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Should We Redesign Payroll Taxes?

phattonez said:
So what we're doing is forcing people to buy insurance that they may not want and that they can pay a lower rate on if they're higher income. Much like the individual mandate, we all know what it actually is. It's a tax, and it's a regressive one.
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You really want my opinion? It's going to be expensive as hell up front but it would lead to solvency not only of SS but also the national debt.

Phase out Social Security in favor of private accounts.

Allow current beneficiaries to either stay on the program as is or get a tax credit for something like 75% of their current benefit every year. The credit would be non-refundable but unused portions would carry forward and could apply to any Estate Tax when the taxpayer dies.

Those who have not yet reached eligibility age but who have been contributing for more than 20 years would have the option of staying on the program as is or having their contributions (including employer portion) transferred to a private account. If they chose the private account option they would be allowed to contribute, tax free, an additional $10k/yr.

Those who have contributed for less than 20 years would have their benefits moved to a private account.

Private accounts would be entirely transferable. When you die, even if you haven't reached retirement age, you can pass the account to whoever you want.

Private accounts would have a basis of whatever you contributed and contributions would be from pre-tax income. Distributions, including gains, would be tax free.

Employers would still contribute at the same rate they do now and employees would also contribute as they do now. However, individuals would be allowed to contribute an additional $5k/yr to their own plan.

Private accounts would have to qualify as a "safe" investment meaning that at least 75% of plan assets would have to be invested in government backed securities. Plan assets would not be eligible for distribution until the plan holder reaches full retirement age.
 
haymarket said:
Again, do you know why the program is called SOCIAL security and the implications of that title and what it means to SOCIETY rather than to individuals?
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A person pays into social security as a tax, then it is taxed again. Not fair is it?
 
Crystal said:
A person pays into social security as a tax, then it is taxed again. Not fair is it?
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So you advocate for SS payments to be tax free?
 
phattonez said:
Because our financial elite own the government.
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Because we the sheeple allow it. The rich are a (voting) minority yet politicians convince (trick?) the not rich majority into thinking that they are being properly represented. That is why more and more (power and spending) is being elevated to the federal government level - you can vote for (or against) at most 3 of the 535 congress critters who enjoy a re-election rate in excess of 90%.
 
phattonez said:
But there's the unethical part. The middle income earners are forced into a program with a meager return, while the rich get to take more of their money and direct it to far more profitable endeavors (and for the past decades that's been real estate). The rich then can get higher yields with less competition from lower income earners who are stuck earning a pitiful yield. In effect it's a wealth transfer from poor to rich.
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I get $1800/month in SS retirement which is not a meager return, IMHO.
 
haymarket said:
Again, do you know why the program is called SOCIAL security and the implications of that title and what it means to SOCIETY rather than to individuals?
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Yes, Which is why I oppose it.
 
Crystal said:
Yes! Taxes were paid once on that money correct?
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I would agree that SS payments should be tax free. So since we both agree, there is nothing there to argue about.

btw- money you earn that is taxed is taxed again all the time. That is simply the way of the world and how it works. And few seem to object to it.
 
haymarket said:
I would agree that SS payments should be tax free. So since we both agree, there is nothing there to argue about.

btw- money you earn that is taxed is taxed again all the time. That is simply the way of the world and how it works. And few seem to object to it.
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Okay then, let’s do it this way, a flat tax on all income, even welfare. When all income on everyone has been taxed once then we can start taxing people twice. That seems fair!
 
haymarket said:
So you are against society taking care of itself through its government?
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I am less against society taking care of itself through government but rather what promotes individual freedom. For instance, law enforcement is necessary to promote a safe environment and provide protection to ensure your rights are protected. Forcing people to buy into an inefficient retirement program doesn't meet that criteria as it limits freedom rather than expand it.
 
Crystal said:
Okay then, let’s do it this way, a flat tax on all income, even welfare. When all income on everyone has been taxed once then we can start taxing people twice. That seems fair!
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1- by "income" do you mean all monies coming into a persons accounts or pocket?
2- why flat?
3- do you really not know that income is taxed many times already? I get paid and that is taxed. then I take that money and buy things at the store and that is taxed again. And i fill up the gas tank and the same money is taxed again. And i pay my property tax with money already taxed. Does this come as news to you?
 
