I can only guess that Aaron's preference is for cutting benefits or raising taxes on poorer people.Some Social Security experts - including Democrats and liberal economists - are wary of a proposal from presumptive Democratic nominee U.S. Sen. Barack Obama, D-Ill., to shore up the federal retirement program by raising taxes on the highest earners.Obama has said he wants to raise limits on wages that are subject to the 12.4% federal Social Security tax. That is the only specific proposal in documents from the Obama campaign directed at helping make the Social Security program solvent over the long term.
Under current law, Social Security taxes are collected only on the first $102, 000 of an individual's income, indexed for inflation. Proposals to increase or eliminate that cap have been around for years, advanced mostly by Democrats who claim that the wage cap unfairly burdens lower and middle-class workers.
But some economists and politicians warn that lifting the cap jeopardizes a feature that has underpinned the success of the Social Security system since its inception in 1935 - the notion that one will ultimately benefit from the system in proportion to what one has paid into it.
"As someone who has contributed to Obama's campaign and will vote for him in November, I don't think that's one of his better proposals," said Henry Aaron, an economist at the Brookings Institution, of Obama's plan to lift the Social Security wage cap.
Jun 4, 2008
Criticism For Obama Plan
From Dow Jones:
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3 comments:
Now that he is the presumptive Democratic nominee, I look forward to more from Mr. Obama--as well as Mr. McCain--as to their proposals, but I think raising the cap on high earners has to be in the mix, along with raising the full retirement age and tinkering with the benefit stucture. It is going to be a painful process for the middle & lower middle class (if such a group still exists above poverty nowadays), but the true poor must be protected: many of them, including my own mother, have nothing else or little else to live on (she is 83 and has outlived her savings--as well as my father--despite a frugal lifestyle.
I called it BS when he was ripping into McCain about Social Security. People will find out if he's elected that "Change" meant what they will have left in their pockets.
The sad thing is if McCain's elected we probably won't even have pants.
"Social Security taxes are collected only on the first $102,000 of an individual's income." Note that SS taxes only apply to earned income, i.e. wages and self employment net profit. This is one of the reasons why many consider the tax harder on lower and middle class workers. The wealthy often receive a much lower percentage of their income from covered earnings while for lower and middle income families earned income is often their only income.
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