you're punishing people for doing the right thing. That is, for saving and investing.

For another, people paid into the system for many years with the understanding that they would receive a benefit. Even if it's reduced, they are entitled to something. There would be a lot of justifiable outrage were people to lose their benefits entirely.

Who gets to decide whether or not people need the benefits? Certainly not the person who's going to receive it!

Honestly, I don't know if when I reach the age of 62 or 65 if congress would decide that I "need" my benefits. As it stands, it's my plan that Social Security would be about 20% of my income at that time. Do I "need" it? Well, I won't starve without it.

Perhaps some will think of me as one of the selfish middle-class, but I feel entitled to my benefits. That being said, if they scaled down benefits by X-percent for everyone receiving more than X-dollars in order to keep the program solvent, that would be reasonable.

CG
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Perhaps some will think of me as one of the selfish middle-class, but I feel entitled to my benefits. That being said, if they scaled down benefits by X-percent for everyone receiving more than X-dollars in order to keep the program solvent, that would be reasonable.

CG

I included SS and my (tiny) pension in my retiremetn calculations. I have enough income to keep my present lifestyle (Assuming the market doesn't take everythng I have!) Take away the SS and I have a problem.

cliff
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Don't increase taxes, means test benefits.

The inclusion of SS benefits in taxable income is a form of means testing. For a long time SS was totally exempt from income tax. Now anything from 0% to 85% of your benefit is taxed, depending on other income.

We now have a similar sliding scale of Medicare Part B premiums, based on income.

Phil
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"The inclusion of SS benefits in taxable income is a form of means testing. For a long time SS was totally exempt from income tax. Now anything from 0% to 85% of your benefit is taxed, depending on other income.

We now have a similar sliding scale of Medicare Part B premiums, based on income.

Phil "


One problem with current taxation of SS benefits is the lack of indexing. A rapidly growing segment of even lower middel income recipients have their SS taxed because the calculation uses an income base that hasn't changed since the legislation was enacted. It was only supposed to tax high income recipients.

A word of warning to Congress: don't write or revise any tax legislation without indexing provisions.
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A word of warning to Congress: don't write or revise any tax legislation without indexing provisions.

I'm sure they're listening with keen ears and that your warning has them shaking in their boots. :)

Regards ... Pixy
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<<Seattle Pioneer wrote: Don't increase taxes, means test benefits.

The problem isn't that taxes are too low, it's that too many upper middle class and upper class people receive benefits from this welfare program.


Why pay benefits to people thatr don't need them?

For one thing, you're punishing people for doing the right thing. That is, for saving and investing.

For another, people paid into the system for many years with the understanding that they would receive a benefit. Even if it's reduced, they are entitled to something. There would be a lot of justifiable outrage were people to lose their benefits entirely.
>>


Anyone who has been paying attention has been on notice since the 1950s that they have no contractual right to a Social Security benefit. The Congress is free to raise or lower benefits as it chooses, and both have been done often enough to make that point.

Furthermore, anyone who has been paying attention has been told, often, that Social Security is inadequately funded to pay all the benefits baby boomers have come to expect under current benefit schemes.

So the question is --- should Gen X, Y and Z pay higher taxes in order to pay benefits to baby boomers who know they have no right to a benefit, and know that there is no reserve to pay benefits for them? It seems quite clear to me. Save Gen X, Y and Z from the higher taxes we baby boomers didn't pay, and means test benefits sharply that the well off baby boomers (like myself) should have realized were never going to be paid anyway.

Why pay benefits to people who don't need them?



Seattle Pioneer
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<<Perhaps some will think of me as one of the selfish middle-class, but I feel entitled to my benefits. That being said, if they scaled down benefits by X-percent for everyone receiving more than X-dollars in order to keep the program solvent, that would be reasonable.

CG

I included SS and my (tiny) pension in my retiremetn calculations. I have enough income to keep my present lifestyle (Assuming the market doesn't take everythng I have!) Take away the SS and I have a problem.

cliff

>>


In a means tested system, once you spend your assets down to a suitably low level, you will start collecting benefits again.


You should have been paying attention to the fact that you have no contractual right to collect Social Security benefits, and that Congress can increase or cut such benefits as it chooses.

