Wait until people realize the trump accounts and a generation of telling people the money won't be there was a way to soft sell the elimination of social security.
Every generation is told the Social Security trust fund will run out. And it will, unless the tax rates are raised. And every generation, up until this one, has had their tax rates raised. The OASDI tax rates have been raised about two dozen times since the start of the program. Every generation has paid more than the previous. People just need to do what previous generations have done.
The Trust Fund will run out but Social Security does NOT run out. Most of the benefits paid are collected by the payroll tax. If Trust Fund runs out, benefits reset to equal what is collected by the payroll tax. This would be a -23% cut but it would not be gone. But since it’s necessary to keep repeating this and younger people keep believing it will be gone then it probably will be repealed or completely privatized to 401k-like. Like every other safety net program in the US. Game over, man.
Is there a reason why Americans are so against having social security invested and managed so that it actually grows at a rate sufficient to sustain itself?
Canada has an equivalent to social security in the Canada Pension Plan, that actually gets invested, and as a result is sufficiently funded for 100 years?
No. Americans would have no problem with Social Security being run like large state pension systems like NYSTRS. IMHO the fear is not from regular people, it was from many in the government (and the Congress) who think there is too much risk in having a large federal system compromising the private financial sector. Regular Americans want Social Security to remain financially secure. Canada did this right. US didn’t.
I wouldn’t put it past Goldman or JP Morgan to gamble our fucking social security away like they do everything else. Maybe if something had been put in place before the 1970s I’d trust it, but not today.
Could you imagine what Trump would do with such a system? Holy hell, he'd buy shares of his own stock and we'd end up getting fleeced.
I think it's a good idea, but it almost would have to be its own federal elected position. Right now it goes into bonds I do believe, which gives them other flexibility.
Thats exactly it, people don't realize if you want to invest SS in something, then you'd have to pay the exact extra taxes to do that... We wouldn't want to pay the gov to centrally plan a massive investment fund but for some reason if you mentally account it for a national pensions people think its a good idea...
Because that's just not how social security works, and there would be no great way to transition to it even if it were A) a good idea, and B) what everyone wanted.
Most social security payments (~$1.5T) come directly from payroll taxes (~$1.5T) in any given year. There is only around two years' worth "saved up" in the social security coffers (~$3T). So even if that were entirely invested at 10% ROI (average nominal returns from stock market), and we literally never have a bad year for returns ever again (lol), those returns would only cover 20% of total benefits.
It's the equivalent of asking a person that is living paycheck to paycheck, with only a small emergency fund saved, why they don't simply supplement their income with investments.
I'm gonna assume you don't live in the us based off your comment. Our president is currently shilling cryptoscams and his own company 24\7. If this current federal government was actually allowed to invest all the money in social security currently , we would have the largest crash in the history of the world in short order.
The money would never grow at a steady rate because we have con men and hacks pretty much everywhere in our government. I mean a former heroin addict is running the health and human services department telling people vaccines aren't safe.
LOL! You obviously have no idea what the max CPP benefit is in Canada, do you?... It's a measly 1,100 USD equivalent, compared to the social security's max benefit of 5,200 USD.
CPP contributions cap out at around 75,000k CAD (they recently added a second layer into it though, is something like 82k somewhere), whereas SS has contributions to over $180k USD. So of course it pays out less.
What is meant by "actually" funded? CPP is "funded" by contributions, SS is "funded" under the same criteria.
Looking at the stats, CPP pays about $61 billion CAD benefits vs $82 billion in contributions. So its "funded" right off the bat from contributions. The difference is that the contributions are more than the benefits, not that the surplus was invested.
The surplus investment fund is about $780b CAD, which to be fair is pretty big, but still probably about half the size of what would probably be needed to reasonably say it could sustain those CPP benefits on its own, assuming historical investment returns continue, and 10-20 year periods of no returns would be completely expected possibilities.
Now the average CPP benefit seems to be far less than social security, $6,700 USD vs $25k/year. And 75 million Americans take SS vs 6.6 on CPP. So SS would need a fund like $25T USD (!) to have the equivalent funding, which is again, about half the size of what would be needed to be reliably "fully" funding. The maximum surplus in history was $2.9T.
These programs will always rely primarily on contributions, and being funded is about the sustainable balance of benefits to contributions, the investments play very little role. The CPP's advantage is mostly that the benefits are way scaled back to a reasonable level.
Because there is no really reason to concentrate ownership in some fund when the gov could just tax the same underlying economic for the same revenue. There is no reason to have the gov or really any other pension or w/e to amass some massive quantity of concentrated capital instead of just tax...
The problem with SS is entirely the way the costs and benefits are regressively distributed, not that a running surplus isn't isolated in some gov account to generate the same yield it would be in the private sector where it could be taxed all the same.
That doesn't answer the question. You would take the money that is generated via tax, and invest it so that it is able to sustain itself.
The money is still concentrated in a fund now, but isn't being invested, and is only generating interest via bonds, and this has lead to the present problem.
Again, in Canada, where we contribute approx 6% of our pay, and approx 6% by the employer (just like SS) the fund is funded such that next year they are actually reducing the tax contributions that we pay into it slightly, instead of needing to increase the amount that is paid in.
Why are Americans so opposed to doing something similar?
That's not how it works tho. You are thinking its like an investment held aside for each person. Social security is whats called pay-as-you-go, sort of like a ponzi scheme (but made to be sustainable). The benefits are intended to entirely paid by current inflows. There isn't supposed to be any surplus, because the surplus is just in a gov account, held out of circulation, so its effectively captured by the gov as taxes that replace the need for equivalent revenue. The only point of the surplus as a virtual accounting scheme is as a statutory mechanism for cutting the program automatically if the imbalances of flows remains negative for too long.
