President Barack Obama on Tuesday backed boosting the amount of individual income subject to Social Security taxes, one of the first concrete proposals he has endorsed to put the retirement program on a stronger fiscal footing. ...
"For the vast majority of Americans, every dime you earn, you're paying some in Social Security," Obama said at an event with college students in Virginia. "But for (billionaire investor) Warren Buffett, he stops paying at a little bit over $100,000 and then the next $50 billion he's not paying a dime in Social Security taxes."
Actually, I think Warren Buffett does not make $50 billion a year (that would be his net worth) and most of his income is from investments and would not be covered by FICA anyway but let us not quibble.
19 comments:
"Actually, I think Warren Buffett does not make $50 billion a year (that would be his net worth) and most of his income is from investments and would not be covered by FICA..."
That's why Obama is OK with this, since it probably wouldn't affect his buddies like Warren Buffett and Bill Gates. It's going to screw small business people. Nothing but a jobs creation killer.
Quibble indeed--this reveals once again how out-of-touch Obama is with the realities of how the economy works. He literally has no clue what he is talking about. Rather scary, actually.
The problem with eliminating the cap is that rich people run the country and for some reason seem to hate taxes, so this would increase opposition to SS among people with power.
So I think the best thing is to agree to keep the cap as long as benefits are not cut. If and when more revenue is needed, gradually raise the tax rate. That way, the rich are not threatened and maybe we can keep the best program the gov't has.
" It's going to screw small business people. Nothing but a jobs creation killer."
Really. As someone who will be adversely affected by this I cannot think of any reason why this would be a "jobs creation killer." Please enlighten me.
Seriously, if you make $250k per year, is the extra $9k you might have to pay in FICA taxes really going to hurt you? If it is, you might want to seriously reconsider your lifestyle choices.
For small businessmen, that additional 15.6% FICA tax on another $150,000 is an additional $23,400. That's real money, not a lifestyle choice.
How many small business people are paying their staff over 100K? Damn few, I bet. Job killer my buttinski. This myth is precisely that, a myth.
I understand the highest "bend point" returns only 10 cents in benefits for every dollar paid in.
That is okay, up to a limit, not infinity.
Don Levit
From the full transcript:
http://www.whitehouse.gov/the-press-office/2011/04/19/remarks-president-town-hall-annandale-virginia
THE PRESIDENT: Well, let me talk about Social Security. The big drivers of our deficit are health care costs. I mean, the thing that we’ve really got to get control of is Medicare and Medicaid. That’s what’s skyrocketing really fast. Because not only is the population getting older, but health care costs are just going up a lot faster than people’s wages and salaries -- or tax revenues to the federal government.
Social Security is a problem but one that we can solve much more easily. So the first answer to your question is, Social Security will definitely be there when you retire. (Applause.) I’m absolutely confident about that. I am absolutely confident about that.
Now, here’s the thing. If we don’t do anything on Social Security, if we just don’t -- if we don’t touch it at all, then what would happen is, by the time you retire, or maybe just a couple years after you retire, you might find that instead of getting every dollar that you were counting on, you’re only getting 75 cents out of that dollar. Because what’s happening is the population is getting older; there are more retirees per worker and more money starts going out than is coming in.
So we do have to stabilize Social Security’s finances, but we can do that with some relatively modest changes -- unlike health care, where we’ve got to get in and work with providers and really get some much more substantial reforms. With Social Security, it’s just a matter of tweaking how it currently works.
Now, politically, it’s hard to do. Politically, it’s hard to do. For example -- I’ll just give you one example of a change that would make a difference in Social Security. Right now you only pay a Social Security tax up to a certain point of your income. So a little bit over $100,000, your Social Security -- you don’t pay Social Security tax.
Now, how many people are making less than $100,000 a year? Don’t be bashful. (Laughter.) The point is, for the vast majority of Americans, every dime you earn, you’re paying some in Social Security. But for Warren Buffett, he stops paying at a little bit over $100,000 and then the next $50 billion he’s not paying a dime in Social Security taxes.
So if we just made a little bit of an adjustment in terms of the cap on Social Security, that would do a significant amount to stabilize the system. And that’s just an example of the kinds of changes that we can make. (Applause.)
So we are going to have to make some changes in Social Security, but it’s not the major driver of our deficit. And what I’ve proposed is let’s work on Social Security, but let’s not confuse that with this major budget debate that we’re having about how we deal with both spending and revenues because that is the problem that is going to require some really hard work and some bipartisan cooperation. Okay?
•"The trouble with socialism is that eventually you run out of other people's money."
Doesn't it seem a bit unAmerican to force educated, successful individuals to buy more retirement and disability insurance for other people? The Social Security wasn't meant to be a second way to tax income!
"For small businessmen, that additional 15.6% FICA tax on another $150,000 is an additional $23,400."
That's at least one employee that can't be hired, so multiply that by every small business and how many jobs does it kill.
Don -
I don't see where you get 10%. Above the highest bend point, the payout (at normal retirement age) is 15% of average income, which is based on 420 months (35 years) of earnings. The tax is 6.2%. Therefore, you pay $100 tax on $1613 in earnings (100/6.2%), which gets you $1613/420*15%=$0.576 more in monthly payments. If you collect for 15 years (age 67 to 82), that's $104 on $100 tax.
Did I make a mistake?
What will better society,helping millions of people or the few wealthy?
Spock said it the best(star trek).
Mike B:
I don't have a reference on that other than what I have read in the past.
The higher the income, the lower the payout per dollar of contribution.
Don Levit
A10:12: The alternative to a viable social security program is that all taxpayers pay higher general taxes, to fund welfare for those folks who never earn enough to save for retirement, or those who are taken advantage of (such as the LA retired bus drivers who lost entire life savings in a Ponzi scheme).
It is unAmerican to allow the elderly to starve.
As for your comment on "educated, successful" folks having to help support others -- the wealthy are not superior to the rest of Americans, and they did not get there without availing themselves of the advantages of our American system. The upper echelon often gets there on the backs of workers in their companies. Those who are blessed financially should and must return some of the largesse to society. Otherwise, class warfare (now seen in other countries) would begin to rear its ugly head.
Back to the topic: social security is successful in providing an income floor, roughly 40% of retirees' income in general. This is a huge benefit to society -- think of all the money retirees pump back into the economy -- think of all the money which Junior does not have to send to Mom -- think of the peace of mind and dignity of being able to count on monthly social security checks. The last major fix was 28 years ago, with relatively minor tweaks in many areas. There is no reason the same approach cannot succeed today.
A 6:55P: Well said.
"Otherwise, class warfare (now seen in other countries) would begin to rear its ugly head."
THANK YOU. The American people largely fail to realize that we will be on the brink of an uprising if we cut basic benefits to the poor and lower middle class. I don't know about you, but I don't want to live in a country where the destitute really have nothing to lose. Study medieval history.
This thread has gone so far around the bend that I can't even begin to comprehend what the last three or four responses are trying to say. Demagogic gibberish, snd not much more.
If you can't comprehend them, then you're part of the problem, sir.
I think the previous posts were trying to imply that raising the FICA base (amongst other potential reforms) is a more viable solution than cutting benefits to address the solvency of Social Security.
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