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Proposals that could affect your retirement
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Has Achieved Nirvana
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posted
quote:
When Congress returns from recess, it will have a slew of proposals to consider, including some that could have a big impact on your retirement.

New proposals aim to fix legacy issues by expanding access to retirement savings, making Social Security solvent and protecting income in multi-employer pensions.

Whether the bills get the green light depends on whether they can generate bipartisan support and motivate both sides of Congress to act.


https://www.cnbc.com/2019/08/1...social-security.html


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We are all visitors to this time, this place. We are just passing through. Our purpose here is to observe, to learn, to grow, to love… and then we return home. - Australian Aboriginal proverb

Bazootiehead-in-training



 
Posts: 37794 | Location: Somewhere in the middle | Registered: 19 January 2010Reply With QuoteReport This Post
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What is the current maximum income for paying Social Security tax? It always seemed to me to be awfully low... and we have a lot of tech jobs that pay in the $100K - $300K range around here.

The solution seems pretty obvious to me. Raise that maximum. Or eliminate the maximum altogether. Why does a CEO who makes $20M only pay SS tax on a small fraction of his or her salary?

[ETA]
quote:
In 2019, you aren't required to pay the Social Security tax on any income you earn beyond $132,900. This limit is known as the Social Security Wage Base. This means that, regardless of how much income you earn, you'll pay no more $8,240 in Social Security taxes.

https://smartasset.com/retirem...l-security-tax-limit

Ludicrous.


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pj, citizen-poster, unless specifically noted otherwise.

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Posts: 30030 | Registered: 27 April 2005Reply With QuoteReport This Post
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Just do similarly to what they do to Medicare.
 
Posts: 45725 | Registered: 20 April 2005Reply With QuoteReport This Post
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As expected, Elizabeth Warren has an asinine proposal in this area. Rather than eliminate the cap, she would just reimpose it above, IIRC, 250k.

But people making between 132 and 250 would get a break. Because those are the people who really need help. Or something.


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If you think looting is bad wait until I tell you about civil forfeiture.

 
Posts: 33797 | Location: On the Hudson | Registered: 20 April 2005Reply With QuoteReport This Post
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Yeah, we get it. You don't like her.

The Real Clear Politics poll of polls now has her in second place, ahead of Sanders, and she's gaining momentum. The party's going to have to decide whether it's her or Biden. If it's Biden, we could have 2016 redux, with all the Bernie supporters holding their breath until they turn blue, and getting four more years of Trump as a result. If it's Warren, the party risks losing people like you who are working on hardening your opposition to her.

I deeply hope that it isn't a Hobson's choice.
 
Posts: 45725 | Registered: 20 April 2005Reply With QuoteReport This Post
"I've got morons on my team."

Mitt Romney
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A Warren candidacy likely will kill the Democratic majority in the House. Many of those swing districts will swing back to the GOP as the moderate Democrats like Spanberger and Luria in my area fail to convince enough GOP voters that the Democratic party has a brain.
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
"I've got morons on my team."

Mitt Romney
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quote:
Originally posted by pianojuggler:
What is the current maximum income for paying Social Security tax? It always seemed to me to be awfully low... and we have a lot of tech jobs that pay in the $100K - $300K range around here.

The solution seems pretty obvious to me. Raise that maximum. Or eliminate the maximum altogether. Why does a CEO who makes $20M only pay SS tax on a small fraction of his or her salary?

[ETA]
quote:
In 2019, you aren't required to pay the Social Security tax on any income you earn beyond $132,900. This limit is known as the Social Security Wage Base. This means that, regardless of how much income you earn, you'll pay no more $8,240 in Social Security taxes.

https://smartasset.com/retirem...l-security-tax-limit

Ludicrous.


The SS program was not built as a gigantic redistribution mechanism. It's a universal benefit with a payout proportional (sort of) to the pay in. We cap the payout at $3,770 per month for a 70 year old retiree. That cap is there no matter how much you have paid in.

Eliminating the income limit while maintaining the capped payout turns the SS program into much more of a straightforward income transfer system than it currently is. Do that, and you may start to see declining support for the system. it becomes "welfare" more than "security." And we know how popular welfare programs are.

SS is an example of "targeting within universalism." You target the neediest group (elderly poor) while giving a universal benefit that is less crucial to the upper income families. Make the payout tiny in proportion to the pay in and it becomes welfare instead.
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
"I've got morons on my team."

Mitt Romney
Minor Deity
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Under reasonable assumptions about returns on investment, any sensible person making more than 150K could likely have more income in retirement by opting out of SS and investing what they currently pay into SS. Jon could chime in with more information here, I'm sure.