So if you want to invest an SS surplus (the entire problem is there isn't one right now, outflows exceed inflows and are being made up by current spending), it has to funded all the same as any other government expense. Because the money is all fungible. SS tax isn't really different than any other tax. So really, why should the government run a side hustle investment bank? It doesn't need to, it can just tax and pay the SS.
Right - my question is why not reform SS so that it actually becomes sustainable via being supported by investing some of the funds.
If the system is not sustainable, improve it to make it sustainable via investment.
CPP is not held aside for each person. We pay a tax along with our employers (just under 6% each, which is very similar to SS) that goes into the fund, and those funds get invested together to sustain the program.
But I'm trying to tell you.. there is no surplus to invest... If all the extra SS payments were invested there would have had to been an additional tax revenue to fund it all the same because the surplus SS tax just effectively became normal tax.
You could "fix" SS by just adding the extra tax now. To have a surplus to invest you'd have to tax even more additionally just so the government could have extra to role play as a fund manager. Why? Just tax what is needed, the capital exists in the underlying taxable economy all the same.
The problem with SS is the distribution of the tax on primarily poor people, and the distribution of its benefits to people who don't need it at all. There is no investment solution. Or if you want the government to run an investment fund, it doesn't need to be mentally accounted for social security than any other gov expense (it would just be like a side gig for the gov for extra revenue).
Having SS invested wouldn't address the current issue. Here's a history and explanation why it wouldn't address the issue:
Current Social Security benefits are paid by the collection of OASDI (Old-Age, Survivors, and Disability Insurance) payroll taxes of 6.2% by the employee and 6.2% by the employer. 12.4% for self-employed.
Until 2020, There were only 11 years in which SS benefits exceeded OASDI revenue. So, in most years until then, the extra was deposited in the SS trust fund and the trust fund grew.
Each year after 2020, there has been a significant shortfall in SS revenue, and the trust fund has been rapidly drawn down.
Each year, there are more retirees than new workers, so the shortfall between revenue and benefits is rapidly increasing.
There is approximately $2.6T in the trust fund today
The trust fund is estimated to be depleted some time in 2033.
Since there are only 6 years of reserves in the trust fund and a significant amount of it is being withdrawn every year, it would be irresponsible to invest it at this point. We would be hoping the currently inflated (by every measure) stock market continues to outperform for 6 years. Even one large negative year of returns could accelerate the year it is depleted by 2 or 3 years.
Moving to an investment fund by slowly increasing the portion of the trust fund that is invested in riskier assets over time is the way other nations have moved to the system you describe. However, that requires the trust fund to be have sufficient funds to be solvent for 15-20 years. In other words, if this had been done prior to 2010, it would have worked. Doing it now would just add unnecessary risk.
So then the future for Social Security is bleak or at best unknown. And I have heard different estimates for the Trust Fund exhaustion from 2031-2034. I am betting sooner rather than later. The stealth “Trump accounts” for babies seem to be the elephant’s footing the tent towards privatization of Social Security. If younger workers are given the choice to have individual investment accounts that would affect payroll tax collection negatively. That in turn collapses the current system. I guess it is time to face up to inevitable end of the program as we have known it. If Republicans control the government after 2028 expect the personal account privatization. If Dems then expect means testing welfare-like benefits.
>That in turn collapses the current system. I guess it is time to face up to inevitable end of the program as we have known it.
When the trust fund is exhausted, if it isn't funded by other means, the shortfall will be about 23-24%. A reduction of benefits is more likely than a complete elimination. Finding another means of funding is the most likely short term remedy. If a party were to reduce benefits by 23-24%, they would lose the next election in a landslide.
I hear ya. But if the speed run is to change payroll tax into individual “Trump account-like” investment accounts that will kick out funds from the payroll tax that supports current beneficiaries. So we could imagine a transition where the new “freedom accounts” are mandated starting with a certain age and deadline. The legacy system would wind down and be supplemented from the general fund. It would support a smaller pool of beneficiaries each year.
But CPP is really only superficially "equivalent" to Social Security. Social Security's benefits formula is intentionally "progressive": the lower your average wages while you were working, the larger the percentage of those wages that it replaces in retirement. The Canadian programs most equivalent to Social Security are arguably Old Age Security (OAS) and Guaranteed Income Supplement (GIS).
Your question is kind of like asking why Canadians would be against eliminating OAS and GIS to lower worker's taxes and then raising the CPP contributions by an equivalent amount.
OAS and GIS are paid out of the general government budget, and isn't sustainable.
I compare SS to CPP because both are funded by a tax paid by the worker and the employer, and as such they are equivalents of one another. CPP also pays out more of a portion of a person's employment when they are in a lower income, just like SS.
>CPP also pays out more of a portion of a person's employment when they are in a lower income, just like SS.
I don't think this is right. CPP replaces a flat percentage of your Year's Maximum Pensionable Earnings. That percentage was 25% and is transitioning to 33%. But importantly, it is a flat percentage. It's 33% for a YMPLE of $74,000 and 33% for a YMPLE of $37,000 and 33% for a YMPLE of just $7,400.
That is quite different from the Social Security. Social Security's concept of "average indexed monthly earnings", or AIME, is similar to CPP's YMPLE. But the benefits calculation is not a flat rate. Instead, Social Security pays
replaces 90% of their first chunk of AIME, up to the first "bend point"
then replaces 32% of their second chunk of AIME (between the first and second "bend points")
and finally replaces 15% of their remaining AIME after that second "bend point"
(Bend points are just income thresholds)
Low-income earners can see Social Security replace up to 83-90% of their incomes in retirement, while higher earners may only get back 30% of their "average indexed monthly earnings" in retirement (and that AIME is capped just like the YMPLE). That is not at all how CPP works. With CPP, both the low earner and high earner would see it pay out the same percentages of their YMPLEs.