Nap said:
I am less against society taking care of itself through government but rather what promotes individual freedom. For instance, law enforcement is necessary to promote a safe environment and provide protection to ensure your rights are protected. Forcing people to buy into an inefficient retirement program doesn't meet that criteria as it limits freedom rather than expand it.
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There are islands for sale where you do not need society and can all the individual freedom you desire.
 
i support raising the cap and making the programs more solvent. if they need to raise my contribution, that's fine, as well. SS and Medicare are good programs, and i hope to live long enough to collect.
 
phattonez said:
Currently we have a bizarre tax system where workers and employers both contribute equally to payroll taxes to pay for social security and medicare. On its own, this isn't necessarily a bad thing. These are programs that do a lot of good and provide for people in retirement. Here's the problem: these payroll taxes do not apply to those who make a living off of investments, and they also do not apply to those who make more than a certain amount of money. Here's where it gets even worse, if you are self-employed, you are effectively playing twice the tax, since you are the employer and employee.

What we've set up is a tax scheme that effectively discourages labor, discourages entrepreneurship, and encourages only investment. On top of that, it's not solvent. So we need to change it. Here's my proposal?

Let's stop treating this like a savings account and treat it like it actually is: social welfare. Make the tax apply to high income earners, not just middle income earners. Make it apply not just to wage income, but to all sources of income. This does mean that yes, now the rich can collect social security, but we already a maximum benefit worked into the system, so on net we'll be collecting much more revenue.

This fix will treat all sources of income equally and fix the budget issues.

Thoughts?
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I say get rid of the payroll taxes and eliminate the bogus "trust finds". We have one budget that includes SS and Medicare,why do we need regressive payroll taxes?

This should be revenue neutral, thus income tax rates will have to be adjusted. This will however move our tax system to be truly progressive.
 
phattonez said:
Currently we have a bizarre tax system where workers and employers both contribute equally to payroll taxes to pay for social security and medicare. On its own, this isn't necessarily a bad thing. These are programs that do a lot of good and provide for people in retirement. Here's the problem: these payroll taxes do not apply to those who make a living off of investments, and they also do not apply to those who make more than a certain amount of money. Here's where it gets even worse, if you are self-employed, you are effectively playing twice the tax, since you are the employer and employee.

What we've set up is a tax scheme that effectively discourages labor, discourages entrepreneurship, and encourages only investment. On top of that, it's not solvent. So we need to change it. Here's my proposal?

Let's stop treating this like a savings account and treat it like it actually is: social welfare. Make the tax apply to high income earners, not just middle income earners. Make it apply not just to wage income, but to all sources of income. This does mean that yes, now the rich can collect social security, but we already a maximum benefit worked into the system, so on net we'll be collecting much more revenue.

This fix will treat all sources of income equally and fix the budget issues.

Thoughts?
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i like your plan. i have proposed similar.
 
Crystal said:
Okay then, let’s do it this way, a flat tax on all income, even welfare. When all income on everyone has been taxed once then we can start taxing people twice. That seems fair!
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my proposal for a flat tax

how about a flat tax on all income. earned and unearned

first $35,000 excluded.

balance budget admendment . tax rate set by what it takes to balance the budget

no deductions, loopholes or writeoffs

no more payroll taxes. Social Security and Medicare come from the general fund where they have been putting it all these years

every quarter every American has to sit down and write a check to the IRS. if congress cuts spending that check gets smaller. if they increase spending then your tax bill goes up. maybe that will bring some accountability to washington.
 
haymarket said:
1- by "income" do you mean all monies coming into a persons accounts or pocket?
2- why flat?
3- do you really not know that income is taxed many times already? I get paid and that is taxed. then I take that money and buy things at the store and that is taxed again. And i fill up the gas tank and the same money is taxed again. And i pay my property tax with money already taxed. Does this come as news to you?
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That’s why it’s not fair to tax investments and social security. Does this condescending tone work for you?
 
Crystal said:
That’s why it’s not fair to tax investments and social security. Does this condescending tone work for you?
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Sorry if I came off as condescending. I was simply asking if you are not well aware that we are already taxed many times on the money we earn over and over and over again. You do understand that right?

