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MrWunderful

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22 minutes ago, arch_8ngel said:

I'm going to dispute your understanding on the part in bold.

If you are hitting the max limit on the social-security side of FICA, the benefits-per-contributed dollar have already been pretty significantly diminished compared to people on the lower end of the scale.

"Rich people" definitely pay their "fair share" into that system, the way it is currently mechanized, and see a much much worse effective-rate-of-return than median-and-below earners, versus if they had been able to invest the income elsewhere.

 

There may be other issues with how social security is handled, but "rich people" not contributing enough to the pot of money isn't one of them.

The social security cap is about $138,000.

That means that anyone that makes above that amount is paying a lower percentage of their income into social security than a person that does not meet the cap.

This is why social security is a regressive tax.

You are making the argument that a high income earner has paid their portion of the resources they themselves have used to earn their income if they hit the max. 

The problem is the amount of money one person gets is dependent on the amount of income they are distributed.

For example, if your company makes $500 million and the ceo gets $200 million and the workers get $200 million the same resource are used to create that money as if you distribited $2 million to the ceo and $200 million to the workers and reinvested $198 million.

Edited by Californication
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23 minutes ago, Californication said:

It improves the economy

Assuming any of that is even true, my feelings on it would be a bit of a catch 22. On one hand i don't want the economy to go down in flames, on the other, i don't really want to see the people who outsource our jobs to be supported for doing so. In the mean time i'll reserve my anger for when SNAP gets cut off for the people that truly need it.

 

27 minutes ago, Californication said:

Medicare and Social security are fully funded by payroll taxes. The only reason they get weakened is because rich people don't pay their fair shar since there is a max limit on income that is charged social security. Also, the government uses the money we pay into social security to sometimes paybother bills.

 

America is paying off their debts using money from investors, they paying those investors with money from more recent investors, and all of this on top of certain privilege investors not putting in their share...

🤔

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1 hour ago, arch_8ngel said:

 

"Rich people" definitely pay their "fair share" into that system, the way it is currently mechanized, and see a much much worse effective-rate-of-return than median-and-below earners, versus if they had been able to invest the income elsewhere.

I just noticed this caveat. It seems kind of backwards.

You are saying because rich people (may) know how to invest their money better, we should tax them less now, because if they know how to make better investments they have a higher opportunity cost. From that logic, if you have a rich person that is a shitty investor, like Donald Trump, they should get a lower tax rate by default, because by having a higher income he would automatically qualify.

I'll tell you what, if rich people know how to make money that doesn't require their direct labor, they should be paying more not less.

Really direct labor should be taxed at a lower rate than investments because direct labor is finite and is your primary source of income. Investments for many are a surplus and aren't limited by things like the hours in the day and how much energy you have.

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Just now, Californication said:

I just noticed this caveat. It seems kind of backwards.

You are saying because rich people (may) know how to invest their money better, we should tax them less now, because if they know how to make better investments they have a higher opportunity cost. From that logic, if you have a rich person that is a shitty investor, like Donald Trump, they should get a lower tax rate by default, because by having a higher income he would automatically qualify.

I'll tell you what, if rich people know how to make money that doesn't require their direct labor, they should be paying more not less.

Really direct labor should be taxed at a lower rate than investments because direct labor is finite and is your primary source of income. Investments for many are a surplus and aren't limited by things like the hours in the day and how much energy you have.

I am saying that Social Security has an "effective" internal-rate-of-return, based on how much you can expect to get paid out versus how much you contribute.

That IRR is highest for the lowest income earners who contribute the least to the program. 

That IRR is lowest for the highest income earners who contribute the most to the program.

 

The tax of FICA is only regressive if you look at it in isolation from the benefits it provides.

If you look at the big picture, of the program in total -- both the tax/funding AND the payout -- it is fairly progressive.

 

 

And you are completely misunderstanding what I am saying about how this tax impacts rich people.

There is an income-cap/contribution-cap based on payouts.  "Rich people" already get paid less-per-contributed-dollar than poor people.

That is already a progressive implementation of the total program, end-to-end.

 

 

You are conflating multiple "taxation fairness" issues, though, it seems.