>I compare SS to CPP because both are funded by a tax paid by the worker and the employer
Yes, Social Security is funded by a payroll tax on workers and employers. But that is largely where the similarities to CPP end. The programs have very different intentions and benefits formulas. The purpose of Social Security is much more in the spirit of OAS and GIS than CPP.
CPP and SS are both designed to be programs funded by direct contribution from a portion of workers wages and their employers. The money in both programs is paid into a specified fund where it is used to make payment to retired workers. That is why I am using them for this discussion.
They are the two programs where governments could do something with the funds to ensure that they grow sufficiently to maintain the programs because they have the pool of funds. It is the manner in which the programs are funded that makes them relevent to this discussion. Neither OAS nor GIS function in that manner. OAS works the same way as many of the European pension systems which are sending multiple countries towards bankruptcy.
The calculation of the benefit amount is not relevent.
If this is the Argument that Republicans have always pushed, then why not keep the Zoning Laws and have the government start building housing in areas where housing cost are outrageously high? Because if they are okay putting everyone's retirement on the casino stock market then why not flood the market with affordable housing? Thus Boomers and big corporations stop hoarding housing and prices come down. Then they can take that money they were using to hoard housing and put it in the casino stock market that they want to put everyone's retirement on.
Money becomes available at 18. So the question is how many 18 year olds won't touch that money until they are 68+?
They need transportation,or to pay for schooling (college/trade) or they need cash when their parents kick them out.
I honestly don't know what these accounts are meant to do but in current circumstances I can't see it being retirement related. Just politics, do you think?
"That was their choice!" It isn't about doing anything substantive, it's about creating an illusion of choice so the sale of social security's termination is easier to accept. Very much the same way defined benefit pensions shifted to defined contribution.
Giving people a choice is the reason there’s social security in the first place. If it’s not there, the government is just going to have to pay for a bunch of old homeless people that didn’t have the means, knowledge, or forethought to invest in their retirement.
Exactly. Just like how he gamed tax withholding so people thought they were paying less in taxes and they'd spend more. Then they got a rude awaking come tax season. If people don't pay into social security they'll spend more now and suffer more later, but later isn't his problem.
Of course it is. Never take anything this admin says at face value. The entire point is to force people to have to lock up "their" money in an account they can only invest into w/e the gov lets them (right now only 100% US, mega-cap tech heavy broad indices). Yeah, maybe they'll get good return if they don't try to trade the index (in or out is all the control they really have) and panic sell the next crash, but the immediately benefactors are the majority owners of those mega cap tech stock who capture the power of that capital immediately, incl. tech founder billionaire cronies of the admin. Index investing is good when the market has the choice, not when it becomes a forced piling of money into stocks regardless of fundamentals which creates bubbles, malinvestment, and further concentrates wealth and power.
What looks strange for me is the cruelty of what this regime do. They quickly do everything in most radical form. At this pace, most of population will end up with unlivable conditions in years. This is unsustainable without really high level of violence from the regime.
By contrast, the EU approach in a compromise. Many European countries have high level of inequality but the system works because of social security and universal healthcare. So the very rich can coexist with the poor because those poor are not at the edge of surviving.
Looks like the US rich decided that this is not enough for them, they want everything. So fuck compromises.
The current majority of congress wants to end social security. Its part of the reason they created the while Trump accounts thing. Ted Cruz said it the other day.
They can't take away older people's SS but people under 18 "can" start building now and it'll easier to get rid of.
Hopefully they do but as it is people dont put away enough for retirement.
Please do the math for us on how SS could be phased out; especially explaining which people will pay in and not receive benefits and how you think they'll be OK with that.
>majority of the current Congress has proven they’d rather sit on their hands than do the right thing.
One party has put forward many bills to help improve the solubility of the trust fund, including raising the cap on SS payroll tax, increasing the OASDI rate for employers and employees, and adding non-payroll taxes.
The other party has put forward many bills to reduce SS benefits.
Neither is doing nothing ("sit on their hands"), but only one puts the people before the billionaires.
While youre at it put a 0.5% tax on all stock trades to go toward it too
Its that simple, fixed forever, youre all welcome i saved social security, Bronze is my preferred medium for my future statues all across america as the savior of Social Security
Raising the FICA cap, even if you didn't give high earners a credit for the extra wages that are now subject to the tax, is not enough to make the program solvent. They tax rate also needs to be raised on everyone from 12.4% to 14.4%.
This isn't a radical solution. It's been the solution to looking insolvency since the beginning of the program. The tax rates have been raised about 20 times since the program started. Every generation has paid more than the previous one.
Still no. It actually needs to be slightly higher than a 2% increase in the tax rate to keep the program solvent over 75 years.
People are living longer and having fewer kids. That means there are fewer workers supporting each retiree and each retiree has to be supported for longer. Taxes have to go up.
It hasn't been proposed, but I think that a great option would be to scale benefit amounts with the number of children a person has had. The biggest problem with social security is the current era's vanishingly small fertility rate. People who are doing their part by having kids should get more than people who aren't, especially considering that the enormous cost of raising kids probably means those people have had more limited opportunities to save. Obviously we could make exceptions for people who are medically unable, but in general, if you don't have kids, you should get less out.
I think it would probably be better to have higher rates on people without children. Most people aren't basing their decisions on what's going to happen 30 years in their future. The investment in raising your children should be considered part of your contribution and if you aren't making that investment you should be taxed more so that you still are investing in the program.