If you do NOT tax investments, you are giving preference to the class of people who use investments as income. Average folks use a job and labor as money for income. Rich folks use investments. Not taxing investments shows a preference and unfair favoritism to that calls of people.
 
phattonez said:
Currently we have a bizarre tax system where workers and employers both contribute equally to payroll taxes to pay for social security and medicare. On its own, this isn't necessarily a bad thing. These are programs that do a lot of good and provide for people in retirement. Here's the problem: these payroll taxes do not apply to those who make a living off of investments, and they also do not apply to those who make more than a certain amount of money. Here's where it gets even worse, if you are self-employed, you are effectively playing twice the tax, since you are the employer and employee.

What we've set up is a tax scheme that effectively discourages labor, discourages entrepreneurship, and encourages only investment. On top of that, it's not solvent. So we need to change it. Here's my proposal?

Let's stop treating this like a savings account and treat it like it actually is: social welfare. Make the tax apply to high income earners, not just middle income earners. Make it apply not just to wage income, but to all sources of income. This does mean that yes, now the rich can collect social security, but we already a maximum benefit worked into the system, so on net we'll be collecting much more revenue.

This fix will treat all sources of income equally and fix the budget issues.

Thoughts?
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Respectfully, no it will not. For example, people will still receive income in the form of employer-owned-housing, or cars, or food. They will also still receive income in the form of gifts, and in the form of things like parents helping to pay for cars, furniture, rent, or college (not to mention scholarships, grants, and the like). They will still be receiving income in the form of unemployment and disability checks, still be receiving income from illicit activities, still be receiving income from small cash business-like activities, such as the neighbors kid mowing a lawn or three.

So, what you propose (and, full disclosure, I include some of what you propose in my own proposed system) isn't really "treating all income equally", but rather "expanding and increasing the income and rates that we wish to tax for purposes of funding Social Security."
 
phattonez said:
No, keep the cap as it is. Social Security should not be paying for a luxurious lifestyle.
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Solid concur. The purpose of Social Security is supposed to be to offer some means of protection for our elderly to help them avoid poverty.

We need to flatten government-provided direct benefits, really, increasing the payouts to the bottom-income-earners and decreasing payouts to the upper-income earners. President Obama's Simpson-Bowles Commission proposed just such an alteration.



More broadly, per your idea of taxing capital-gains and all income for FICA purposes: I would be willing to trade this in return for shifting Social Security into private investment, IRA-like accounts that are owned by the individual, with government guaranteeing a minimum benefit that looks like that flattened rate. If it's just "Hey, let's discourage savings and investment and hope that works to generate more money over the long haul", then... no.
 
Skeptic Bob said:
I imagine because most people would hate that and it would stifle ingenuity. Many people may hate what the OP proposes, but I don’t see it stifling ingenuity.
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I do, though not in total, but rather to a degree. When you reduce the incentive for risk taking, increase the cost of savings and investment, and reduce the gains for making the right decisions.... well, that impacts human behavior.
 
haymarket said:
Sorry if I came off as condescending. I was simply asking if you are not well aware that we are already taxed many times on the money we earn over and over and over again. You do understand that right?

If you do NOT tax investments, you are giving preference to the class of people who use investments as income. Average folks use a job and labor as money for income. Rich folks use investments. Not taxing investments shows a preference and unfair favoritism to that calls of people.
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I am not into punishing people who have done well for themselves in the form of taxation. We should all be taxed at an equal rate! Every last one of us! So do away with the progressive tax tables and institute a fair flat tax on absolutely all income!
 
Crystal said:
I am not into punishing people who have done well for themselves in the form of taxation. We should all be taxed at an equal rate! Every last one of us! So do away with the progressive tax tables and institute a fair flat tax on absolutely all income!
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so how about this one

how about a flat tax on all income. earned and unearned

first $35,000 excluded.

balance budget admendment . tax rate set by what it takes to balance the budget

no deductions, loopholes or writeoffs

no more payroll taxes. Social Security and Medicare come from the general fund where they have been putting it all these years

every quarter every American has to sit down and write a check to the IRS. if congress cuts spending that check gets smaller. if they increase spending then your tax bill goes up. maybe that will bring some accountability to washington.
 
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