The fact that the retirement of the baby boom generation is going to place huge strains on Social Security. Social Security is famously a mostly unfunded system that is "pay as you go." When the money that is famously ghoing to be going a lot faster than it's coming, why would you plan that you would continue to collect what politicians who are now dead or out of office once promised you?


Perhaps you should revise your plans and keep working longer.



Seattle Pioneer
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<<Don't increase taxes, means test benefits.

The inclusion of SS benefits in taxable income is a form of means testing. For a long time SS was totally exempt from income tax. Now anything from 0% to 85% of your benefit is taxed, depending on other income.

We now have a similar sliding scale of Medicare Part B premiums, based on income.

Phil
>>


That's right, and for the same reason.

There's an argument for paying a small stipend to keep indigent fools from starving in their old age. There is no good argument for heavily taxing people (or raising already high taxes) in order to continue paying benefits to the well off middle class who should be looking after themselves.


Why pay benefits to people who don't need them?



Seattle Pioneer
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<<One problem with current taxation of SS benefits is the lack of indexing. A rapidly growing segment of even lower middel income recipients have their SS taxed because the calculation uses an income base that hasn't changed since the legislation was enacted. It was only supposed to tax high income recipients.

A word of warning to Congress: don't write or revise any tax legislation without indexing provisions.
>>


Oh, you think things like that happen because of an accident? It's just one of several ways that means testing is already written into Social Security. Another is that the benefits paid are higher per dollar of income for low income people than for high income people.

Expect for more of those kinds of features to be written into the law in the future.



Seattle Pioneer
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I included SS and my (tiny) pension in my retiremetn calculations. I have enough income to keep my present lifestyle (Assuming the market doesn't take everythng I have!) Take away the SS and I have a problem.

cliff

-----------------------


Exactly right.
Most people today don't have pensions as they did long ago when they worked for one corporation their whole lives. Corporations used to give nice pensions -- lifetime pensions -- when people retired. This is no longer true.

So today, most retirees only have what they have managed to save and invest -- and all "investments" are subject to loss -- and Social Security to keep them afloat in their elder years.

If Social Security is taken away -- even from those of us who have managed to save and invest -- we may not be able to stay afloat. Those who don't stay afloat will end up on some other government program. Why not allow us to keep what we have worked for for so many long years -- and which allows us to live with dignity -- instead of forcing us to rapidly spend down all else we have managed to save until we end up on true welfare?

It used to be said that it was one leg of a three-legged stool: Social Security, Savings, and Pension.
Today, the stool usually only has two legs (savings and SS) -- and maybe just a tiny stub of a third (pension).

Social Security is a life-saver for so many retirees.
Like Cliff, many others (probably most) would have a real problem without it.


AM
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Seattle Pioneer continues to ask:

Why pay benefits to people who don't need them?

How much income does a person need? At what point do you cut off benefits? Is it the poverty line? Is it the $250k / year "middle class" cutoff? Is it $1M net worth? ...
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Why pay benefits to people who don't need them?

How indeed do you define need? It would have to be indexed not only for income but for the area in which a person lives (eg. cost of living is lower in Mississippi than in New York). How about considering medical need? Nursing home needs? Sicker people need more money than healty people. People who rent may need a different amount than people who live in homes that they own free and clear.

One could build a very large, expensive bureaucracytrying to administer something like that. It might well/probably would cost more than the way we are doing it now.

Ted
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If Social Security is taken away -- even from those of us who have managed to save and invest -- we may not be able to stay afloat. Those who don't stay afloat will end up on some other government program. Why not allow us to keep what we have worked for for so many long years -- and which allows us to live with dignity -- instead of forcing us to rapidly spend down all else we have managed to save until we end up on true welfare?

I can agree with this sentiment--we've paid in, we should get back (even though we're not legally entitled, it all being a whim of Congress). Another way to think of it is as a big tax hike--only instead of having to send in bigger tax payments each quarter, you don't receive some income you were counting on. Same effect on the bottom line.

When I started planning our early retirements (me at age 53), I figured on there being no SS at all, thus our safe withdrawl would have to be entirely from the portfolio. I was planning either on not taking it until we were older or using it for extra vacations or something. Now we're "depending" on receiving SS at 62 to mitigate the effects of the loss of the Bush tax cuts in 2010. We'll survive without it but the higher taxes will push us closer to or over the 4% withdrawl level (unless we scale back our expenditures, hurting the lower-income people in the community we spend it on), so having it will make things less risky going forward.