That's actually an awesome idea. Raise the rate 6% and knock off 2% for each dependent child. If everyone had three kids, the program would have no problem at the current rate. I'd still like to see some components of benefits tied to children, since the people who chose not to have any children over the past 20 years and caused the problem the first place shouldn't really get off scot-free.
Seriously. All of retirement systems took for granted that people would have kids
But then people figured out the neat life hack of not having kids, not investing time, money, and resources in the next generation, which allowed them to have more resources for themselves and then other people's kids would support them in their old age. We really shouldn't let people play society for a bunch of suckers like that.
That makes sense. I’m very frustrated with Congress that they didn’t bump the rate just a little decades ago. It’s not like we didn’t know this was coming.
It is what it is. If you read into the history of Social Security, they usually wait until the last minute to fix it. It's just not a pressing issue until then.
I'm not seeing anything indecent about workers supporting the elderly and disabled as they have for 90 years. That sounds like how it should work. That's the social contract. You work when you are able and provide support to those who can't.
You are acting saintly in your please for the elderly and disabled to get 70-80% of what the sane people today get, aren’t you.
Remove the cap, the rich pay their share same as I do and we protect those people you describe. The wealthy don’t even notice and it is zero change to their lives while it saves lives of our own people, just the way it’s been. Your prayers are answered.
While we're at it, we should raise tax rates on everyone, because your can't cover the gap by removing the cap. That only closes half of the short fall. Americans are just going to have to grow up and pay more taxes.
I think Americans need to realize that they've spent the past 40 to 50 years having their taxes cut and government benefits expand and they've been getting a free ride. Your parents paid more in taxes than you do, as did your grand parents. Let's go back to that. You should have some skin in the game, rather than saying it's someone else's responsibility to pay. Almost every other developed country taxes it's middle class and poor far more heavily than the US.
That's an attitude that will result in nothing getting done. Putting all the effort into what might be the better but harder solution means if that solution doesn't happen because there isn't enough political capital or whatever, then no solution happens.
Taking the easy, particularly the easier pro-corporate, way is a large part of why we are fucked today. I’m fucking sick of the greatest, most powerful country on earth making excuses why they can’t even compete with moderate European countries.
Just get it over with and bump taxes by 5% for everyone. It's fair and it closes the gap. If people feel that is too much, cut initial benefits until people are happy with the required tax increase to keep what's left. Personally, I favor a 3% tax increase and 10% initial benefit cut.
Eliminating the cap only covers 50% of the shortfall, unless you intend to have those people pay in without getting credits for the additional money they paid, in which case i still only covers 68% of the shortfall. That, however, is a terrible ideas because one of the reason Social Security has been so long-lived and untouchable is because it's a "benefit for everybody". Add to that that even the current benefit formula is highly progressive, and no cap with no additional benefits is likely to cause people to start attacking social security in earnest.
Eliminating the cap only covers 50% of the shortfall, unless you intend to have those people pay in without getting credits for the additional money they paid, in which case i still only covers 68% of the shortfall. That, however, is a terrible ideas because one of the reason Social Security has been so long-lived and untouchable is because it's a "benefit for everybody". Add to that that even the current benefit formula is highly progressive, and no cap with no additional benefits is likely to cause people to start attacking social security in earnest.
For a long time I didn’t know about the cap but when I found out about it I couldn’t believe it. It’s actually staggering how much wealth has been kept out of the social security system.
You're missing his point. By applying it to only earned income (not investments), it misses the vast majority of where wealth is accumulated. Apply it to investment income over 250K per year, and that'll collect far more than removing income caps.
Removing the cap wouldn't capture a most of the income from billionaires and such. But it is a relatively simple thing that would dramatically improve things without hurting anyone financially.
That would be a difficult number to determine, though, in a fair manner. I think all compensation has a value that could be determined as it is provided to an employee. Set up a compensation revenue source for higher earning people (with a match from the employer, like the rest of us have for our earnings). Also, no one should be receiving $100,000 per year in benefits, either imo. There needs to be a cap on yearly benefits received, too.
No "one" receives 100k in benefits. That occurs when BOTH spouses have worked, BOTH maxed out their payments for 35 years, AND BOTH delayed payments till they hit 70, and you combine BOTH benefits.
Also, people aren't stupid. If you put a hard cap, people will move their numbers around to avoid it by retiring earlier and/or starting benefits earlier, making SS even less viable as those are the people who get the least back in terms of what they've paid in.
Again, tying payments only to employer-provided compensation leaves the bulk of actual wealth accumulated off the table for social security. There really shouldn't be any reason why that's the case, particularly when capital gains rate is just half that of income tax at the highest brackets.
Look at what I wrote. Notice where I say “over the current limit.” Envision a world where I might be describing a hypothetical instead of talking about the current system. Try to show me where your correction applies.
The benefits are also capped, that's why the contribution cap exists. But isn't that interesting, everyone thinks of social security as 'their' money because they pay in, even though current benefits are way more than anyone paid in, and to fund it, you just want more of other people's money.
You missed my point entirely. I’m pointing out all the wealth that is left out of the social security system from investments. Elon Musk famously gets like a 60,000 dollar a year salary from both Space X and Tesla yet his ownership of stock in both companies makes him worth hundreds of billions. That’s money that does not make it back into the system.
And raising the cap would do nothing to change that at all. We need to be raising the NIIT instead of more taxes on people who work a job for a living.
They did it for Medicare tax. Why not social security?
It should be a combination. The cap is 184,000 as far as I remember. Uncapping that would ensure that high wage earners are taxed appropriately if they are high earners . A tax on investments should also be implemented.
You talk about Medicare but you do know Medicare isn’t capped right and there’s even a 0.9% higher tax for high earners?
