How SS Taxes Subsidize the Rich

Discussion in 'Politics' started by pal_of_poor, Sep 14, 2009.

  1. pal_of_poor
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    pal_of_poor VIP Member

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    First, realize that the wealthy, especially investors are able to save money, since they make more than they have to spend. They are usually allowed to defer taxes, sometimes for decades, before cashing in on stock. The capital gains tax is only 15 percent now, no matter how much they make in profit each year. Also, it isn’t paid until the profit is realized. So unlike regular tax-paying, hard-working Americans, who pay taxes on their CD’s, or other interest bearing accounts, or their labor each year, they are allowed to defer their taxes, and are allowed to profit from the deferring of taxes, by a sweet little thing called compounding. They also get a lot of different ways to shelter, and defer paying taxes in other ways, but that isn’t the point of this post.

    In 1984, working Americans were subject to an increase in their Social Security Insurance taxes. I believe it was Monahan that said it was the biggest rip-off of America’s poor ever, but that is the point. We had reached a place where, after taxpayers paying too much for a long time, and that money dropping into the general fund to be used for the Vietnam War and other general budget things, even though it was collected from employers and employees specifically for the purpose of paying out SS claims. Once again, in 1984, the status of collecting more than we needed was implemented, and once again, for the 25 years that have ensued since, we pay more than we pay out in SS.

    In fact, from 1984-2002 the government collected $1.7 Trillion more in Social Security taxes, than it paid out to retirees, widows, for disability, and orphans. If these investors had collected that income, that overage, it would have doubled the amount in all 401K funds. That amount would have paid off all consumer debt accrued at the end of 2001. It is an average of $16,000 that each family did not have to spend on home-improvements, personal debt, or perhaps to open up a small savings account, and enjoy some of the same benefits are the rich, who were given some of this money in recent tax-cuts. When the time comes, that we are once again, paying more than we collect, will all of this money, surely well above 2 Trillion now, perhaps approaching 3 Trillion, in 2009, be paid back to the Social Security fund first, before once again, levying this regressive tax, only on the poorest people in the land? I don’t think so, but it should be, certainly, the first thing we do before we ever raise taxes again.

    Also, there is the fairly well-known fact that we only collect these funds on income below a cap. The cap was $87,000 in 2003and now it is $106,800, so anyone who earns more than this total, stops paying this regressive tax on any dollar they are paid above the total. This means, of course, that while the employer and employee each pay 6.2 cents per dollar earned, on all income below that level, as employers it was felt should be required to help secure at least some minimal retirement for their employers, all dollars above the level have no taxes levied. Most economists regard the portion paid by employers as compensation to workers, as being paid for by workers. Another, about 1.3 percent is collected for Medicare and Medicaid, which has had the cap removed and is one of the few things Bill Clinton did that was actually something one would expect a democrat to do. Keep in mind, the overage has been used in recent years to give tax cuts to some of the richest people in the land, already spared from paying the full percentage in taxes on their salaries.

    A couple who earns the cap this year, will pay $13,243 in social security insurance taxes, the same as a couple that makes one million, ten million, or a hundred million a year. In fact, for the top earners, such as insurance CEO’s, who pay the same amount $13,243, who will continue being paid the Bush tax cuts, partly from the money collected mostly from the rest of the SS insurance payers the huge majority that make less than the cap, this amount will be so small as to be considered rounding error on their salaries.

    Remember, those who earned less than 106,800 have for 25 years now, thanks to Reagan politics, been deprived of a huge amount of money that they would have been able to spend, at the same time that tax rates for the top marginal group dropped from 74 percent, to 35 percent this year. I keep mentioning this, as it is important to realize that they’ve collected this tax from the poor, a disproportionately large amount, and at the same time, massively dropped the taxes on the top income group, above $357,700 a year. Once again, it points out that taxes have been steadily removed from the richest people under conservative thought, and put on the backs of the rest of us, through a criminal increase in SS taxes, sales, gas, property, utility, toll road, higher state taxes, and many, many new fees, to name a few. Always ask yourself the question when thinking about reciting a line you’ve had drilled into your had, “we need to cut the taxes of the rich,” if you believe that so much, that you are willing to have yet another tax put back onto you. The latest are soft drink or Twinkie taxes, sold under the ruse of whipping us into shape.

