Should We Redesign Payroll Taxes?

[rickc]

Get rid of payroll taxes. Get rid of tax brackets. Get rid of all of the special loopholes, credits, and deductions. Get rid of all special treatment for various forms of income.

Replace the whole mess with flat-rate tax on all sources of income, with a single cost-of-living deduction.

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.

 

[Conservative]

Based on the way we do business today and the way we have done business for the last century and without any major changes, in what year will we NOT have enough money to pay promised SS benefits to those who have earned them? You cannot answer and you won't answer because you are not intellectually honest.

Every time I get in these exchanges with you I eventually remember how you quickly you get personal and petty and outright pissy you get making personal remarks about me and things you have not the slightest idea what your ass is talking about. Glad it came early in this exchange.

Its your stage. Enjoy your solo act.

Exactly why the left cannot be trusted, establish a tax for a specific function, use the money for something else, then go back to the taxpayers asking for more. My getting personal points out that you divert from the thread topic and never answer direct questions. There is no justification for putting SS and Medicare ON BUDGET and using the funds for something other than intended. That isn't the way it was establish but like most from the left you have no problem trying to justify it then supporting higher taxes for this abuse of tax dollars.

Why would anyone support higher taxes after finding out how the payroll taxes have been used? The way we do business? OMG, you can justify anything in your own mind

 

[haymarket]

Exactly why the left cannot be trusted, establish a tax for a specific function, use the money for something else, then go back to the taxpayers asking for more. My getting personal points out that you divert from the thread topic and never answer direct questions. There is no justification for putting SS and Medicare ON BUDGET and using the funds for something other than intended. That isn't the way it was establish but like most from the left you have no problem trying to justify it then supporting higher taxes for this abuse of tax dollars.

Why would anyone support higher taxes after finding out how the payroll taxes have been used? The way we do business? OMG, you can justify anything in your own mind

You are trying to create a trap for the American people and they will not fall for it. The issue of comingling revenues has long long been decided. You are akin to Don Quixote tilting at windmills with your obsession. SS is here to stay and its not going to be reduced.

Get used to it.

We do NOT have to raise taxes one red cent on the 94% of workers who are already taxed on 100% of their income for FICA. Just extend that to the 6% that do not and your problem is largely solved.

 

[Conservative]

You are trying to create a trap for the American people and they will not fall for it. The issue of comingling revenues has long long been decided. You are akin to Don Quixote tilting at windmills with your obsession. SS is here to stay and its not going to be reduced.

Get used to it.

We do NOT have to raise taxes one red cent on the 94% of workers who are already taxed on 100% of their income for FICA. Just extend that to the 6% that do not and your problem is largely solved.

So because it was done that makes it right? You lost this debate just like you lose almost every other debate as logic and common sense don't resonate in your world. There is no justification for co mingling SS and Medicare funds and using that money to fund the operating expenses of the United States. You would never get away with it nor should the bureaucrats.

As usual it is all about raising taxes and raising them on 6% of the population is still a raise and that still doesn't answer the question as to why the funds were comingled in the first place and why you support it?

 

[haymarket]

So because it was done that makes it right?

It makes it the reality we live in.

My solution would NOT raise taxes for the 94% of workers who are already paying FICA tax on 100% other incomes. The only people impacted would be the upper 6% who have NOT paid the FICA tax on 100% of their incomes as the overwhelmitng majority of people do.

 

[jonny5]

I have no problem with the rich having more money (assuming that they worked for it and it's not just unearned income). What I have a problem with is a regressive tax, which is exactly what payroll taxes become at upper income levels.

Its a flat tax, not regressive. Each person pays the same tax rate on each eligible dollar.

 

[Conservative]

It makes it the reality we live in.

My solution would NOT raise taxes for the 94% of workers who are already paying FICA tax on 100% other incomes. The only people impacted would be the upper 6% who have NOT paid the FICA tax on 100% of their incomes as the overwhelmitng majority of people do.

Your solution continues to ignore the problem which is over spending on social programs and using designated SS and Medicare funds for the general fund and to buy votes.

Condoning the use of Payroll taxes to fund things that Income taxes should fund shows the hypocrisy of the left and the reality that there never will be enough money to fund the liberal spending appetite. Raising taxes on 6% of the population is indeed raising taxes. Can you prove that had the Federal Govt. not used the SS and Medicare funds to pay for operating expenses that there wouldn't be enough money to fund the SS obligations without raising taxes on those 6%?

 

[Neomalthusian]

It makes it the reality we live in.