Because "rich people paying their fair share" OVER ALL, is DIFFERENT from whether they are paying that "fair share" on FICA SPECIFICALLY.

 

On the latter issue, I would argue it is already "fair" -- that is, it is a government-administrated retirement and disability program that pays out based on your own contributions, with higher rates of return for those who contributed least to the program and lower rates of return for those who contribute most.

 

On the former issue, you can pretty readily argue either direction, depending on your bent, but it isn't outlandish to suggest that at VERY HIGH incomes from capital gains the rates are likely lower than they could reasonably be.

But you have to mechanize any changes to that in a way that doesn't hose up fairly "normal" levels of retirement investment withdrawals, if you don't want to fuck things up for a lot of "non-rich" people that are at a phase in their life where they derive the bulk of their income from investments.

 

 

Unless you're trying to suggest that anyone that can live solely off their investments is "rich", in which case I'd seriously question your definition of "rich".

 

 

 

 

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1 hour ago, Californication said:

The social security cap is about $138,000.

That means that anyone that makes above that amount is paying a lower percentage of their income into social security than a person that does not meet the cap.

This is why social security is a regressive tax.

You are making the argument that a high income earner has paid their portion of the resources they themselves have used to earn their income if they hit the max. 

Social security is only regressive if you look at it as a tax alone, independent of the eventual payout.

As a program, in total, it is not regressive.

 

People that pay the maximum into social security do not see nearly the same benefit (i.e. the internal rate of return) as those who pay the minimum.

 

 

You can certainly make the argument that it "should be different" -- but that would be a fundamentally different program than how social security is structured.

Edited by arch_8ngel
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3 hours ago, arch_8ngel said:

 

If you are hitting the max limit on the social-security side of FICA, the benefits-per-contributed dollar have already been pretty significantly diminished compared to people on the lower end of the scale.

 

You can be on the bottom end of the social security scale and get signifigantly diminished benefits also.  If I had started taking  social security benefits at my full retirement age I would have had over fifty percent stripped from a monthly  amount under $1000.   On a slightly brighter side I get an effective rate of increase of 16% (or thereabouts) per year if I wait until I hit 70 (I will still get a good chunk stripped from my monthly amount - so I will still be under what I should have gotten at full retirement - and way under what I would have gotten at 70 without the deduction.   Yay me..

Edited by Wandering Tellurian
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19 minutes ago, Wandering Tellurian said:

You can be on the bottom end of the social security scale and get signifigantly diminished benefits also.  If I had started taking  social security benefits at my full retirement age I would have had over fifty percent stripped from a monthly  amount under $1000.   On a slightly brighter side I get an effective rate of increase of 16% (or thereabouts) per year if I wait until I hit 70 (I will still get a good chunk stripped from my monthly amount - so I will still be under what I should have gotten at full retirement - and way under what I would have gotten at 70 without the deduction.   Yay me..

How does one end up with lower-than-typical benefits, for a contribution level, without simply not having the 40 quarters of contributions necessary to be fully vested in the program?  (ignoring the separate issue of choosing to take benefits early, at a reduction, or later, at an increased amount)

 

Though with respect to early (age 62) vs late (age 70) benefit-start, the concept there is that your total payout from the program will work out to be roughly equivalent, no matter which option you choose.

So on the one hand, if you can tolerate the lower cashflow of early withdrawals, you come out ahead investing the money earlier.

On the other hand, if you can live without the cashflow until age 70, you can treat SS as "old age insurance" where the larger payout can make living to VERY old age more tolerable, financially, where you may be nearing the end of your nest-egg.

But the total payout from the government should be roughly equal based on your life expectancy for your cohort.

Edited by arch_8ngel
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16 minutes ago, arch_8ngel said:

How does one end up with lower-than-typical benefits, for a contribution level, without simply not having the 40 quarters of contributions necessary to be fully vested in the program?  (ignoring the separate issue of choosing to take benefits early, at a reduction, or later, at an increased amount)

 

Though with respect to early (age 62) vs late (age 70) benefit-start, the concept there is that your total payout from the program will work out to be roughly equivalent, no matter which option you choose.

