A Really New Idea On Social Security! Increase The Employers Tax Ratio!

[Itsthetruth]

CounterPunch
March 24, 2005

Crying Wolf, Wolf, Wolf, Wolf
A New Social Security Snow Job
By DAVE LINDORFF

With Bush's Social Security wrecking scheme on the ropes in the face of widespread public distrust of his intentions and his "facts," the inevitable scare stories are now coming out of the politically manipulated Social Security Administration itself.

The whole scare story, which was loudly trumpeted by the Associated Press with a misleading headline screaming "Social Security Set to Go Broke in 2041," is a political scam. The Trust Fund Board is chaired by Bush Treasury Secretary John Snow, a political charlatan who immediately grabbed the opportunity to claim that the new projection meant that absent some major reform of the system, either payroll taxes would have to be raised 3.5 percent or benefits would have to be cut by 22 percent.

If it turns out that at some point there were going to be a shortfall in Social Security funding, there are other answers besides raising the payroll tax on workers or slashing benefits for retirees. The simplest is raising the payroll tax on the wealthy, who currently only pay it on the first $90,000 of income. The tax could also be applied to unearned investment income, which currently pays nothing into the Social Security fund. Best of all, there is another option that has never been discussed: changing the formula that has employer and employee each pay 50 percent of the tax. There is nothing magic about that ratio, after all; it was simply how the system started out in 1935. It could just as easily be shifted so that employers paid 70 percent and employees paid 30 percent, or even to a 90/10 formula, where employers would foot 90 percent of the bill.

Then we could raise the employer tax rate by a few percent without hurting workers' paychecks at all. After all, over the last decade, corporate taxes have been slashed. They would hardly notice a rise of a few percent in their payroll tax bill, which would not even bring most companies back up to the corporate tax rate they were paying in 1990.

http://www.counterpunch.org/lindorff03242005.html

[Zuni]

1. I simply think lowering the rate, raising the cap to 250,000$

and taxing Capital gains from stock for SS would be the best way to fix it.
That way, most Americans get a substantial tax cut, the rich pay more than they do and stock income pays into it.

[PsN2Wind]

3. I agree but I'd go one step further

I'd make these separated executives pay FICA on the entirety of their separation packages. In John Snow's instance that means he would pay about $8.5 million into the Social Security trust fund on the reported $68.9 "golden parachute".

[Zuni]

6. I'm fine with that

I figure, with the trillions given to the wealthiest Americans in 'tax cuts' paid for by SS trust fund, they owe us quite a bit

[FloridaPat]

2. You have fallen for a scam. On paper, your employer pays 50%.

In reality, that money comes from your future raises, your original salary. It's coming out of your pocket. Do you really think companies are so nice that they are willingly giving 50% of the SS tax to the government for your retirement? It is coming out of your pocket. It is also probably one of the reasons jobs have gone overseas the last 10 years. Overseas workers don't pay into SS. When Clinton got into office, SS tax was on about $40,000. It has more than doubled to help pay for the baby boomers retirements. Then you throw in health care that has gone way way up - it's a wonder we have any jobs in this country left.

[mongo]

4. Oh NO we can't just raise the cap on the WEALTHY...

You have no idea what this will do to small business.

Then we could raise the employer tax rate by a few percent without hurting workers' paychecks at all. After all, over the last decade, corporate taxes have been slashed. They would hardly notice a rise of a few percent in their payroll tax bill, which would not even bring most companies back up to the corporate tax rate they were paying in 1990.

And as someone who has been working 50+ hours/week for less than min wage and no health insur I can tell you I will have to do one of 2 things if this passed:

1. Cut hours/suspend raises on my one employee and suspend raises on myself - won't help me get health insur either

2. Or I could RAISE PRICES. This won't hurt anyones paycheck either will it?

Maybe we should take SS tax out of capital gains.

[Zuni]

7. I'm not in favor of changing the 50/50 ratio

I think that is fair.

I am in favor of raising the cap to 250,000$ of personal income, including capital gains income and lowering the overall SS tax rate to 10.2% or 11% or something (in order to put more money back in the hands of working folk)
And I want the government to start a responsible progressive tax system to pay down the debts already owed to SS, to prevent further defecits in the future

[LuminousX]

5. If only we had put some of that surplus in a legislative lockbox

[Willy Lee]

8. As a small business owner I don't like that idea.

If I am paying someone $7/hour I'm actually paying $14/hour after taxes factored in.

Ouch!