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Social Security Fix

Your Identity and For/Against this SS Reform model


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What's at issue is the personhood of corporations and the definition of "speech." If corporations are "people too," then it follows that they pay taxes just like anyone else, and that they can contribute "speech" in the form of money, to political causes.

If the corporation "people" aren't paying taxes, then they shouldn't be able to use "speech," which really means dollars, to influence politics.

1. Corporations are indeed people, and, even if we got rid of corporate taxes, they would still be paying taxes, through capital gains.

2. Please show me where in the Constitution it states that you lose your inalienable human rights if you don't pay taxes to the Federal Government. Do my children have no rights? Did people who lived before direct taxation was authorized by the 16th Amendment have no rights?

This strikes me as a populist sentiment, but not a well-thought out principle.

The real people, whether they are owners of corporations or not, are free to give all of the "speech" money to political causes that they want.

Indeed. And if they want to do that as a group, they are free to do that as well.

The speech you see in newspapers and magazines is the other sort, the kind made up of words rather than dollars.

Au contraire, it takes dollars to print those newspapers and magazines - and, more to your point those are corporations engaging in political speech.

Ditto for Greenpeace, the United Auto Workers, and the Veterans Advocacy Group of America. All of them, engaging in political speech. All of them doing so corporately.

As it stands right now, corporations don't pay taxes on the money they pay out in dividends to shareholders. That is not net profit that is taxed. They don't pay taxes on capital improvements, as that is part of their expenses and therefore not part of the profits. That's why raising or lowering the taxes on corporations themselves doesn't affect them very much.

Now, when one of the corporate owners gets capital gains income, it is taxed at a different rate than when one of the employees of said corporation gets a paycheck. The money paid out by said corporation in salaries or dividends is not a part of its profit, and is not taxed. Therefore, the money is not taxed twice.

Now, those state taxes you gloat about do represent money that is taxed twice, thanks to Trump and his tax reform. I pay taxes to the federal government, then pay taxes to the State of California on the whole amount, including what Uncle Sam has already taken. You seem to think that's all well and good, and my just desserts for living in a "liberal" state.

Or, maybe I've misinterpreted your stance on the matter of double taxation.

I don't think I've said anything about California, or, in fact, any "liberal" state in this entire thread, so, you may be conflating me with someone else. My argument is:

When I make money with my business and it is taxed both when I make it and when I shift it to my personal account, that money has been taxed twice.

If we want tax parity between that kind of income and employment-based-income, then we should tax them each only once, but at the same rate, OR

Tax the former twice, but at the same cumulative rate (which is more complex and troublesome, and, I think, therefore less desireable).
 
1. Corporations are indeed people, and, even if we got rid of corporate taxes, they would still be paying taxes, through capital gains.

2. Please show me where in the Constitution it states that you lose your inalienable human rights if you don't pay taxes to the Federal Government. Do my children have no rights? Did people who lived before direct taxation was authorized by the 16th Amendment have no rights?

This strikes me as a populist sentiment, but not a well-thought out principle.



Indeed. And if they want to do that as a group, they are free to do that as well.



Au contraire, it takes dollars to print those newspapers and magazines - and, more to your point those are corporations engaging in political speech.

Ditto for Greenpeace, the United Auto Workers, and the Veterans Advocacy Group of America. All of them, engaging in political speech. All of them doing so corporately.



I don't think I've said anything about California, or, in fact, any "liberal" state in this entire thread, so, you may be conflating me with someone else. My argument is:

When I make money with my business and it is taxed both when I make it and when I shift it to my personal account, that money has been taxed twice.

If we want tax parity between that kind of income and employment-based-income, then we should tax them each only once, but at the same rate, OR

Tax the former twice, but at the same cumulative rate (which is more complex and troublesome, and, I think, therefore less desireable).

As it stands right now, all of the entities you mention are able to engage in political "speech," meaning dollars, not words. Now, back to the original idea, which was that all income, regardless of source, should be taxed the same. Your argument is that money from corporations should not be taxed the same way as it has already been taxed once, correct?

But, corporations pay taxes on profits, after the money that they pay out for wages and dividends.

You've made a good argument that they should continue to be able to engage in "speech," but not that the money they pay in salaries should be taxed at a higher rate than what is paid as capital gains. That is money that is paid to corporate shareholders based on increased value of goods, and not all of it comes from any corporation. If I buy a house, for example, for $100,000, and then sell it later for $200,000, I've earned a capital gain of $100,000. If I earn $100,000 by working, then I've earned the same, but I don't pay the same taxes on that amount of money.

