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Only 6% of workers max out their Social Security contribution. Lifting the cap doesn't change the bottom line of the program very much. The truly high income already shift their income from earned income subject to the tax to unearned income that isn't taxed. You'd see a huge increase in that behavior.
We need to take into account political realities. No one is going to advocate cutting SS benefits significantly.
The Republicans do -- but it's so blatantly obvious what their game is when they say "We'll keep things the same for people 55 and older, but everyone younger will have to deal with fewer benefits." Well, duh, we know who their voters are.
The millennials/Gen Yers are getting older - the oldest are well into their 30s now - but not getting significantly more conservative. If anything they are getting more liberal since Gen Z looks more liberal than Gen Y was. I doubt when they become the majority of voters and within 20 years of retirement that they are going to fall all over themselves to cut SS - that day is NOT that far ahead of us (the 2020s).
If reform of the current SS system is going to happen where retirement ages get raised, benefits get cut, and taxes go up is going to happen, it MUST happen within the next two presidential cycles. After the 2024 election it's game over - at that point Gen Y will be in their mid to late 40s and will not vote for people saying they're going to eliminate their retirement. At this point, their votes are still mostly irrelevant but by then they won't be. It will already be extremely difficult. If we drag it out, the political window of opportunity will close. Even if a reform passed, it would be like ACA - the opposition party will run on repealing it for years. It will be a lot easier to repeal & restore SS cuts than to repeal a complicated benefit program like ACA.
I actually think the window already closed - the best bet was probably the grand bargain of 2011 between Obama and Boehner that failed. SS does not hit crisis mode until the mid 2030s iirc. If we have done nothing, I think a more likely scenario is one where we re-imagine old-age benefits completely.
COLA increases have been so unrealistically small in recent years that the continued similar COLA trend would probably account for the required 25% real benefit cut by 2033 without any other measures. People are less likely to protest against lack of increase in income than against decrease in income (via either increased taxes or decreased SS payments), so my guess is that the government is going to use primarily the minimum-COLA approach. They have been using it for several years already.
After the 2024 election it's game over - at that point Gen Y will be in their mid to late 40s and will not vote for people saying they're going to eliminate their retirement.
Intelligent Gen Y-ers and younger will have planned for a hypothetical future that does not include SS benefits. I'm a boomer, and that is what I did starting when I was 25 years old. I won't be old enough to claim SS for years, but if if I never see a penny from SS, I'll be fine. I planned for bupkis.
If the min wage was increased to $15 an hour nationwide, how much would that increase revenue for Social Security? I bet it'd be quite a bit.
It all depends on how many people lose their jobs. Everyone credible economist agrees total employment will shrink. Those who keep their jobs will make more, but those who lose the jobs will end up on unemployment for a while.
Quote:
Originally Posted by NorthStarDelight
I fail to see why the payroll tax would need to be increased 33% at this very moment to balance out the program.
It is all in the math. The Trustees of SS did all the math for you; just read the links in the original post.
The poll leaves out the best solution: remove the cap on the Social Security tax.
I should also point out that it's very easy for someone whose most strenuous labor consists of sitting at a desk to suggest that a worker who loads trucks, works in a factory, or stands up all day at work to keep doing that until they turn 70.
By the time they hit their 40s, 50s, and 60s, they will be supervisors, managers, directors and VPs. They won't be loading trucks.
Scroll down to Table 1. Individual Income Tax Returns, Tax Year 2012 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income
You're looking at 3 distinct income brackets from columns 6, 7 and 8:
(6) $100,000 under $200,000
(7) $200,000 under $250,000
(8) $250,000 or more
You need the total number of returns filed:
(6) $100,000 under $200,000 = 14,123,441
(7) $200,000 under $250,000 = 1,654,070
(8) $250,000 or more = 3,032,742
...and you need the total income reported:
(6) $100,000 under $200,000 = $1,610,920,079,000
(7) $200,000 under $250,000 = $297,831,541,000
(8) $250,000 or more = $1,281,411,930,000
We'll start with Column (8).
There are 3 Million (3,032,742) people who earned more than $250,000 annually totaling $1.28 TRILLION ($1,281,411,930,000)
Add in the employers share --- another $65,189,142,602--- and that will pay for another 3 weeks or 6 weeks total.
That's it.
There you go again, being all logical and analytical and everything. With actual data, no less.
Last edited by SportyandMisty; 04-24-2016 at 08:39 PM..
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