--fleg
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Seattle Pioneer wrote:

In a means tested system, once you spend your assets down to a suitably low level, you will start collecting benefits again.

Better yet, don't save for your own retirement! Let the government take care of you! This is a lot like people who believe that they shouldn't save for their children's college educations because then they won't qualify for financial aid.

Denying benefits on the basis of means testing is unfair. You reward those who were the least responsible - those who saved the least. People like AngelMay, cliff and myself are counting on the combination of our savings and Social Security for income in retirement.

The EBRI shows that the top 25% of the Elderly (by income) receive 21% of their income from Social Security.

http://www.ebri.org/publications/benfaq/index.cfm?fa=retfaq7...

I daresay that a few of the posters on this board are typical of this group. As I stated in an earlier post, when I turn 62, 20% of my income will come from Social Security.

Seattle Pioneer, I think that it is well-understood that in a few decades that Social Security will run into insolvency. Something has to change, but means testing is not the right change.

In a means-tested system, we all go to the government and ask for a handout due to our poverty.

In the current system, we get a benefit based on our work history. It is something we've earned.

The two couldn't be more different.

CG
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I think that it is well-understood that in a few decades that Social Security will run into insolvency. Something has to change, but means testing is not the right change.

In a means-tested system, we all go to the government and ask for a handout due to our poverty.

In the current system, we get a benefit based on our work history. It is something we've earned.

The two couldn't be more different.

CG

--------------------------



Not to mention that the elderly suffer enough indignities without adding yet another to the list.

They should be allowed the dignity of living off what they have worked for (social security) along with what they have saved, rather than having to go to the government for a welfare handout with hat in hand, begging.

Dignity may not mean much to someone who is not in a likely position to lose it, but it means a lot to the rest of humanity. And it's the caring way to treat people.

AM
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billiam: A word of warning to Congress: don't write or revise any tax legislation without indexing provisions.

Absolutely! If that had been incuded in the original SS legislation, we likely wouldn't be having this conversation. Ditto estate tax, alternative minimum tax, and a bunch of other stuff.

cliff
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Seattle Pioneer continues to ask:

Why pay benefits to people who don't need them?

How much income does a person need? At what point do you cut off benefits? Is it the poverty line? Is it the $250k / year "middle class" cutoff? Is it $1M net worth? ...

It's easy to throw out the term "means testing". The question then arises, "How do we define 'means'?" Is "means" other outside income? Is "means" assets? How do we (they) know about assets? How about income from dividends and interest?

One of the stupidest things congress has done lately is to allow people to take SS at retirement age even if they still have large incomes. I know I did this, and I know several others who have. I used the extra income to pay down the house faster, but it is still silly to give working people social security. Social Security, to my mind, is retirement money, not an extra bonus for living to 65. This would be an easy leak in the system to fix.

cliff
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One of the stupidest things congress has done lately is to allow people to take SS at retirement age even if they still have large incomes. I know I did this, and I know several others who have.

Don't your benefits get cut in half if you earn over about $12k per year? Or have you got it set up so all the income is in your wife's business' name while you take SS with no income of your own?

--fleg
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Don't your benefits get cut in half if you earn over about $12k per year? Or have you got it set up so all the income is in your wife's business' name while you take SS with no income of your own?

--fleg

No, I got my full SS dole for a couple of years before retiring from working for wages. Same of several other folks I know. At this time, I have no income from wages, so the issue is no longer current for us. My wife still pays her taxes, including Self Employment tax.

There was a time when SS was cut if you collected SS while still drawing wage income. That changed about 5-6 years ago. I don't find a source for the information, but it happened.

cliff
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Don't your [SS] benefits get cut in half if you earn over about $12k per year?


Not necessarily. This benefit reduction due to earned income has evolved over time. Today it applies only if you are under Full Retirement Age (FRA), and I think the earnings limit before benefit reductions is somewhere around $18,000, but a quick search on "benefit reduction" at www.ssa.gov would clear it up.

Once you reach FRA you can earn as much as you like with no reduction in your SS benefits. The change came, I think, within the past 10 years, in a law called the Freedom to Work Act.

Phil
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<<In a means-tested system, we all go to the government and ask for a handout due to our poverty.

In the current system, we get a benefit based on our work history. It is something we've earned.

The two couldn't be more different.