    We need to correct this travesty, first by paying back to the SS trust fund, each and every dollar that has ever been borrowed from it, for any purpose, from the general fund, from waging wars to tax cuts for the very wealthy. This money was specifically collected for paying out social security, and it needs to be distributed back to where it was intended to be first, before any new tax is levied. And if we do, sometimes in the future, need to collect more, the first thing to do is the rid ourselves of the cap, so the richest people, who benefit the most from our labor, and from all the compounding of the tax cuts they received, from our money, will pay the same percentage of their vast incomes, that we do.

    Information gleaned and paraphrased from Chapter eight of a great book about taxes, Perfectly Legal, by David Cay Johnston. If you want the true story of American taxes, and the change over the years, this is a great book to read, with much true information that you’ll never likely see on the mainstream media, as they mostly earn tens of millions per year to be talking heads, and often push their own personal economic agendas, and are nothing like us economically. I think you’ll notice that when the media became decidedly against Obama’s health care plan, was exactly in synchronization with when the house passed its plan to pay for the 900 Billion dollar plan with surtax on the rich, of which these talking heads who faithfully deliver the corporate line, belong.

    Good link, top rate levels at chart on top.

    FiveThirtyEight: Politics Done Right: The Missing $1,000,000 Tax Bracket
     
  2. WillowTree
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    WillowTree Diamond Member

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    And do you have any idea who writes the laws? And then finds legal ways to shelter the money? Do you?
     
  3. Titanic Sailor
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    Titanic Sailor Senior Member

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    In summary, Social Security does not cover about one-fourth of public
    employees, for various historical reasons. As a result, these employees
    do not pay Social Security taxes on earnings from their noncovered
    jobs. Nevertheless, they can still be eligible for Social Security
    benefits based on their spouses' or their own earnings in covered
    employment. Currently, Social Security has two provisions to address
    the resulting fairness issues. The Government Pension Offset (GPO)
    affects spouse and survivor benefits, and the Windfall Elimination
    Provision (WEP) affects retired worker benefits. Both provisions reduce
    Social Security benefits for those who receive noncovered pension
    benefits. However, the Social Security Administration (SSA) cannot
    effectively and fairly apply these provisions because it does not have
    access to complete and accurate information on receipt of such
    noncovered pension benefits. Implementation of some of our
    recommendations has improved the availability and tracking of key
    information for federal retirees, which we estimate will save hundreds
    of millions of dollars. However, Congressional action is still needed
    to improve access to information on state and local government
    pensions.

    In recent years, various Social Security reform proposals that would
    affect public employees have been offered. Some proposals specifically
    address the GPO and the WEP and would either revise or eliminate them.
    While we have not analyzed these proposals, we believe it is important
    to consider both the costs and the fairness issues they raise. Still
    other proposals would make coverage mandatory for all state and local
    government employees. According to Social Security actuaries, doing so
    for all newly hired state and local government employees would reduce
    the 75-year actuarial deficit by about 11 percent. It could also
    enhance inflation protection, pension portability, and dependent
    benefits for the affected beneficiaries, in many cases. However, to
    provide for the same level of retirement income, it could increase
    costs for the state and local governments that would sponsor the plans.
    Moreover, the GPO and the WEP would continue to apply for many years to
    come, even though they would become obsolete in the long run.
     