Yes, my point is we need to not just raise taxes on people who work for a living. If they captured all investment income, maybe they could even reduce the rate for those who work.
What evidence exists that high wage earners are not already taxed appropriately? The top 10% have a 50% share of income while paying over 70% of taxes. The bottom 50% have a 12% income share and pay 2% of taxes.
The premise that high wage earners aren’t taxed fairly does not stand up to scrutiny. Saying billionaires and wealth aren’t taxed appropriately is one thing - suggesting the most productive members of society relying on income that already pay way more than their fair share need to somehow pay more is disgusting. We should reward the ambition, perseverance, and sacrifice it takes to become a high earner. Not penalize them because others have poor financial discipline and feel entitled to more.
The money does make it back to the system as Space X and Tesla pays salaries for doing business which is then taxed. Stock is not money sitting in some bank account doing nothing.
Social Security is not a pension, nor was it intended to be. Social Security is an insurance program. It insures again complete destitution.
The tax you pay on your wages, insures a portion of them, should you become old or disabled. The portion of wages that you don't pay taxes in aren't insured and you don't get a portion of them once you can no longer work. You also get a smaller and smaller portion of your wages insured as your earn more and more. The points at which further dollars insure less are called bend points.
People over the cap aren't paying anything or getting anything back.
It was not designed to be one. Sure. However, when FDR pitched the program he also pitched an additional system of voluntary annuities that would basically supplement the benefits and provide a more wholistic retirement. That part of the program failed and subsequently over American history social security has been broadened out to basically be the retirement program for Americans. I don’t care that much about how Social Security was designed compared to how it functions for America today.
It didn't really fail in the sense that we have them now in the form of IRAs. We very much have the system he envisioned. Americans don't save enough for retirement despite having some of the highest levels of disposable income on earth.
They aren't getting anything back from the program for the money that isn't taxed. They also subsidize everyone else in the program. Because they are only getting back 15% on most of those dollars, 85% goes to other people.
Sure, as it should be. Again, we exist within a series of communities. Just because a few of us is able to insulate themselves from the tiresome toil doesn’t mean they should be excused from contributing to the society that, largely because of those same tired toilers, built their wealth.
They pay far more in taxes than kindergarten teachers. They subsidize you on that front as well. The US relies heavily on people far above median income for it's tax revenue. Your effective tax rate doesn't rise above zero until around median income.
I'm starting to think you might not understand the tax code any better than you understand Social Security. The United States has one of the most progressive tax codes on Earth and has high earners bear the vast majority of the tax burden. Most developed nations tax people with lower incomes at much higher rates.
Why is your solution to raise the cap and not raise the rate on everyone. That would be more fair, wouldn't it? And you think SS is a great program worth saving, don't you? Just not with your money I guess? Odd.
Don't put words in my mouth. For better or worse we have a progressive income tax system. However SS is intentionally structured how it is so everyone's supposed to pay in. It already is progressive, but it's not meant to just be a transfer. That's why you earn credits towards it as you work.
No it’s capped because the wealthy are wealthy and wealth bring power and power brings corruption. Wealthy people who purchased legislation dont want to contribute and live as sociopaths. That’s why there is a cap.
It’s fucking unamerican to have a class of kings, IMO.
It's not a mystery. People understand that. But that doesn't change the fact that FICA should be uncapped, while leaving the cap on benefits. It's how you fix the problem.
Yeah no. The wealth gap in this country is massive. Making the rich pay more is a far better solution than forcing the working poor to work into their late 70s.
I doubt it would reduce the wealth gap meaningfully. Or prevent people from becoming wealthy. But it would solve social security funding problem. Which is the main point
Are we raising benefits with the cap!? I already pay a 50% effective tax rate and get FUCKING NOTHING for it. I see plenty of people with no financial discipline complaining about how taxes are too low while contributing nothing.
When are we going to have a real conversation about our spending issues? Why are we fucking over the W-2 workers who are the most productive, intelligent members of society who are loaded with student debt and can’t afford a house?
Taxing billionaires is one thing, but raising the FICA cap just fucks over the people who already pay the most and receive least. Anyone who actually understands economics knows this is not the way forward.
I’d love to do this but raising the cap increases the payouts. Someone with an average salary of $1 mill would be getting like $13-15k/mo. The increased revenue would be null as it is.
Plugging that hole requires Congress to rewrite social security entirely because by law the money paid out is proportional to what an individual paid into it. And in Congress’ current state, they can’t even agree to get rid of daylight savings.
Won’t somebody think of the poor extremely wealth people? They will have to pay a tiny extra tax that will functionally not impact their lives at all. It’s way too unfair.
That will not fix it forever if the population trends keep on going the way they currently are, along with people liveing longer. Also a 0.5% tax on every stock transaction is both a really bad idea because you're destroying liquidity in the market, but also won't get you nearly the ruturns you may think because people are going to act far different if such a tax were implemented.
We might get a small increase in FICA tax, but I’ll bet money the cap won’t be completely removed mainly because if we can increase taxes on those making over roughly $200K by 12.4%, we need it for healthcare, education, deficit/debt reduction, environment, and much more.
Second reason is that group won’t get much in return because of the benefit curve.
If we are lucky, we’ll get a small increase in tax, a bigger than usual increase in cap, increase in full retirement age, etc. Enough to kick can down the road another 20 years.
There will be a dramatic rise in senior homelessness and suicide. No way the regime will fix Social Security. They want it, and Medicare, gone. So do the majority of Americans, which is why they voted fir this.