CG>>


Sorry, but the money to pay for all those promises isn't going to be there. So the question is, should we sharply raise payroll taxes on Gen X, Y and Z in order to pay benefits to the boomer generation that that generation didn't fund adequately or properly?

Since there is no right to a benefit, the answer to me is quite clear: no.

Pay what money is available to the elderly indigent. The middle class is responsible for paddling our own canoe, although if people spend down their assets to the point of becoming indigent, they would then be eligible to collect.

That's the most just and equitable method out of this botched and grossly mismanaged program, in my view.

Perhaps Gen X, Y and Z will combine politically and just abolish this failed program altogether and choose to spend money going for taxes elsewhere. Who could blame them?



Seattle Pioneer
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<<If Social Security is taken away -- even from those of us who have managed to save and invest -- we may not be able to stay afloat. Those who don't stay afloat will end up on some other government program. Why not allow us to keep what we have worked for for so many long years -- and which allows us to live with dignity -- instead of forcing us to rapidly spend down all else we have managed to save until we end up on true welfare?
>>


Perhaps you can be satisfied that the money you paid in taxes helped to finance a nice vacation cruise for some already welthy member of the WWII generation.

But if you thought the taxes you were paying were being carefully saved to pay you benefits when you retired, you were willfully fooling yourself, in my opinion. I've read hundreds of article since about 1970 or so predicting Social Security funding problems when the boomer generation got to retirement age.

And each year you've gotten an annual statement from Social Security that has notified you that benefits can be changed by Congress, and you have seen benefit cuts such as increasing the Social Security retirement age from 65 to 68 and making Social Security subject to income taxes.

Soory, but in my opinion only fools would ignore all that evidence of impending problems and choose to believe the honeyed promises of politicians who are now either dead or out of office.


If you don't have the money to retire ----keep working.



Seattle Pioneer
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<<Seattle Pioneer wrote:

In a means tested system, once you spend your assets down to a suitably low level, you will start collecting benefits again.

Better yet, don't save for your own retirement! Let the government take care of you! This is a lot like people who believe that they shouldn't save for their children's college educations because then they won't qualify for financial aid.
>>


Personally, I think there an arhument for paying a small stipend to the indigent. If you want to spend down your assets to receive that benefit, help yourself.


<<Denying benefits on the basis of means testing is unfair. You reward those who were the least responsible - those who saved the least. People like AngelMay, cliff and myself are counting on the combination of our savings and Social Security for income in retirement.
>>


Tough. It would be a lot worse to raise taxes a lot on Gen X, Y and Z when few of them expect that Social Security will ever pay them benefits.


<<Seattle Pioneer, I think that it is well-understood that in a few decades that Social Security will run into insolvency. Something has to change, but means testing is not the right change.
>>

It's not decades away. It's five or six years until the boomer generation starts claiming benefits, which is going to rapidly start escalating government deficits. At age 65, boomers are going to start claiming Medicare, which is in far worse condition than Social Security, and which will start grossly exploding Federal deficits as well.

Medicare has already started means testing for drug benefits and for basic Social Security, charging those with extra income more in premiums and paying less in benefits. Expect that trend to continue with Medicare being sharply means tested as well, just as I've described.

After all, why pay benefits to people that don't need them?



Seattle Pioneer
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<<One of the stupidest things congress has done lately is to allow people to take SS at retirement age even if they still have large incomes. I know I did this, and I know several others who have. I used the extra income to pay down the house faster, but it is still silly to give working people social security. Social Security, to my mind, is retirement money, not an extra bonus for living to 65. This would be an easy leak in the system to fix.

cliff
>>


Also, eliminate early retirement benefits at age 62. No retirement benefit until reaching the normal retirement age, now rising towards age 67.



Seattle Pioneer
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"Also, eliminate early retirement benefits at age 62. No retirement benefit until reaching the normal retirement age, now rising towards age 67."

Sorry, I can't go along with that. First, my promised company pension turned out to be a joke. Wonderful if you worked there 40 years, but poverty level if they slashed your job after 24 years, which they did. And no way to recoup the lost benefits with a new employer because their pension was also only good if you spent your whole life there.

Second, many older employees will be pushed out long before they reach 67. And there are only so many greeter jobs available at Wal-Mart. Seriously, how many 60+ new employees in high paying jobs has your current or former company hired in the last year? For the majority of workers all the talk about working more years is just talk unless they're willing to take huge pay cuts.

