Should We Redesign Payroll Taxes?

Conservative said:

None of which justifies putting SS and Medicare on budget in the first place and the abuse of those tax dollars which you want to ignore. So let's give these bureaucrats more tax revenue because they misused previous tax revenue? Is that liberal logic as it appears to be yours? Long term financial gap created how?? LBJ putting SS on budget and using the money to fund the Vietnam War and other Congresses using it to fund social programs to keep them employed

Until the bureaucrats take SS and Medicare off budget and explain how much of the trust fund was used for issues other than SS and Medicare not one more dime in Payroll taxes to the bureaucrats!! Keep running from reality and keep proposing higher taxes for those same bureaucrats, BOTH PARTIES!

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I don't care.

haymarket said:

I don't care.

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Which is why you have zero credibility and your call for higher taxes on 6% of the population doesn't address the questions of Congressional abuse of our tax dollars. You always buy what someone else tells you never accepting the facts that refute that rhetoric. Payroll taxes were created to fund SS and Medicare, NOT the operating expenses of the Federal Govt. Yes, you don't care and have no problem with that fact!

Lord of Planar said:

I, on the other hand, think we need to tax everyone at an equal percentage. People who don't pay taxes have no skin in the game, and want everyone elses taxes raises. These selfish people need to pay too.

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I don't see what's good or right about taxing people who are struggling just to pay the rent.

haymarket said:

To be honest with you, its my house and my analogy and it works for me. No "complete overhaul" was needed.


My pension - a state pension - is rock solid and the check comes every month. I know lots and lots of people in the exact same position.

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Anecdotes are not always generalizable. Which state?

We know which states have practically unsolvable pension problems. The wide disparity in funded status among state pensions is going to create major problems for those particular states that have been so chronically and badly managed, and some of this pain will spill over invariably on to other states that have been better managed.

Conservative said:

Which is why you have zero credibility and your call for higher taxes on 6% of the population doesn't address the questions of Congressional abuse of our tax dollars. You always buy what someone else tells you never accepting the facts that refute that rhetoric. Payroll taxes were created to fund SS and Medicare, NOT the operating expenses of the Federal Govt. Yes, you don't care and have no problem with that fact!

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Score update:
Windmill 23
Conservative 0

Neomalthusian said:

Anecdotes are not always generalizable. Which state?

We know which states have practically unsolvable pension problems. The wide disparity in funded status among state pensions is going to create major problems for those particular states that have been so chronically and badly managed, and some of this pain will spill over invariably on to other states that have been better managed.

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Michigan

haymarket said:

Michigan

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A 64% funded status is not "rock solid," as you characterized it. Just because you see a check arrive every month is no evidence of the plan's financial condition. Michigan is in the bottom half of state pensions by financial condition, which is bad company.

Neomalthusian said:

A 64% funded status is not "rock solid," as you characterized it. Just because you see a check arrive every month is no evidence of the plan's financial condition. Michigan is in the bottom half of state pensions by financial condition, which is bad company.

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Why don't you let me worry about my Michigan pension?

From my experience with it, and my time working for the Michigan Legislature where I studied it, and from the annual reports I receive about it, and the fact that it is backed by the State itself, I am comfortable in saying it is rock solid.

haymarket said:

Why don't you let me worry about my Michigan pension?

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Because you evidently can't tell the difference between a "rock solid" pension and one that is seriously underfunded.

haymarket said:

Score update:
Windmill 23
Conservative 0

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Really? Your I don't care comment says it all, nothing but trying to get points for the failed ideology you support. Windmill? Sorry that facts always get in the way of your partisanship

Conservative said:

Of course you don't as the purpose of a particular tax is irrelevant to you as all dollars are the same.

You believe people would have supported the payroll tax if they were told it would be used in the general fund for federal operating expenses?

Continue to support bureaucrats ignoring particular taxes and their purpose to fund whatever they want knowing they would get your support for higher taxes to cover their misuse of SS funds

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I, like most working Americans who will receive Social Security, only care that I pay money in and receive due benefit when I retire. Where the government keeps the money is irrelevant.

But what do Republicans want to do? They gave a huge deficit producing tax cut to the rich and want to now address the deficit by cutting entitlements. In other words, we pay into entitlement programs and then get smaller benefits because of the tax cuts for the rich — exactly what liberals said they would do.

MTAtech said:

I, like most working Americans who will receive Social Security, only care that I pay money in and receive due benefit when I retire. Where the government keeps the money is irrelevant.

But what do Republicans want to do? They gave a huge deficit producing tax cut to the rich and want to now address the deficit by cutting entitlements. In other words, we pay into entitlement programs and then get smaller benefits because of the tax cuts for the rich — exactly what liberals said they would do.

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Right you truly don't care about the unfunded liability or the fact that your payroll taxes were used to fund the daily operating expenses of the U.S. such as the Vietnam War as long as you get yours!

Republicans aren't much better than Democrats which is why I supported Trump HOWEVER allowing people to keep more of what they earn has boosted charitable giving to record levels and allowed people to need less of that so called "liberal help" you people promote.

