Should We Redesign Payroll Taxes?

[Lord of Planar]

Past studies show otherwise.

Does it matter? It still doesn't solve any problems and might make it worse. Some rich will decide to pack up and be taxed in a different country. Many already have. Those who do, will contribute far less to our economy. Lowering their taxes bring wealth back here. The question becomes which is greater. The gains or losses of rich tax payers who return, or leave based on taxes vs. the total of who remains?

 

[Lord of Planar]

I don't care.

We see. You are just being spiteful of the rich.

 

[Lord of Planar]

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

And who put them in that situation?

 

[Lord of Planar]

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.

Not for the citizens who have to cough up more money in the future, to pay someone who obviously believes in sucking the government teat.

 

[phattonez]

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".

Where do you think that the income of the highest income earners comes from? It's mostly investments.

 

[phattonez]

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

I didn't say that it currently was. I'm saying that I don't want my proposal to be interpreted that way.

 

[phattonez]

And who put them in that situation?

The same businesses that have agitated for decades now for open borders and free trade.

 

[haymarket]

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."



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.

Get a grip - the state of Michigan is not going belly up.

 

[haymarket]

Does it matter? It still doesn't solve any problems and might make it worse. Some rich will decide to pack up and be taxed in a different country. Many already have. Those who do, will contribute far less to our economy. Lowering their taxes bring wealth back here. The question becomes which is greater. The gains or losses of rich tax payers who return, or leave based on taxes vs. the total of who remains?

The rich have far far too long held the threat of their bailing on the rest of us at our throats. Let them put up or shut up.

 

[haymarket]

We see. You are just being spiteful of the rich.

Not at all - I simply want them to participate the way the other 94% does.

 

[haymarket]

Not for the citizens who have to cough up more money in the future, to pay someone who obviously believes in sucking the government teat.

A pension is something a person has earned through their own hard work for decades.

 

[JustHanging]

Why confine the proposed changes to the “payroll” taxes. The entire program needs work; wasn’t Trump going to make the tax form fit on a 3x5” card?

Right after he built the steel and concrete wall that was 50', no wait 60', Mexico said "NO" again...70' high wall.

The only things Trump has gotten done are the things that are making him and his buddies rich.

Trump will personally save up to $15m under tax bill, analysis finds


Personally, I'm for scrapping most of the income taxes, and instead tax consumption. The more you consume, the more you contribute through taxation.

 

[Neomalthusian]

Get a grip - the state of Michigan is not going belly up.

Very elementary response to what I said. Your head is in the sand.

 

[haymarket]

Very elementary response to what I said. Your head is in the sand.

Actually it is the most important and most relevant fact about my pension.

 

[Neomalthusian]

A pension is something a person has earned through their own hard work for decades.

It's also something that has the potential to effectively bankrupt the entity attempting to administer it. That will always be prone to happening when you allow yourself to pay for things you want now using very-long-term debt that you attempt to finance based on unrealistic assumptions of investment returns. It's a formula for abject disaster. "The employee earned it though!" doesn't magically turn it into something that isn't a disaster.

 

[Lord of Planar]

The same businesses that have agitated for decades now for open borders and free trade.

No, in the economy now, almost all who are in that position, have nobody but their own life decisions to blame. The few exceptions are why we have safety nets. I believe one thing they likely have on common is laziness. The illegal immigrant isn't. We don't have a labor shortage for jobs. We don't need illegals. The problem is, our people think they are too good for small wages. Illegal immigrants are here and are willing to do cheaper work than our own. The businesses are trying to stay alive. Taxes and cheap imports are crippling them. If they go, so no jobs. They have little choice but to cheat, so they can compete with foreign products.

You can thank president Clinton for all our lost jobs to other nations.

 

[Neomalthusian]

Actually it is the most important and most relevant fact about my pension.

It's not important at all, and doesn't remotely refute any of the overall comments I've made about state pensions. The fact that you are centering the entire pension subject around just Michigan because you live there, and your personal expectation of your MERS check until you die, just reveals how myopic and in denial you are about this subject.