Im 50 and will depend on Social Security in retirement and I am one with a 401k. There are many people my age with out any savings. If they take away social security there will be riots in the streets. I don't think they have thought through the desperation this will cause. maybe not giving billionaires and business owners tax cuts over the last 25 years could have helped avoid this.
If everyone on SS took a 20% cut, there’s going to be a mutiny toward CONgress. People may not care about much but be willing to riot if stuff like SS is cut. Many use it as their only source of income.
Guys! Chill! They are working behind the scenes to put our social security money into high yield meme coins . The money we all make from those coins PLUS the beanie baby reserves will have us all living FAT!
Let's all be clear: there is no easy way out of this.
If you attempt to transition to private accounts, that's money drained from the social security pipeline. But not enough money going into SS is already the problem, isn't it?
To actually end SS and transition to another system, you'd have to double charge people... To make the current payments and also to start funding the private accounts.
And then we have to talk about how those private accounts work. The last time I saw a serious proposal, enrollees were going to be offered a very limited number of choices of investment... becuase this money needs to be available. What good is a pension program where you can invest in Pets.com?
Instead, we could have been managing SS properly. FFS, it was a big issue in the 2000 debates. Bush's ludicrous private accounts VS Gore's asinine "lock box". God forbid we make a hard choice to increase taxes or reduce benefits or... Means test (not a fan, but any port in a storm)
> Let's all be clear: there is no easy way out of this.
There absolutely is an easy way out of this.
1.)Eliminate the "salary cap" on social security taxation
2.)Raise taxes on the wealthy and on non-productive activities (like high frequency trading)
There ya go. Maybe you meant, won't be politically easy, and that's correct, but the solution is pretty simple. Hell, just eliminating the salary cap would fix social security for 2-3 decades.
Fuck your pedantic bullshit. "politically" IS the goddamn hurdle. To get that passed will cost some politicians their jobs... Which means it's unlikely to happen. Or "hard".
If people are living longer today than they were when it was introduced why not just raise the age of collection by the equivalent amount of years and raise the cap a little bit. Everyone sacrifices a little
I wish they abolish it right now so boomers would finally be forced to sell their homes. The baby boomers created this mess so they should lose the funds, perhaps pause social security for ten years while we fund it for future generations.
Tasty_Sun_865 | a day ago
Wait until people realize the trump accounts and a generation of telling people the money won't be there was a way to soft sell the elimination of social security.
Jest_out_for_a_Rip | a day ago
Every generation is told the Social Security trust fund will run out. And it will, unless the tax rates are raised. And every generation, up until this one, has had their tax rates raised. The OASDI tax rates have been raised about two dozen times since the start of the program. Every generation has paid more than the previous. People just need to do what previous generations have done.
https://www.ssa.gov/oact/progdata/taxRates.html
Lord_Vesuvius2020 | a day ago
The Trust Fund will run out but Social Security does NOT run out. Most of the benefits paid are collected by the payroll tax. If Trust Fund runs out, benefits reset to equal what is collected by the payroll tax. This would be a -23% cut but it would not be gone. But since it’s necessary to keep repeating this and younger people keep believing it will be gone then it probably will be repealed or completely privatized to 401k-like. Like every other safety net program in the US. Game over, man.
Icy-Lobster-203 | a day ago
Is there a reason why Americans are so against having social security invested and managed so that it actually grows at a rate sufficient to sustain itself?
Canada has an equivalent to social security in the Canada Pension Plan, that actually gets invested, and as a result is sufficiently funded for 100 years?
Lord_Vesuvius2020 | a day ago
No. Americans would have no problem with Social Security being run like large state pension systems like NYSTRS. IMHO the fear is not from regular people, it was from many in the government (and the Congress) who think there is too much risk in having a large federal system compromising the private financial sector. Regular Americans want Social Security to remain financially secure. Canada did this right. US didn’t.
brilliantminion | a day ago
I wouldn’t put it past Goldman or JP Morgan to gamble our fucking social security away like they do everything else. Maybe if something had been put in place before the 1970s I’d trust it, but not today.
Doctor_Shotbottom | a day ago
This administration cannot be trusted
Reagalan | 10 hours ago
The Biden and Obama administrations could be trusted. Democrats don't steal like this (they stick to insider trading).
ell0bo | a day ago
Could you imagine what Trump would do with such a system? Holy hell, he'd buy shares of his own stock and we'd end up getting fleeced.
I think it's a good idea, but it almost would have to be its own federal elected position. Right now it goes into bonds I do believe, which gives them other flexibility.
RETARDED1414 | a day ago
Haha, the social security money is invested in us treasury bonds...it gives the us more room to play with money on the federal level.
Illustrious-Lime-878 | a day ago
Thats exactly it, people don't realize if you want to invest SS in something, then you'd have to pay the exact extra taxes to do that... We wouldn't want to pay the gov to centrally plan a massive investment fund but for some reason if you mentally account it for a national pensions people think its a good idea...
polar_nopposite | a day ago
Because that's just not how social security works, and there would be no great way to transition to it even if it were A) a good idea, and B) what everyone wanted.
Most social security payments (~$1.5T) come directly from payroll taxes (~$1.5T) in any given year. There is only around two years' worth "saved up" in the social security coffers (~$3T). So even if that were entirely invested at 10% ROI (average nominal returns from stock market), and we literally never have a bad year for returns ever again (lol), those returns would only cover 20% of total benefits.
It's the equivalent of asking a person that is living paycheck to paycheck, with only a small emergency fund saved, why they don't simply supplement their income with investments.
MediocreAssociate466 | a day ago
I'm gonna assume you don't live in the us based off your comment. Our president is currently shilling cryptoscams and his own company 24\7. If this current federal government was actually allowed to invest all the money in social security currently , we would have the largest crash in the history of the world in short order.