If we're going to have a fair tax system, then all income should be taxed at the same rate, don't you agree?
 
Alright so if we go back and look at annualized returns for a 18-65 year old working life for the entire US post-war experience and average up each cohort, your return comes out to 6.9855%

Using that return for Ole Joe of our OP fame, let's run the numbers:

With an annual 2% raise (which is roughly what current SS figures assume), Ole Joe's monthly benefit is $4,800. Roughly 4 times the current average monthly benefit from Social (in)Security, which, as a fairly standard worker, Standard Income Joe would get from the old system.

With an annual 0.5% raise (1/4th of what current SS figures assume) and two years of labor lost, Ole Joe's monthly benefit is $3,385. Or, roughly 3 times what the current average monthly benefit, which itself is higher than Low Income Joe's (Joe's maximum income is under $32,000 a year) benefit would have been.

With low annual raise of half a percent and two years of working lost, Low Income Joe faces a 40% utter market crash the year he retires and he foolishly makes the worst decision possible withdraws it all at the trough. Low Income Joe's benefit is still a little over twice what he would have gotten from Social (in)Security.

The lowest cohort was the 1962-2009 cohort, which saw an inflation adjusted annualized return of 4.92. Had Joe been in that cohort, his numbers would have been $2,654, $1,850, and $1,110 respectively.

In other words, you have to pick the lowest scoring cohort since WWII, keep Ole Joe under $32,000 for his entire working life, which features two years of unemployment, and then produce two back to back 2008-style market crashes just to produce enough economic damage for Low Income Joe's monthly benefit to match what Standard Income Joe would have seen from traditional Social Security.



The System Works. There is good reason why part of Chile's program is that if your private account ever drops low enough that it would not have made up for the loss of the public benefit the government covers the difference... and the government has yet to pay out a single peso.
Would you mind showing your sources for information? That might help engagement. Its been quite a few years since i went to college for economics :).
 
A lot to sort through here but what do you mean by the price for opting out will mean they still pay for others? In what way?
 
Would you mind showing your sources for information? That might help engagement. Its been quite a few years since i went to college for economics :).

Absolutely - historical inflation-adjusted returns from here. I used the Social Security website to take a look at anticipated returns, and a variety of sources that all generally pointed towards the same "average SS check". Numbers in the thread are from a few years ago, back before Mango Man decided to wreck willingness on the Right to engage in this sort of thing :(
 
A lot to sort through here but what do you mean by the price for opting out will mean they still pay for others? In what way?

I'd have to have you point me towards the discussion of "opting out".

Here, however, I split the FICA taxes, with a portion continuing to help cover current costs (along with a CRAP ton of short-term debt which was then paid back by the funds generated from the investments), and a portion going into the personal accounts. That may have been it.
 
Would you mind showing your sources for information? That might help engagement. Its been quite a few years since i went to college for economics :).
good post with a lot of linked sources here, that also goes through the costs of transition.
 
My points of agreement: If I were building a new retirement safety net program from scratch, and SS didn't already exist, it would look similar to this. Basically a forced-savings program that the worker can invest without the government touching their money. I'd probably limit the investments to stock/bond index funds so that the investor didn't do stupid things with their nest egg, like day-trading or investing it all in ape NFTs.

Also there would still need to be a safety net for people who are poor (regardless of age) though. Otherwise poverty among the elderly would increase.

My main point of disagreement: In a world where social security is already well-established...I think this is solving a problem that doesn't exist. I'm aware of the projections about social security's solvency, but this is wrong for a few reasons:

1) People assume that once the program is in the red it will only get worse, forever. When in reality we just have a demographic bottleneck because the baby boomers were a large generation. It will be solvent again after that generation is no longer with us. 2) Insolvency projections assume no major demographic changes. I propose we allow large numbers of young, highly-skilled immigrants come to the United States to balance our demographic pyramid as well as solve lots of other problems. 3) There isn't really any impetus to make huge changes to SS...it works well enough as-is.
 
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On the public ownership part, you can own an account which you withdraw from at a bank without necessarily buying anything. Social security’s goal is stability and guarantees, not necessarily investing and taking risks.
 
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