So on the one hand, if you can tolerate the lower cashflow of early withdrawals, you come out ahead investing the money earlier.

On the other hand, if you can live without the cashflow until age 70, you can treat SS as "old age insurance" where the larger payout can make living to VERY old age more tolerable, financially, where you may be nearing the end of your nest-egg.

But the total payout from the government should be roughly equal based on your life expectancy for your cohort.

Because I have a pension I lose a flat amount of my social security payouts (whenever I take it) that is not based on how much I would otherwise get at any point in time.  If I had taken the early option at 62 I would have wound up with well under $200 a month.  Yay.

I do have more than 40 quarters

It just gets better -  my wife (who doesn't qualify for social security) can't collect survivor benefits nor even the paltry death benefits when I shuffle off.

About the only good thing about the situation (I am gonna be selfish here and look at it solely from my (and Mrs Tellurian's perspective) is that both of us at least qualify for medicare (not yet for Mrs.Tellurian)  - although that of course is not free either.  If I had taken the SS at 62 I would  now be getting less than $50 a month from SS. Yippy.  And well into negative territory when my wife can sign up for medicare.  As John Mclain said "Yippee  Kay-Ay."

 

 

 

 

 

    

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Just now, Wandering Tellurian said:

Because I have a pension I lose a flat amount of my social security payouts (whenever I take it) that is not based on how much I would otherwise get at any point in time.  If I had taken the early option at 62 I would have wound up with well under $200 a month.  Yay.

I do have more than 40 quarters

It just gets better -  my wife (who doesn't qualify for social security) can't collect survivor benefits nor even the paltry death benefits when I shuffle off.

About the only good thing about the situation (I am gonna be selfish here and look at it solely from my (and Mrs Tellurian's perspective) is that both of us at least qualify for medicare (not yet for Mrs.Tellurian)  - although that of course is not free either.  If I had taken the SS at 62 I would  now be getting less than $50 a month from SS. Yippy.  And well into negative territory when my wife can sign up for medicare.  As John Mclain said "Yippee  Kay-Ay."

 

What kind of pension not only decreases your social security benefit (assuming you paid your 40 quarters -- versus the type of pension where you avoided paying directly into FICA), but ALSO doesn't have survivor or death benefits for your wife?

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3 minutes ago, arch_8ngel said:

What kind of pension not only decreases your social security benefit (assuming you paid your 40 quarters -- versus the type of pension where you avoided paying directly into FICA), but ALSO doesn't have survivor or death benefits for your wife?

Dont you have to usually elect to decrease your own percentage you get to get the death benefits? maybe he didnt elect to do that.

Edited by Quest4Nes
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Just now, Quest4Nes said:

Dont you have to usually elect to decrease your own percentage you get the death benefits? maybe he didnt elect to do that.

I wasn't thinking of actual death benefits when I wrote that out, so if that's a thing, I'm not familiar with the election details to do it.

I was actually thinking of direct spousal benefits that current (and FORMER, i.e. divorced) spouses can claim for the duration of their own lives (i.e. potentially well beyond the death of the original recipient)

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Just now, arch_8ngel said:

What kind of pension not only decreases your social security benefit (assuming you paid your 40 quarters -- versus the type of pension where you avoided paying directly into FICA), but ALSO doesn't have survivor or death benefits for your wife?

State pension - I don't know how Federal ones work.  I didn't pay into SS while working for the state but I certainly did pay into it before then - but that it was apparently not all my money  (and my employers') since I am only getting a portion of what I would normally be getting.

Since Mrs. Tellurian also gets a state pension she falls into even harsher terms (vis a vis survivot benefits) - I would have to be getting somewhere north of 3K before she would see a red pfennig.  And the miserly death benefits are just gone. (even though she had absolutely nothing to do with the moneys i (and sundry employers) paid into SS.

Anyone want to ask me how I feel about illegal aliens getting SS?

 

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7 minutes ago, Quest4Nes said:

Dont you have to usually elect to decrease your own percentage you get to get the death benefits? maybe he didnt elect to do that.

