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Err... I just refuted that assertion. Everybody pays in. The more you pay in, the proportionally less you get out at the other end. That is not regressive.
Hmmm. "Regressive" has to do with the nature of the tax, not with the nature of whatever the tax proceeds are or are not used for. The marginal utility of any dollar's worth of income is greater than that of any additional dollars. That alone would make flat-rate payroll taxes regressive, but the wealthy simply don't pay the SS tax at all anymore on wages above the cap. Silly talk about SS "going broke" could be dispensed with out of hand by raising the wage cap and thereby reducing the levels of regressivity.
GeoffD, on one side of our political spectrum, there are those that insist there must be to absolute certainty between governments’ tax revenues and the costs of benefits provided by governments. Those on the other extreme, pretend that we can spend with absolutely no budgeting or accounting.
Regardless of what we would believe to be some reasonable relationship between taxes and the benefits they purchase, governments have, and do now operate by deficit spending. Tax revenues and government purchased benefits can, (dependent upon governments’ practices), be closely related; but they are two separate entities.
We agree Social Security regulations are of greater proportional benefit to those with lower lifetime earnings. You wouldn’t deny payroll taxes themselves are much more regressive than our progressive income taxes? Would you deny that a flat rated general sales tax is less regressive than our FICA tax based only upon payrolls (and cap’s individual’s maximum annual tax)?
The future benefit are proportionally more favorable to lower income families, but the FICA tax based upon payrolls is undeniably a regressive tax.
That has already been worked out on the tax side. The point of the response was to show that the tax was no longer regressive since a tax credit had been created to adjust the EFFECTIVE TAX RATE downward.
"The federal income tax code has the Earned Income Tax Credit (EITC) which refunds to the working poor some or all of the payroll taxes they paid as well as any federal income taxes without any effect on their working credits in the Social Security and Medicare programs."
Tell that to black men, who have a life expectancy of about 65. Or tell that to ANYONE who dies before collecting any payout.
Pfft! Nobody receives anything from anywhere after they die. But somehow, more than 6 million Americans do receive SS survivor benefits in amounts that vary but average some $1,100 per month. The simple facts are that SS includes substantial life and disability insurance benefits for all covered workers.
As someone without employer-paid health insurance, and a high math SAT score, I can tell you that, other things being equal, workers with employer-paid health insurance pay higher effective tax rates than those without employer-paid health insurance.
Show your work, Math Whiz. Keep in mind that an individual's effective tax rate is calculated by dividing his total tax expense (Form 1040 – Line 63) by his taxable income (Form 1040 -- Line 43).
USA, 2009 years of Life expectancy “at birth” by race.
I don’t yet know what these statistics would be if it were for after date of birth or post infancy.
GeoffD, on one side of our political spectrum, there are those that insist there must be to absolute certainty between governments’ tax revenues and the costs of benefits provided by governments. Those on the other extreme, pretend that we can spend with absolutely no budgeting or accounting.
Regardless of what we would believe to be some reasonable relationship between taxes and the benefits they purchase, governments have, and do now operate by deficit spending. Tax revenues and government purchased benefits can, (dependent upon governments’ practices), be closely related; but they are two separate entities.
We agree Social Security regulations are of greater proportional benefit to those with lower lifetime earnings. You wouldn’t deny payroll taxes themselves are much more regressive than our progressive income taxes? Would you deny that a flat rated general sales tax is less regressive than our FICA tax based only upon payrolls (and cap’s individual’s maximum annual tax)?
I would deny it, because it isn't true.
Regressive tax = Tax rate increases as the base to which it is applied decreases.
Payroll taxes are CLEARLY NOT regressive.
Quote:
The future benefit are proportionally more favorable to lower income families, but the FICA tax based upon payrolls is undeniably a regressive tax.
Show your work, Math Whiz. Keep in mind that an individual's effective tax rate is calculated by dividing his total tax expense (Form 1040 – Line 63) by his taxable income (Form 1040 -- Line 43).
Sorry, but that isn't how effective tax rate is calculated. (Hint: your denominator is wrong.)
Sorry, but that isn't how effective tax rate is calculated. (Hint: your denominator is wrong.)
In the end, it is all about the effective tax rate. It is deeply negative for the bottom quintile and stilll negative including the payroll tax.
In the simplest terms, it is a flat tax and a flat tax is neither regressive nor progressive. The connotation that it is regressive derives from the ceiling placed on the wages subject to the tax. That is matched by a limit on the benefits allowable. Hence, it is not really a regressive tax.
Last edited by lchoro; 08-17-2017 at 10:56 AM..
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