That person making 150K may still support SS at present because of its "out of sight, out of mind" way of getting him or her to save. The saving may be artificial, because the government really hasn't "invested" that person's payroll tax money in anything real. It has gone out the door to pay their parents. Our system is pay as you go, despite the "trust fund," which is just a promise. But it does give that person "security," ... unless the promise goes away.

But get much beyond 150K (and I'm not at all sure where that line might be drawn), and very few people will value the "security" portion of the SS benefit enough to overcome the cost of paying a higher payroll tax. They'll see it for what it is. Just another income transfer.

The more people you put into the category of "SS is a crappy thing" the more likely you will see a Congress that no longer considers SS untouchable. The people who are most important to the politics of SS are probably those in the 150K to 300K income range. There are a lot of them, they vote, and they give to candidates.
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
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quote:
Originally posted by Piano*Dad:

Eliminating the income limit while maintaining the capped payout turns the SS program into much more of a straightforward income transfer system than it currently is. Do that, and you may start to see declining support for the system. it becomes "welfare" more than "security." And we know how popular welfare programs are.



Has it worked that way with respect to Medicare?
 
Posts: 45725 | Registered: 20 April 2005Reply With QuoteReport This Post
"I've got morons on my team."

Mitt Romney
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Good question. I don't know the evidence on that. Some of these changes to Medicare taxes are new enough that reliable evidence on something as subtle as political consequences may not be available at this point.

It's worth noting that Medicare and SS work differently. The alternatives to Medicare for the retired are not good at present, unless you spend crazy amounts of money. The "security" from having Medicare is more universal than the "security" from having SS. That's because the alternatives to SS are your own investments in a broad portfolio.

Also, the wealthy generally can shield income from Medicare taxes much more easily than the middle class can, so they can avoid the tax to some extent. And the Medicare tax is substantially lower than the SS tax.
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
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Yes to all of that, but it's uncapped, if I recall correctly.

Meaning that it's a huge income transfer from the wealthy to the people on the lower end of the income spectrum. Meaning, from what you said above, that it's "welfare", even if the tax rate is lower.
 
Posts: 45725 | Registered: 20 April 2005Reply With QuoteReport This Post
"I've got morons on my team."

Mitt Romney
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quote:
Yes to all of that, but it's uncapped, if I recall correctly.


Yes, but it's not black or white ... "if it's one drop of welfare then no one making more than X will vote for it."

I think the welfare aspect of SS is potentially greater, given no cap, than the welfare aspect of the smaller medicare tax, given that everyone gets basic medicare. My hunch is that the rich aren't going to bail on medicare because of the uncapped nature in quite the same way that many of them might sour on SS if SS were to become uncapped. The rich can take care of their retirement saving rather easily, and most have done so in spades. They don't need SS as it stands today. They'll need it even less if they have to pay much much more for the paltry benefit (paltry to their exalted income status).
 
Posts: 12513 | Location: Williamsburg, VA | Registered: 19 July 2005Reply With QuoteReport This Post
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quote:
Originally posted by QuirtEvans:
Yeah, we get it. You don't like her.


Except I don’t just sit here and call her names, I speak in specific detail about how asinine her proposals are if you get beyond the fawning headlines in Vox and actually read them.


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If you think looting is bad wait until I tell you about civil forfeiture.

 
Posts: 33797 | Location: On the Hudson | Registered: 20 April 2005Reply With QuoteReport This Post
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quote:
Originally posted by Piano*Dad:
Under reasonable assumptions about returns on investment, any sensible person making more than 150K could likely have more income in retirement by opting out of SS and investing what they currently pay into SS.


The problem with that argument is that invariably degenerates in to an argument about people dying in the streets. Madoff people. Really sick people. It doesn’t take much to wipe out millions in retirement savings. Millions most people will not save even though they promise they will.

Social security will always be there. It may not be what you thought you’d have but it will keep you alive.


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Life is short. Play with your dog.

 
Posts: 34851 | Location: Hooterville, OH | Registered: 23 April 2005Reply With QuoteReport This Post
Minor Deity
Picture of Mary Anna
posted Hide Post
quote:
Originally posted by Steve Miller:
quote:
Originally posted by Piano*Dad:
Under reasonable assumptions about returns on investment, any sensible person making more than 150K could likely have more income in retirement by opting out of SS and investing what they currently pay into SS.


The problem with that argument is that invariably degenerates in to an argument about people dying in the streets. Madoff people. Really sick people. It doesn’t take much to wipe out millions in retirement savings. Millions most people will not save even though they promise they will.

Social security will always be there. It may not be what you thought you’d have but it will keep you alive.


This is what I was thinking.


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Mary Anna Evans
http://www.maryannaevans.com
MaryAnna@ermosworld.com

 
Posts: 15506 | Location: Florida | Registered: 22 April 2005Reply With QuoteReport This Post
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