Third, I've seen many employees forced to retire early due to health issues. Even with savings and a reduced pension, they count on SS to bridge the gap between just existing and living.

Ironic thing is when I was 30 I never expected SS to be there for me. I saved and invested quite successfully and thought with my pension I'd have a very, very comfortable retirement. Well, thank god, SS is there and with my investments I'm still pretty comfortable. But without SS, and soon Medicare to take the place of private health insurance that increases at a compound rate over 13%, I'd be in major trouble.

I agree we need to address both SS and Medicare for the long term. What we don't need is another 8 years of drawing a line in the sand and saying it's this or nothing. That sure worked, didn't it? We got nothing.
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<<Second, many older employees will be pushed out long before they reach 67. And there are only so many greeter jobs available at Wal-Mart. Seriously, how many 60+ new employees in high paying jobs has your current or former company hired in the last year? For the majority of workers all the talk about working more years is just talk unless they're willing to take huge pay cuts.

Third, I've seen many employees forced to retire early due to health issues. Even with savings and a reduced pension, they count on SS to bridge the gap between just existing and living.

>>


I see no reason why people should get Social Security payments because they can no longer get the high pay they got used to. That's another good reason to save and invest when you can, rather than to spend and spend.


The disabled who aren't able to do any kind of work would continue to be eligible for Social Security disability in my scheme.

I'd also boost the normal retirement age from 68 to 70 or 72.



Seattle Pioneer
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I'd also boost the normal retirement age from 68 to 70 or 72.

I guess clerical and office workers could probably work that long, but I'm not sure about roofers, stone masons, truck loaders, paving workers, and other jobs that require hard physical labor on a daily basis.

Of course, in my southwestern part of the USA we get around that problem by using illegal Mexican labor and making it impossible for them to qualify for social security because they are illegals and have no way to change their status to green card holders.

Ted
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"I'd also boost the normal retirement age from 68 to 70 or 72."

Raising it to 72 would probably solve the problem. A sizable percentage of workers would not live long enough to collect anything.
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<<Of course, in my southwestern part of the USA we get around that problem by using illegal Mexican labor and making it impossible for them to qualify for social security because they are illegals and have no way to change their status to green card holders.

Ted
>>


No problem --- I'm sure Democrats will be glad to provide a procedure for imputing credit for Social Security benefits for those who never paid taxes as a part of "Comprehensive Immigration Reform."

After all, a lot of them will be VOTERS!



Seattle Pioneer
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No problem --- I'm sure Democrats will be glad to provide a procedure for imputing credit for Social Security benefits for those who never paid taxes as a part of "Comprehensive Immigration Reform."

The last I knew you had to pay into social security for 40 quarters (10 years) to be eligible for social security retirement. Tell me where you get that "never paid in" statement.

Ted
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<<No problem --- I'm sure Democrats will be glad to provide a procedure for imputing credit for Social Security benefits for those who never paid taxes as a part of "Comprehensive Immigration Reform."

The last I knew you had to pay into social security for 40 quarters (10 years) to be eligible for social security retirement. Tell me where you get that "never paid in" statement.

Ted
>>



Never discount the creativity of politicians who are giving someone else's money away.


<<WASHINGTON -- "We might be on the cusp of giving billions of dollars worth of our senior's Social Security money to illegal Mexican workers, and it's getting almost no media attention whatsoever," warned Brad Phillips, a spokesman for TREA Senior Citizens League, one of the nation's largest nonpartisan seniors groups with 1.2 million members.


TREA Senior Citizens League filed a Freedom of Information Act (FOIA) lawsuit in U.S. District Court Thursday morning - after what the group styled as "numerous refusals over three years by the U.S. Department of State and Social Security Administration to provide a draft of - or virtually any pertinent information regarding - the impact of the Totalization Agreement with Mexico on the U.S. Social Security Trust Fund."


The Totalization Agreement could allow millions of illegal Mexican workers to draw billions of dollars from the U.S. Social Security Trust Fund. The agreement between the U.S. and Mexico was signed in June 2004, and is awaiting President Bush's signature.

>>



http://archive.newsmax.com/archives/articles/2006/7/2/214834...
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It looks like John MaCain is totaly confused about Social Security:

http://economistsview.typepad.com/economistsview/social_secu......
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