  4. Titanic Sailor
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    Titanic Sailor Senior Member

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    During 1997, Social Security had $457.7 billion in revenues and $369.1 billion in expenditures. About 89 percent of Social Security's revenues came from payroll taxes. The Social Security payroll tax is 6.2 percent of pay each for employers and employees, up to an established maximum. Maximum earnings subject to Social Security payroll taxes were $65,400 in 1997 and are $68,400 in 1998.
    1.
    SSA estimates that about 5 million + state and local “Democrat” government employees, excluding students and election workers, occupy positions not covered by Social Security. SSA also estimates that the noncovered employees have annual salaries totaling about $132.5 billion. Seven states--California, Colorado, Illinois, Louisiana, Massachusetts, Ohio, and Texas--account for over 75 percent of the noncovered payroll. Based on a 1995 survey of public pension plans,
    1. 5 the Public Pension Coordinating Council (PPCC) estimates that police, firefighters, and teachers are more likely to occupy noncovered positions than other employees are.
    Millions of Democrats who NEVER paid into SS, have zero business saying anything about it. The reason they fear privitization, is because Social Security is a Dem stronghold, and they will all lose their mega salary and pension jobs. They need to continue to force feed themselves off of the people's cash. And even SS management doesn't pay into SS, all those hired before 1983 had their own pension system. These are the folks they sent to advise our Congressman on SS reform, folks who have NEVER PAID INTO THE SYSTEM. No Democrat bias there, is there???. Is it discriminatory that I have to pay into Social Security because I’m not a hack Democrat government employee or teacher???? Me thinks so.
     
  5. Titanic Sailor
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    Titanic Sailor Senior Member

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  6. Titanic Sailor
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    Titanic Sailor Senior Member

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    Before anyone even looks at raising the wage ceiling on Social Security, true reform needs to take place. ALL working Americans have to pay into Social Security, even the millions of government workers who don't today. Some do contribute, good for them, as it should be. The sad fact is numerous states employees don't, including about 600,000 left on the federal side who were hired before 1983. Over 5 million public employees and growing, the largest employer in the nation, and over a quarter of public employees do not even pay into the system. Including most of the senior management of Social Security today who makes the recommendations to Congress on reform. Nice gig ha? The government workers also created LAWS so they would never have to pay into the system. Hackorama. Would you rather have Social Security, or a government pension for your kids?
     
  7. pal_of_poor
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    pal_of_poor VIP Member

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    another little portion, since someone on another site misunderstood, or didn't read my own post,

    The amount that is wiethheld from paychecks for Social Secuirty taxes represent only half of the total levy. The tax is double the amount witheld from paychecks becaue it hs paid half by workers, and half by their employers. Econmists of all stripes agree that the Soucial Security tax paid by the employer is really paid by the workers, that it is simply an invisible part of their compensation.
    Perferctly Legal, p.119, by David Cay Johnston

    Yea, well the whole point is, we've been collecting this money largely from those who earn less than the current cap, 106,000 dollars a year, and not from any monies paid above that amount. As I said, we collected 1.7 Trillion extra, that wasn't paid out to recipients, from 1984, to 2002, while the richest people got huge tax cuts.

    It is as I've always said, this is just another way that Reagan transferred the tax cuts for the richest, cut from 74 percent to 40 percent, onto the backs of the lower earners.

    What I'd like is to cut the rate paid by the employees and employers in their stead, and remove the cap at the same time.

    And of course, before we add any new taxes, we need to collect from the general fund, every bit, all of the monies we've ever spent on anything else besides SS payouts, and return it to the fund. This tax is collected very specifically for the purpose of paying out SS insurance claims, not for wars, or tax cuts for the rich.

    If you earn less than 106,800 a year, you should be livid that you are paying so much more, just so the rich people can get tax cuts paid by you, and of course the loans from China, and Saudi Arabia.
     
  8. xotoxi
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    xotoxi Platinum Member

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    The posts in this thread are too damn long for me to read.

    Give me a pithy one liner, and I'll respond.
     
  9. pal_of_poor
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    pal_of_poor VIP Member

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    I think, perhaps intentionally, you've pointed out a problem with our sloganeering society. You Lie, Unions hurt workers, a higher minimum wage hurts employees, requiring clean air laws here makes it hard for corporations to deal, are a few.

    Oh, it's too much trouble and work to actually read, and learn stuff. Hand me a saying, like "Oboy is a commie," and I'm down with you, cause it's easy, and sounds good, and you seem to be really angry about it too, and I like angry.
     
  10. pal_of_poor
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    pal_of_poor VIP Member

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    Anyway, this would seem to be more important than the Federal Income tax, since three of four people pay more payroll taxes than they do FICs.

    It's sad that most people are unaware of this fact. You just can't get past the programming in these folks, as they've been well conditioned, steeped for years, no decades, with lies, and more lies.
     

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