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In reply to the discussion: by Robert Reich:As if you didn’t already have too much to worry about, Social Security’s funds [View all]Scruffy1
(3,257 posts)It often conflates life expectancy at birth with life expectancy at retirement which are two different things. The life expectancy at retirement has only increased less than two years since 1990, or about 9 %, which, of course, adds up to some dough but is hardly catastrophic. But in the main he is right. Even Milton Friedman thought the cap was wrong. The problem is that the average working person knows nothing about how the well off live. If all your income is from capital gains, interest and dividends you don't pay payroll taxes at near the same rate as the working people because you don't get a paycheck. If you are self employed you pay the 15% to cover social security employee and employer share. If you are rich, you pay nothing because most of your income is not from payroll. Instead you get the capital gains deal which cuts your income for tax purposes.
Of course Reich is right in the main in that the cap sucks. Even Milton Friedman saw no reason for it.
Another factor is that in reality only the rich live much longer, which skews the whole graph. Also there is a huge disparity between the poor, middle class, and rich in lifespan.
To really fix the problem capital gains tax exclusion (notice I don't use the misleading term capital gains tax:it's an exclusion which means those that don't work pay less than those that do) needs to go, along with the stupid rule that inheritances are only taxed at the original purchase value and excluded from capital gains. Same with the carried interest. These are bought and paid for tax dodges for the oligarchy.