The money would never grow at a steady rate because we have con men and hacks pretty much everywhere in our government. I mean a former heroin addict is running the health and human services department telling people vaccines aren't safe.
Finfeta | a day ago
LOL! You obviously have no idea what the max CPP benefit is in Canada, do you?... It's a measly 1,100 USD equivalent, compared to the social security's max benefit of 5,200 USD.
Icy-Lobster-203 | a day ago
CPP contributions cap out at around 75,000k CAD (they recently added a second layer into it though, is something like 82k somewhere), whereas SS has contributions to over $180k USD. So of course it pays out less.
But again...it's actually funded.
Illustrious-Lime-878 | 21 hours ago
What is meant by "actually" funded? CPP is "funded" by contributions, SS is "funded" under the same criteria.
Looking at the stats, CPP pays about $61 billion CAD benefits vs $82 billion in contributions. So its "funded" right off the bat from contributions. The difference is that the contributions are more than the benefits, not that the surplus was invested.
The surplus investment fund is about $780b CAD, which to be fair is pretty big, but still probably about half the size of what would probably be needed to reasonably say it could sustain those CPP benefits on its own, assuming historical investment returns continue, and 10-20 year periods of no returns would be completely expected possibilities.
Now the average CPP benefit seems to be far less than social security, $6,700 USD vs $25k/year. And 75 million Americans take SS vs 6.6 on CPP. So SS would need a fund like $25T USD (!) to have the equivalent funding, which is again, about half the size of what would be needed to be reliably "fully" funding. The maximum surplus in history was $2.9T.
These programs will always rely primarily on contributions, and being funded is about the sustainable balance of benefits to contributions, the investments play very little role. The CPP's advantage is mostly that the benefits are way scaled back to a reasonable level.
Illustrious-Lime-878 | a day ago
Because there is no really reason to concentrate ownership in some fund when the gov could just tax the same underlying economic for the same revenue. There is no reason to have the gov or really any other pension or w/e to amass some massive quantity of concentrated capital instead of just tax...
The problem with SS is entirely the way the costs and benefits are regressively distributed, not that a running surplus isn't isolated in some gov account to generate the same yield it would be in the private sector where it could be taxed all the same.
Icy-Lobster-203 | a day ago
That doesn't answer the question. You would take the money that is generated via tax, and invest it so that it is able to sustain itself.
The money is still concentrated in a fund now, but isn't being invested, and is only generating interest via bonds, and this has lead to the present problem.
Again, in Canada, where we contribute approx 6% of our pay, and approx 6% by the employer (just like SS) the fund is funded such that next year they are actually reducing the tax contributions that we pay into it slightly, instead of needing to increase the amount that is paid in.
Why are Americans so opposed to doing something similar?
Illustrious-Lime-878 | a day ago
That's not how it works tho. You are thinking its like an investment held aside for each person. Social security is whats called pay-as-you-go, sort of like a ponzi scheme (but made to be sustainable). The benefits are intended to entirely paid by current inflows. There isn't supposed to be any surplus, because the surplus is just in a gov account, held out of circulation, so its effectively captured by the gov as taxes that replace the need for equivalent revenue. The only point of the surplus as a virtual accounting scheme is as a statutory mechanism for cutting the program automatically if the imbalances of flows remains negative for too long.
So if you want to invest an SS surplus (the entire problem is there isn't one right now, outflows exceed inflows and are being made up by current spending), it has to funded all the same as any other government expense. Because the money is all fungible. SS tax isn't really different than any other tax. So really, why should the government run a side hustle investment bank? It doesn't need to, it can just tax and pay the SS.
Icy-Lobster-203 | a day ago
Right - my question is why not reform SS so that it actually becomes sustainable via being supported by investing some of the funds.
If the system is not sustainable, improve it to make it sustainable via investment.
CPP is not held aside for each person. We pay a tax along with our employers (just under 6% each, which is very similar to SS) that goes into the fund, and those funds get invested together to sustain the program.
Illustrious-Lime-878 | a day ago
But I'm trying to tell you.. there is no surplus to invest... If all the extra SS payments were invested there would have had to been an additional tax revenue to fund it all the same because the surplus SS tax just effectively became normal tax.
You could "fix" SS by just adding the extra tax now. To have a surplus to invest you'd have to tax even more additionally just so the government could have extra to role play as a fund manager. Why? Just tax what is needed, the capital exists in the underlying taxable economy all the same.
The problem with SS is the distribution of the tax on primarily poor people, and the distribution of its benefits to people who don't need it at all. There is no investment solution. Or if you want the government to run an investment fund, it doesn't need to be mentally accounted for social security than any other gov expense (it would just be like a side gig for the gov for extra revenue).
OddlyFactual1512 | 22 hours ago
Having SS invested wouldn't address the current issue. Here's a history and explanation why it wouldn't address the issue:
Moving to an investment fund by slowly increasing the portion of the trust fund that is invested in riskier assets over time is the way other nations have moved to the system you describe. However, that requires the trust fund to be have sufficient funds to be solvent for 15-20 years. In other words, if this had been done prior to 2010, it would have worked. Doing it now would just add unnecessary risk.
Lord_Vesuvius2020 | 21 hours ago
So then the future for Social Security is bleak or at best unknown. And I have heard different estimates for the Trust Fund exhaustion from 2031-2034. I am betting sooner rather than later. The stealth “Trump accounts” for babies seem to be the elephant’s footing the tent towards privatization of Social Security. If younger workers are given the choice to have individual investment accounts that would affect payroll tax collection negatively. That in turn collapses the current system. I guess it is time to face up to inevitable end of the program as we have known it. If Republicans control the government after 2028 expect the personal account privatization. If Dems then expect means testing welfare-like benefits.