Most states are plugging in blatantly unrealistic expectations of investment returns as it is (which by itself shouldn't be legal based on their actual asset allocations and historical performance), and even when they do that, the funded ratio of these plans, i.e. the net unfunded liability to pay promised benefits, is still bleak in at least a dozen states. We're knowingly fudging the numbers, and yet the results are still crap. And in a few states the situation is basically unsolvable and irrecoverable. There is no answer to that. Saying "I personally will likely be dead before the state goes belly up, so I don't care" does not demonstrate anything positive about pensions as good long-term compensation tools. They're not functional. It cannot be said that they're functional, given the unfunded liability in at least a quarter of the states.

 

[haymarket]

It's also something that has the potential to effectively bankrupt the entity attempting to administer it. That will always be prone to happening when you allow yourself to pay for things you want now using very-long-term debt that you attempt to finance based on unrealistic assumptions of investment returns. It's a formula for abject disaster. "The employee earned it though!" doesn't magically turn it into something that isn't a disaster.

I see nothing that would cause this disaster you hold as a looming threat.

I guess it simply comes down to me being more of a fiscal conservative that you are. My father started out as a simple tool and die maker who worked up to being an engineer. He ingrained in me a very simple rule about your money: don't take on new expenses until you have paid for the ones you have already incurred.

I have treated that as a law in my financial life and apply it to others as well. Pensions fit this perfectly.

 

[haymarket]

It's not important at all, and doesn't remotely refute any of the overall comments I've made about state pensions. The fact that you are centering the entire pension subject around just Michigan because you live there, and your personal expectation of your MERS check until you die, just reveals how myopic and in denial you are about this subject.

Most states are plugging in blatantly unrealistic expectations of investment returns as it is (which by itself shouldn't be legal based on their actual asset allocations and historical performance), and even when they do that, the funded ratio of these plans, i.e. the net unfunded liability to pay promised benefits, is still bleak in at least a dozen states. We're knowingly fudging the numbers, and yet the results are still crap. And in a few states the situation is basically unsolvable and irrecoverable. There is no answer to that. Saying "I personally will likely be dead before the state goes belly up, so I don't care" does not demonstrate anything positive about pensions as good long-term compensation tools. They're not functional. It cannot be said that they're functional, given the unfunded liability in at least a quarter of the states.

Any shortfall the state pension funds incur over time can be made up by other state revenues.

 

[Lord of Planar]

The rich have far far too long held the threat of their bailing on the rest of us at our throats. Let them put up or shut up.

Many have, but moving the taxing countries of assets. I don't think you realize just how global the rich can be, and benefit from globalism. It's first world nations that their middle class suffers.

Lets say they own significant shares of stock in a corporation, of which they get dividend income from. The shareholders of this stock move to relocate it's corporate headquarters. Their corporate incomes are now from other countries, and taxed by their laws.

Some, just move residency as well.

 

[Lord of Planar]

It's people like president Clinton, that in law and treaties, gave their elitists friends that choice.

 

[Lord of Planar]

Not at all - I simply want them to participate the way the other 94% does.

They already do. You ask for more from them out of ignorance or spite.

 

[Lord of Planar]

A pension is something a person has earned through their own hard work for decades.

Yes, it is, and a pension is based on they they contributed. It isn't based on what others contributed too. If you are going to eliminate the maximum payments in, then you may as well eliminate the maximum payments to the rich. If you truly believe it's like a pension system, then expect the payouts to be like a pension system too.

 

[Lord of Planar]

Right after he built the steel and concrete wall that was 50', no wait 60', Mexico said "NO" again...70' high wall.

The only things Trump has gotten done are the things that are making him and his buddies rich.

Trump will personally save up to $15m under tax bill, analysis finds


Personally, I'm for scrapping most of the income taxes, and instead tax consumption. The more you consume, the more you contribute through taxation.

Do you think $15 million is significant to him? That is probably no more significant than me gaining $15 for the five year period.

 

[Bullseye]

Where do you think that the income of the highest income earners comes from? It's mostly investments.

Looks to me that Labor is the largest number for quintiles and percentages.