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I'll go ahead and be that guy. IMHO there actually wasn't much wrong with the pre-Trump Federal income tax system. If you dig into the sources of revenue and where that revenue is being spent you end up with the conclusion that federal income tax, corporate tax, excise taxes, etc paired with discretionary spending and interest on the Federal debt isn't the problem, in 2015 comparing those leaves a sizable surplus: https://www.nationalpriorities.org/b...-101/revenues/ vs https://www.nationalpriorities.org/b...-101/spending/
I give them some credit for at least lowering the MID. IMHO they will have to raise the FICA cap, curtail benefits, raise the age to draw benefits, or some combination in the next few decades.
If there is no FICA cap, or self employment tax cap, how would you justify having a SS benefit cap? If a VP earns 500k and pays FICA tax on the whole amount, he should get retirement benefit proportional to that as well and not being capped at $2100 or whatever the amount is for full retirement. I don't think that will happen.
I don't understand why people think legally earning a high salary is some sort of crime that we need to punish. If you really discourage legal earning through heavy taxing, people either become discouraged from working or they resort to under the table transactions. Neither is good for society.
While the Federal income tax is doing alright IMHO, personally I see SS heading for a disaster if benefits aren't cut, the age isn't raised, or the cap isn't raised or scrapped. Politically I would imagine the cap is the easy sell, after all it would be a tax increase on the rich.
If there is no FICA cap, or self employment tax cap, how would you justify having a SS benefit cap? If a VP earns 500k and pays FICA tax on the whole amount, he should get retirement benefit proportional to that as well and not being capped at $2100 or whatever the amount is for full retirement. I don't think that will happen.
I don't understand why people think legally earning a high salary is some sort of crime that we need to punish. If you really discourage legal earning through heavy taxing, people either become discouraged from working or they resort to under the table transactions. Neither is good for society.
It’s simple. They themselves don’t earn that much, and they foresee no way they ever will.
As Mathjak has pointed out. The harsh taxes and negatives always starts at the level right above themselves.
In other words, they’re selfish and envious and incapable of objectivity.
If there is no FICA cap, or self employment tax cap, how would you justify having a SS benefit cap? If a VP earns 500k and pays FICA tax on the whole amount, he should get retirement benefit proportional to that as well and not being capped at $2100 or whatever the amount is for full retirement. I don't think that will happen.
I don't understand why people think legally earning a high salary is some sort of crime that we need to punish. If you really discourage legal earning through heavy taxing, people either become discouraged from working or they resort to under the table transactions. Neither is good for society.
Bp25, Those opposed to populist government policies are not incorrect when they describe federal social programs and policies as government’s inequitable distribution of benefits funded by inequitable tax policies. But what’s inequitable is not always unjustifiable.
Since its inception. Social Security retirement program has been of net benefit to our nation’s economy. Higher income earners both in proportion to their incomes and per capita are the greater beneficiaries of our more robust economy. Eliminating the “cap” for Social Security’s portion of the FICA payroll tax would be of extremely tiny proportional differences to wealthier taxpayer’s, but it would assist sustaining the Social Security retirement system and that’s of significant difference to our nation's economic and social well-being.
[Ex-senator Al Franken, often repeats another former U.S. senator from Minnesota, Paul Wellstone who said, “We all do better when we all do better”. I consider that to be the essence of populism].
LowExpectations, currently, federal FICA’s total tax revenue is approximate-ly or effectively 15.3% of USA’s payrolls. The tax levied equally upon employers and their employees. It’s approximately rather than precisely 15.3% because individual employees annual FICA taxes are “capped” at a legally maximum amount.
Its proposed that the entire 2.9% of payrolls earmarked for Medicare and half of the 12.4% of payrolls earmarked for Social Security be halved.
Thereafter FICA would be expected to fund no more than half of Social Security retirement plans, and nothing else.
Both each employers and employees FICA taxes would be reduced from 7.65% to be 3.1% for each of them.
The reduction of FICA revenue would (at least) be sufficiently replaced by an effectively 4.55% sales tax.
As Mathjak has pointed out. The harsh taxes and negatives always starts at the level right above themselves.
Talking about raising the FICA cap along with curtailing benefits and/or raising the age to draw said benefits is harsh? Compared to what's coming for FDR's bright idea fairy, probably within our lifetime?
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Eliminating the “cap” for Social Security’s portion of the FICA payroll tax would be of extremely tiny proportional differences to wealthier taxpayer’s, but it would assist sustaining the Social Security retirement system and that’s of significant difference to our nation's economic and social well-being.
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The problem with this kind of scenario analysis is that people will assume other factors will remain the same - but they won't. Because of the cap, people earning above the cap limit do not bother to explore moving some of their income to non-cash compensation (stock grant, direct employer contribution to 401k, etc) because federal income tax will be assessed on those (now or later) anyway. If you suddenly impose the additional 6.25% on the amount above current cap, there will be a strong push (and many of these people are executives) to move some money to non-cash compensation. If I earn 200k, I don't necessarily need all of it in cash form.
In summary, you may not get the tax revenue increase you are expecting from such a move. Two things that the behavioral economists always say:
- People respond to incentives, positive or negative.
- Taking away a benefit feels twice as bad as not getting the benefit in the first place.
Regarding the topic of taxing ultra rich, good luck with that. They are in power, directly or indirectly. If you ever get a government truly wanting to fight this battle, the ultra rich will just move to another country with low tax.
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