My solution would NOT raise taxes for the 94% of workers who are already paying FICA tax on 100% other incomes. The only people impacted would be the upper 6% who have NOT paid the FICA tax on 100% of their incomes as the overwhelmitng majority of people do.

Would you increase benefits to these high earners too, the way the program currently works? Or would you increase their taxes without increasing benefits? Because the latter would constitute a significant reform.

 

[haymarket]

Your solution continues to ignore the problem which is over spending on social programs and using designated SS and Medicare funds for the general fund and to buy votes.

Condoning the use of Payroll taxes to fund things that Income taxes should fund shows the hypocrisy of the left and the reality that there never will be enough money to fund the liberal spending appetite. Raising taxes on 6% of the population is indeed raising taxes. Can you prove that had the Federal Govt. not used the SS and Medicare funds to pay for operating expenses that there wouldn't be enough money to fund the SS obligations without raising taxes on those 6%?

You are like Don Quixote tilting at windmills. This issue was decided decades ago.

I have no idea what you are asking me to "prove". Feel free to present any information you want to. This is NOT my obsession - it is yours. I deal with the reality of today while you seem mired in the past and what should have been done or could have been done.

 

[haymarket]

Would you increase benefits to these high earners too, the way the program currently works? Or would you increase their taxes without increasing benefits? Because the latter would constitute a significant reform.

NO. I would freeze the benefit levels where they are today plus a modest inflation allowance if the budget can afford it.

 

[Conservative]

You are like Don Quixote tilting at windmills. This issue was decided decades ago.

I have no idea what you are asking me to "prove". Feel free to present any information you want to. This is NOT my obsession - it is yours. I deal with the reality of today while you seem mired in the past and what should have been done or could have been done.

No the issue hasn't been decided as you failed to answer the question, do you support having SS and Medicare funds being spent on budget to fund the daily operating expenses of the Federal Govt. and then when not having enough money asking for more?

 

[Neomalthusian]

NO. I would freeze the benefit levels where they are today plus a modest inflation allowance if the budget can afford it.

That’s a pretty significant reform, rather than a simple tweak. Pension-style programs (which was how SS was designed) typically make benefits directly proportional to contributions, i.e., you pull more out if you put more in. The idea to freeze benefit levels is almost as significant as the idea to raise contributions, because it shifts the program a little more toward means-based/needs-based, rather than its original design.

The fact that you recommend this should signal recognition that the original design as a pension isn’t working well. Pensions in general don’t work well.

 

[Conservative]

You are like Don Quixote tilting at windmills. This issue was decided decades ago.

I have no idea what you are asking me to "prove". Feel free to present any information you want to. This is NOT my obsession - it is yours. I deal with the reality of today while you seem mired in the past and what should have been done or could have been done.

So you think that our Congress Critters are keeping their responsibility to fund Social Security and Medicare to recipients by using the recipients contribution to fund the daily operating expenses of the federal government? Why on Earth would you support giving them more money when they wasted or defrauded the taxpayer as it is

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[MTAtech]

So you think that our Congress Critters are keeping their responsibility to fund Social Security and Medicare to recipients by using the recipients contribution to fund the daily operating expenses of the federal government? Why on Earth would you support giving them more money when they wasted or defrauded the taxpayer as it is

Social Security revenue is a government inflow. Social Security payments are government outflows. The money borrowed from the Social Security fund is a government obligation. I really don't see the problem here.

For conservatives that crave revenue starving tax-cuts while pretending to be committed to principles abandoned the moment they become inconvenient -- like deficits, you should be in favor of this action.

 

[Conservative]

Social Security revenue is a government inflow. Social Security payments are government outflows. The money borrowed from the Social Security fund is a government obligation. I really don't see the problem here.

For conservatives that crave revenue starving tax-cuts while pretending to be committed to principles abandoned the moment they become inconvenient -- like deficits, you should be in favor of this action.

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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[phattonez]

Yep, that tiny minority has the vast majority electing those that they allow us to choose among. That, not some funding details of a social program, is what needs changing.

And how do we go about changing that?

 

[phattonez]

:shrug: I would say it depends on the individual. Regardless, merely taxing capital gains is not "treating all income equally". It is simply "deciding to increase taxes on certain kinds of income".

And why don't we treat capital gains like wages? Why should that get special treatment?