Tax cuts to the rich haven't cut SS and Medicare benefits as you have no proven with data that to be the case since FIT revenue continues to grow so how does growing revenue cause deficits? when was the last time entitlements were cut because of revenue issues and when was the last time a FIT cut led to cuts in FIT revenue? Post the Treasury data supporting your claim or apologize for being wrong

Neomalthusian said:

Because you evidently can't tell the difference between a "rock solid" pension and one that is seriously underfunded.

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Because I have not swallowed the right wing propaganda to turn people against pensions? The State backs my pension. The State would have to go belly up to renege on it.

That, in my estimation, makes it rock solid.

Conservative said:

Really? Your I don't care comment says it all, nothing but trying to get points for the failed ideology you support. Windmill? Sorry that facts always get in the way of your partisanship

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make that 24 to 0.

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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Just one quick point for now: FICA is a "middle income" tax; current the max salary is around $125,000, or somewhere near the top 5% of all incomes. Second given employment numbers I'd say current system hardly "discourages labor or entrepreneurship".

haymarket said:

make that 24 to 0.

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Love being here to make you look foolish. Think you are ever going to change someone else's mind with the attitude "I don't care" when it comes to the purposes of taxes and the abuse of tax dollars?

phattonez said:

No, keep the cap as it is. Social Security should not be paying for a luxurious lifestyle.

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It's not. Any retiree living a "luxurious lifestyle" is doing so by having smartly used his wages to invest prudently.

Conservative said:

Love being here to make you look foolish. Think you are ever going to change someone else's mind with the attitude "I don't care" when it comes to the purposes of taxes and the abuse of tax dollars?

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just in: 25 to 0 in favor of the Windmills!!!!! GO TEAM!!!!!!

Crystal said:

Be honest! You would like to tax the rich until they are no longer rich!

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I've had several conversations with phattonez. He seems to think only wages earned by physical labor creating physical objects is legitimate. Using any of those wages to invest in order to improve your life is wrong. Don't even think of buying property to rent - that's like a cardinal sin.

Lutherf said:

None of what I suggested would stifle ingenuity. It would just change the focus of ingenuity from producing things to avoiding taxes.

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I think the focus is already on production. You have to incur a tax, e.g. by producing something, before you have to worry about avoiding tax.

haymarket said:

just in: 25 to 0 in favor of the Windmills!!!!! GO TEAM!!!!!!

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Keep posting and showing that you don't really care about your tax dollars being wasted, diverted, and misused because after all the federal govt. is the answer to protecting you from your own mistakes and poor choices

Conservative said:

Keep posting and showing that you don't really care about your tax dollars being wasted, diverted, and misused because after all the federal govt. is the answer to protecting you from your own mistakes and poor choices

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I am very happy to have my tax dollars used to pay Social Security benefits.

I have made no mistakes and made no bad choices.

Other than engaging with you and some others here from time to time.

haymarket said:

I am very happy to have my tax dollars used to pay Social Security benefits.

I have made no mistakes and made no bad choices.

Other than engaging with you and some others here from time to time.

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I am sure you would the problem is your tax dollars were not used to fund SS and Medicare but rather to pay for the Vietnam War and other Daily operating expenses supposedly paid by Federal Income taxes. I would have thought a former civics teacher would have understood the taxes being paid and their purpose along with the budget items in the U.S. Budget, apparently not

WarmPotato said:

Communism is not the answer

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Or is that Socialism. These days, they are blending real well with the left.

haymarket said:

Because I have not swallowed the right wing propaganda to turn people against pensions?

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Don't be ridiculous. The valuation of the unfunded liabilities on the books of states and their political subdivisions related to pensions is a GASB accounting standard, not "right wing propaganda."

The State backs my pension. The State would have to go belly up to renege on it. That, in my estimation, makes it rock solid.

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You reveal how little you've thought about the actual finance involved in these things. Just acknowledging what the unfunded net pension and OPEB liabilities literally mean (as required by GASB 68 and 75, respectively), we should be able to understand the gravity of this problem. And this problem assumes rates of return that are not supported by observed long-term actual rates of return. So even when we fudge the assumed ROR with irresponsibly optimistic hopes for ongoing stock market returns, we still have this scenario in which a dozen states or more have a pension forecast that is bleak as hell.

"The State backs it, therefore it's rock solid!" is an absolutely hilarious knee-slapper of a comment, it would be funny to see the reaction if you were to say it at the podium of a GFOA conference.

The fact that law does not provide states a means to declare bankruptcy does not mean states can't destroy themselves economically by being forced to crush their tax base to meet their debt service (pensions are a form of debt service, as pension liabilities are LTD). Short of vast pension law reforms, Kentucky and Illinois, for example, will have to significantly increase the cost to taxpayers for their pensions in the near-term, while Wisconsin and South Dakota will not. This dials up the incentive for people and companies with money (from whom those governments will have to try to extract revenue) to flee those states. An exodus from a state that is desperately having to raise taxes to meet its debt service obligations exponentially magnifies the problem. It's a death spiral. It can happen to any government that 1) can issue long-term debt but 2) cannot print its own fiat currency.

It would be one thing if all states had a pension funded ratio of (x)%, because then we'd all be in the same boat. It would still be extremely difficult to develop an agreeable solution about what to do about it, but at least there would not be the potential for entire states to circle the drain.