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re: 'You earned it, you keep it act' bill would eliminate taxes on Social Security
Posted on 2/9/24 at 8:00 am to NC_Tigah
Posted on 2/9/24 at 8:00 am to NC_Tigah
quote:
The SS Tax would apply to all earnings >$250K
Nope...not all. Depends on the source of the income - W2 verses pass-through businesses.
Posted on 2/9/24 at 8:02 am to dietcoke7
You have me convinced, let’s throw good money at bad.
This post was edited on 2/9/24 at 8:03 am
Posted on 2/9/24 at 8:23 am to AUauditor
quote:Correct. Bad habit. I carelessly use earnings and earned income interchangeably. Easier to type the one word until more specificity is needed.
earnings >$250K
---
Nope...not all. Depends on the source of the income - W2 verses pass-through businesses.
That, and I have real aversion to the term "unearned income"
Posted on 2/9/24 at 8:27 am to armtackledawg
quote:
It also does not raise the payout so high earners are funding it
So...welfare.
Posted on 2/9/24 at 9:18 am to bigblake
quote:
I get this sentiment, but how is it going bankrupt then?
Pure speculation on my part here but I'd say 3 things for certain:
1. Demographic changes -- we have a lot less workers today funding the program and people, on average, are living longer than when the program started.
2. Mismanagement of Funds -- Congress has raided these "trust fund" for decades to pay for other stupid shite and close shortfalls.
3. Fraudulent "Disability" Claims -- I have no data but I'd imagine you have tons of people on Social Security "disability" with some bullshite condition that are draining funds that they never contributed to.
quote:
If it's how you claim - you're just getting what you paid in - then why does it matter if I pay? Your generation's pot of money should pay for you.
The program was intended to be "insurance" in the sense that the founders of the program didn't want old ladies whose husband's died to end up homeless and destitute.
The program has since evolved over time to be a de facto "retirement" program for the lower classes.
If you look at it as an insurance program it may make a little more sense.
quote:
The reality is that workers surviving to retirement age has increased, extending survivor benefits for those that die before/after retirement, and people living to be older than the program intended are what is draining it. Politics prevents the above from being corrected.
Agreed. I'm not simping for Social Security. haha. Just trying to offer some pushback on the board. SS has plenty of problems and needs reform ASAP.
quote:
Having more "workers" paying to cover the current beneficiaries only masks the problem; a sort of pyramid scheme. At some point you can't keep growing workers/population at which point that generation would be screwed.
Sure....the SS program always has had ponzi scheme characteristics in that it always need more people and new money to sustain itself.
quote:
Lastly, imo, SS is one of the easier problems to fix relative to the slew of government problems.
Absolutely. It is a math problem at the root. As with most things, there is zero policital will to reform it and the politicians don't win elections by telling grandma and grandpa they are going to cut their "earned benefits" so the can is kicked down the road.
Younger people don't vote. Older folks, who this directly impacts, vote much more and thus have more political sway and impact.
Unless and until young people (40 and under) start voting en masse and getting politicians in office to fight for their concerns and issues nothing will change.
As with most collapses, the SS program's demise will be slowly and then all at once.
Posted on 2/9/24 at 10:04 am to jclem11
quote:FYI, if revenue is unchanged, projections have SS underfunded steadily by 20%/yr for the next 75-100yrs. However, the SSTF has a full two-years of payments saved. At a 20%/yr drawdown rate, those TF reserves will be exhausted in 10yrs. So some point about 10yrs from now would be the first point SS has ever been 1¢ in the red... if we do nothing. After that it would run at 20% deficits.
Pure speculation on my part here but I'd say 3 things for certain:
1. Demographic changes -- we have a lot less workers today funding the program and people, on average, are living longer than when the program started.
2. Mismanagement of Funds -- Congress has raided these "trust fund" for decades to pay for other stupid shite and close shortfalls.
3. Fraudulent "Disability" Claims -- I have no data but I'd imagine you have tons of people on Social Security "disability" with some bullshite condition that are draining funds that they never contributed to.
However, any time between now and then, we can reduce SS payouts/COLA by 20%, increase SS revenue 20% (6.2% to 7.4% employee contribution), or do some combination, and SS would remain in balance for the next 100yrs.
Posted on 2/9/24 at 10:09 am to NC_Tigah
quote:
2. Mismanagement of Funds -- Congress has raided these "trust fund" for decades to pay for other stupid shite and close shortfalls.
And what is this? Is this correct?
Posted on 2/9/24 at 10:33 am to NC_Tigah
quote:
Yes. I was just repeating wording in the OP source. FYI, the actual bill frames it in terms of an employment/wage tax.
I wasn't trying to challenge you, I saw what you were quoting. You are right, thanks for posting.
But the bill also details that the limit would essentially be phased out. It also says you will get very little benefit for those contributions over 250k. So this absolutely reads as additional tax for high earners moving forward. They are coming for those S corp earnings
Posted on 2/9/24 at 12:35 pm to jclem11
quote:
2. Mismanagement of Funds -- Congress has raided these "trust fund" for decades to pay for other stupid shite and close shortfalls.
3. Fraudulent "Disability" Claims -- I have no data but I'd imagine you have tons of people on Social Security "disability" with some bullshite condition that are draining funds that they never contributed to.
#2. I haven’t done a slew of research but I believe this isn’t true. SS must purchase treasuries with excess funds. Of course government is issuing treasuries because it’s borrowing money for… whatever. However, the SS trust fund isn’t “out” that money, in the same way that your bank deposits are issued as loans to other Borrowers but your deposits are not gone.
#3. I definitely agree with the abuse of SSDI. I have distant family members that have taken advantage of it and now dick around all day rather than working. I left it out because I thought it was funded separately.
Posted on 2/9/24 at 12:39 pm to bigblake
quote:
#2. I haven’t done a slew of research but I believe this isn’t true. SS must purchase treasuries with excess funds.
You are absolutely right. Excess funds in the trust are invested in Treasuries. So the money is "loaned" not "raided".
Posted on 2/9/24 at 12:41 pm to frogtown
quote:Not really.
And what is this? Is this correct?
The SSTF is a compilation of IOUs.
As soon as your SS tax payments arrive in DC, they are converted to interest-generating debt-instruments (IOUs), and the money is spent on whatever it is the government spends money on. Meanwhile, interest generated is reinvested and/or distributed in payouts to SS recipients.
"Raiding the trust fund" was always the design. In the mid-1930's, FDR needed to borrow money to fund the New Deal. During the depression, few lenders were interested in buying US bonds/treasuries. SS was a means of forcing every working American to lend FDR money (buy bonds) under the auspices of a retirement program.
Posted on 2/9/24 at 12:43 pm to DaveyJones12
quote:You'll keep paying SS and I'll enjoy spending your money.. Thanks!
DaveyJones12
Posted on 2/9/24 at 12:47 pm to TigerintheNO
quote:
-raises the cap on SS tax from 168K to 250K
I don’t like this at all. That will take more money from a lot of folks who will never get the benefits of SS.
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