This side of Christ, there is no such thing. There are more and less likely returns of varying degrees, but pensions are hardly guaranteed, and, inasmuch as the structure represents promises on the part of others to pay tomorrow, if anything, they seem systematically less likely than the self-directed accounts to prove reliable. A self-directed account might get you an inflation-adjusted 5% or 6% or 7% over the long-haul, but regardless of the return, it's yours. A pension is under the control of others, and we are in the middle of realizing what a terrible structure that can be. Localities, States, Companies, all of them, massive underfunded pensions, and it's going to be the pensioners who have to take the hit. A pension isn't taking a small but guaranteed return, it's just putting your trust in the pension-holder to take care of you. It's worth noting that, in comparison to the Social Security program - while nothing is guaranteed - the very strong likelihood is that you will get much higher returns on an individually directed account than from SS (laid out in the link).

I understand, but would we really want an entire generation to live a destitute retirement because of a bad stock market downturn?

 

[phattonez]

Its a flat tax, not regressive. Each person pays the same tax rate on each eligible dollar.

A flat tax means everyone pays the same percentage. Everyone paying the same amount means it's regressive because the rich pay lower rates than the poor.

 

[ttwtt78640]

And how do we go about changing that?

I have no idea because it requires different congress critters to make different campaign/election laws. The best way would be to keep as much government power at the state and local level as possible yet congress is busy doing exactly the opposite.

 

[cpwill]

And why don't we treat capital gains like wages? Why should that get special treatment?

Why don't we treat parental provision of cars and college funding like wages, or scholarships like wages, or student discounts like wages? Why should that get special treatment?


The implication, of course, being that these things should be taxed like income, but are being "treated special" by somehow being exempted from governmental taking - assuming that governmental taking rightfully extends to all items, and that which it takes less of is therefore carved out exceptions.

I understand, but would we really want an entire generation to live a destitute retirement because of a bad stock market downturn?

Nope. Which is why, if you'll go wander through the thread I linked to, you'll note that:

A) I wanted to see if this was plausible, and so I ran the numbers for what-if-we-had-tried-this-in-a-downturn. I had to take the worst-performing post-WWII cohort, keep the worker under $32,000 of income his entire working life, give him two full years of unemployment, and have him retire immediately after back to back 2008-2009-style market meltdowns.... just to get the low income worker down to a return that matched the average worker's social security check.

B) The plan includes a guaranteed minimum monthly benefit of what one would have received from Social Security (a flattened benefit, with lower income folks getting a bit more and upper income folks getting a bit less), meaning that individuals had a floor they could not fall below, protecting them from precisely the worry you outline, and which was more than paid for by revenues generated by taxing the accounts at 50% upon transitioning to the heirs.

 

[WarmPotato]

We need to fix social security.

 

[haymarket]

No the issue hasn't been decided as you failed to answer the question, do you support having SS and Medicare funds being spent on budget to fund the daily operating expenses of the Federal Govt. and then when not having enough money asking for more?

I think you missed the windmill on the next lane over. Its still going round and round and is just crying out for you on your valiant charger.

 

[haymarket]

That’s a pretty significant reform, rather than a simple tweak. Pension-style programs (which was how SS was designed) typically make benefits directly proportional to contributions, i.e., you pull more out if you put more in. The idea to freeze benefit levels is almost as significant as the idea to raise contributions, because it shifts the program a little more toward means-based/needs-based, rather than its original design.

The fact that you recommend this should signal recognition that the original design as a pension isn’t working well. Pensions in general don’t work well.

To the contrary - the original program and its revisions over the years works very well.... but occasional tweaks and improvements are necessary to make it even better.

 

[haymarket]

So you think that our Congress Critters are keeping their responsibility to fund Social Security and Medicare to recipients by using the recipients contribution to fund the daily operating expenses of the federal government? Why on Earth would you support giving them more money when they wasted or defrauded the taxpayer as it is

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The checks are printed and the checks are distributed and the checks cash at the bank and the retirees enjoy the benefits promised to them. That is a grand slam home run for the American people.

 

[Neomalthusian]

To the contrary - the original program and its revisions over the years works very well.... but occasional tweaks and improvements are necessary to make it even better.

What you're describing (increasing taxes and freezing benefits) is not a "tweak" or a "tune-up," it's a fundamental conversion of the program into a means- and needs-based income security program instead of a pension-style program. If it's necessary to make the program less of a pension-style program, it means the pension-nature of the program does not "work very well."

Look at states whose public pensions are in horrible funded status that have as a result eliminated defined benefits and created new tiers that are defined-contribution for all future participants. Pensions worked horribly there, hence they are being phased out altogether. That's not a "tweak" to keep pensions "working well," it's an acknowledgement that pensions didn't work at all and cannot work and therefore need to be replaced with something that isn't a pension.