The death benefits are a whopping $225  or so (last time I checked() to maybe defray burial expenses - might get me a cardboard coffin if my wife were to get it.  ,

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13 minutes ago, Wandering Tellurian said:

State pension - I don't know how Federal ones work.  I didn't pay into SS while working for the state but I certainly did pay into it before then - but that it was apparently not all my money  (and my employers') since I am only getting a portion of what I would normally be getting.

Since Mrs. Tellurian also gets a state pension she falls into even harsher terms (vis a vis survivot benefits) - I would have to be getting somewhere north of 3K before she would see a red pfennig.  And the miserly death benefits are just gone. (even though she had absolutely nothing to do with the moneys i (and sundry employers) paid into SS.

Anyone want to ask me how I feel about illegal aliens getting SS?

 

So it's less the pension cutting into your ss and more you not paying into ss right? That's how it was for my mom working for the post office. She also received pension largely in place of ss since most of her work years were for the po and they didn't do ss contributions.

Edited by Lincoln
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17 minutes ago, Lincoln said:

So it's less the pension cutting into your ss and more you not paying into ss right? That's how it was for my mom working for the post office. She also received pension largely in place of ss since most of her work years were for the po.

No matter how much I had paid into SS I would still lose the same flat amount - which will come directly out of my future SS (and which is not added into my pension whatsoever - that is calculated (basically) by length of service.  The percentage I will be losing is so high since I was making very little (both because it was in the early part  of my work history and what the economy was doing - the minimum wage was about $2.00 an hour IIRC) The only exception would be if I had been paying into SS at the same time as paying into my pension.  Then I would not see my SS payout reduced.  Mrs.Tellurian still would not see any survivor benefits.

 

Edited by Wandering Tellurian
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Ya, I completly misunderstood the Internal Rate of Return you were talking about. I thought you meant private investment. TBH I am not familiar with that aspect, of social security, but the way you lay it out makes sense, so I will defer to your description of the internal structure.

I've got to think about whether I think the payout is relevant.

And I respect the pensions that are tied up in investments that benefit from a lower tax rate, but that has got to be a pittance of the overall inveatment market. 

I am sure I heard that something crazy that like 80 something percent of stocks are owned by 10% of the population and I am pretty sure that accounted for pension funds. I will have to look around and find the actual numbers.

 

 

Edited by Californication
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43 minutes ago, Wandering Tellurian said:

@Tulpa

Not now (which, surprisingly perhaps, I do know).   I did work in HR/Payroll for a good chunk of my work time.   

It is/was a future tense usage.  

I don't know of any effective push to include them in receiving benefits. 

I do know that a good number of them contribute into SS by virtue of their paying payroll taxes.

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1 minute ago, Tulpa said:

I don't know of any effective push to include them in receiving benefits. 

I do know that a good number of them contribute into SS by virtue of their paying payroll taxes.

It gets mentioned periodically by elements of a certain political persuasion.

I am fairly certain if some of them thought they could get it done the push would be on.

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9 minutes ago, Wandering Tellurian said:

It gets mentioned periodically by elements of a certain political persuasion.

I am fairly certain if some of them thought they could get it done the push would be on.

Certain political persuasions want Christianity to be the state religion.

I concern myself with movements that actually have a push and not political boogeymen. I cannot see SS being reformed to include anyone other than who it currently includes anytime soon.

Edited by Tulpa
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10 minutes ago, Tulpa said:

Certain political persuasions want Christianity to be the state religion.

I concern myself with movements that actually have a push and not political boogeymen. I cannot see SS being reformed to include anyone other than who it currently includes anytime soon.

I suspect that  the closer amnesty and open borders may come to fruition the closer this will come to being pushed for.  These things do not happen in a vaccuum and build on each other.   

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7 minutes ago, Wandering Tellurian said:

I suspect that  the closer amnesty and open borders may come to fruition the closer this will come to being pushed for.  These things do not happen in a vaccuum and build on each other.   

SS isn't even that much of a stretch considering certain states are slowly giving them voting rights

https://www.newsweek.com/immigrants-are-getting-right-vote-cities-across-america-664467

Edited by PineappleLawnchair
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