A tax break I've never understood
I mean this with all sincerity: can someone please explain to me the rationale for exempting social security taxes after the first $102,000 in income? Why should someone making a six-figure income not pay the same percentage of social security taxes as someone making half that amount?
Labels: Social Security taxes
posted by Ken @ 9:35 AM
5 Comments:
At 6/28/2008 11:52 AM,
MAX Redline said…
Personally, I don't worry about it. Government will always do what's best.
At 7/02/2008 10:05 AM,
Anonymous said…
well, the theory is that you are supposed to be paying in for your own retirement, and if you make over a certain amount, you should be free to invest (or spend) that amount as you see fit rather than fork it over to Uncle Sam.
if you ask me, we should all be free to invest (or spend) MORE of our money, since the return on investment from Uncle Sam is far, far lower than even simple interest from a savings account (not to mention that whole "government is in the red paying it out" problem).
So if I were running for office, I'd do the opposite of Obama and say "no social security taxes on your income over, oh, how about $24K per year?"
... and then I'd cut future benefits for everyone still paying in, scaled to the amount you have paid in so far (i.e., if you are 58 today, you will have almost no change, but if you are 23 and have been paying in only for a few years, you should consider saving significantly more money each pay check).
And of course, in the long run, we'd just phase out collecting social security taxes, pay off remaining benefits (by then most people getting the current full amount will have passed on) out of the general fund, and allow us all to have complete control over our retirement portfolios.
Some people will retire with nothing. Not my problem. Shouldn't be anyone's problem but their own.
Heartless? Maybe. But fair. And fiscally sound. Besides, so many more people will retire with far MORE money that there will be a lot more opportunities for charitable organizations to pick up the burden.
See? I really DO want the stupid old people to have food and shelter... just out of the private sector instead of gummint.
At 7/02/2008 11:52 PM,
T. D. said…
Could it be because there is a cap on how much social security will pay out in monthly payments?
Since you get back a percentage of the best 35 years of salary, people making mega-salaries would get mega-benefits. And that's not what the system is intended to do. It's supposed to be a safety net, not a real retirement system.
At 7/03/2008 9:01 AM,
Ken said…
Terrance -- thank you, I didn't know there was a cap on payments, so that helps me understand it better.
Gully -- that might make some sense from a solvency standpoint, but it will never happen. Social Security has become like an amendment to the Bill of Rights: everyone assumes it's always been there and it always will be, and no politician is going to allow his or her fingerprints on the major tinkering that would be needed.
At 7/07/2008 4:03 PM,
Anonymous said…
They raise the threshold every year. As fewer workers support more and more retirees they will probably make it like Medicare; no threshold at all.
Dave Lister
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