OddlyFactual1512 | 20 hours ago
>That in turn collapses the current system. I guess it is time to face up to inevitable end of the program as we have known it.
When the trust fund is exhausted, if it isn't funded by other means, the shortfall will be about 23-24%. A reduction of benefits is more likely than a complete elimination. Finding another means of funding is the most likely short term remedy. If a party were to reduce benefits by 23-24%, they would lose the next election in a landslide.
Lord_Vesuvius2020 | 20 hours ago
I hear ya. But if the speed run is to change payroll tax into individual “Trump account-like” investment accounts that will kick out funds from the payroll tax that supports current beneficiaries. So we could imagine a transition where the new “freedom accounts” are mandated starting with a certain age and deadline. The legacy system would wind down and be supplemented from the general fund. It would support a smaller pool of beneficiaries each year.
Ruminant | a day ago
But CPP is really only superficially "equivalent" to Social Security. Social Security's benefits formula is intentionally "progressive": the lower your average wages while you were working, the larger the percentage of those wages that it replaces in retirement. The Canadian programs most equivalent to Social Security are arguably Old Age Security (OAS) and Guaranteed Income Supplement (GIS).
Your question is kind of like asking why Canadians would be against eliminating OAS and GIS to lower worker's taxes and then raising the CPP contributions by an equivalent amount.
Icy-Lobster-203 | a day ago
OAS and GIS are paid out of the general government budget, and isn't sustainable.
I compare SS to CPP because both are funded by a tax paid by the worker and the employer, and as such they are equivalents of one another. CPP also pays out more of a portion of a person's employment when they are in a lower income, just like SS.
Ruminant | a day ago
>CPP also pays out more of a portion of a person's employment when they are in a lower income, just like SS.
I don't think this is right. CPP replaces a flat percentage of your Year's Maximum Pensionable Earnings. That percentage was 25% and is transitioning to 33%. But importantly, it is a flat percentage. It's 33% for a YMPLE of $74,000 and 33% for a YMPLE of $37,000 and 33% for a YMPLE of just $7,400.
That is quite different from the Social Security. Social Security's concept of "average indexed monthly earnings", or AIME, is similar to CPP's YMPLE. But the benefits calculation is not a flat rate. Instead, Social Security pays
(Bend points are just income thresholds)
Low-income earners can see Social Security replace up to 83-90% of their incomes in retirement, while higher earners may only get back 30% of their "average indexed monthly earnings" in retirement (and that AIME is capped just like the YMPLE). That is not at all how CPP works. With CPP, both the low earner and high earner would see it pay out the same percentages of their YMPLEs.
>I compare SS to CPP because both are funded by a tax paid by the worker and the employer
Yes, Social Security is funded by a payroll tax on workers and employers. But that is largely where the similarities to CPP end. The programs have very different intentions and benefits formulas. The purpose of Social Security is much more in the spirit of OAS and GIS than CPP.
Icy-Lobster-203 | a day ago
CPP and SS are both designed to be programs funded by direct contribution from a portion of workers wages and their employers. The money in both programs is paid into a specified fund where it is used to make payment to retired workers. That is why I am using them for this discussion.
They are the two programs where governments could do something with the funds to ensure that they grow sufficiently to maintain the programs because they have the pool of funds. It is the manner in which the programs are funded that makes them relevent to this discussion. Neither OAS nor GIS function in that manner. OAS works the same way as many of the European pension systems which are sending multiple countries towards bankruptcy.
The calculation of the benefit amount is not relevent.
JitteryJoes1986 | 21 hours ago
Why tf is everything turning into a 401k these days?
NewToHTX | a day ago
If this is the Argument that Republicans have always pushed, then why not keep the Zoning Laws and have the government start building housing in areas where housing cost are outrageously high? Because if they are okay putting everyone's retirement on the casino stock market then why not flood the market with affordable housing? Thus Boomers and big corporations stop hoarding housing and prices come down. Then they can take that money they were using to hoard housing and put it in the casino stock market that they want to put everyone's retirement on.
OddlyFactual1512 | 23 hours ago
>the casino stock market
Most uneducated/ignorant comment today.
Doctor_Shotbottom | a day ago
Raise rates and remove the earnings ceiling.
TheGoodCod | a day ago
Money becomes available at 18. So the question is how many 18 year olds won't touch that money until they are 68+?
They need transportation,or to pay for schooling (college/trade) or they need cash when their parents kick them out.
I honestly don't know what these accounts are meant to do but in current circumstances I can't see it being retirement related. Just politics, do you think?
Tasty_Sun_865 | a day ago
"That was their choice!" It isn't about doing anything substantive, it's about creating an illusion of choice so the sale of social security's termination is easier to accept. Very much the same way defined benefit pensions shifted to defined contribution.
I absolutely agree that it's political.
Helpful-Wolverine555 | a day ago
Giving people a choice is the reason there’s social security in the first place. If it’s not there, the government is just going to have to pay for a bunch of old homeless people that didn’t have the means, knowledge, or forethought to invest in their retirement.
Illustrious-Lime-878 | a day ago
>the government is just going to have to
But you see, that's not this admin's or any of their crony donor's problem. They get the liquidity inflows now.
HedonisticFrog | a day ago
Exactly. Just like how he gamed tax withholding so people thought they were paying less in taxes and they'd spend more. Then they got a rude awaking come tax season. If people don't pay into social security they'll spend more now and suffer more later, but later isn't his problem.
Illustrious-Lime-878 | a day ago
Of course it is. Never take anything this admin says at face value. The entire point is to force people to have to lock up "their" money in an account they can only invest into w/e the gov lets them (right now only 100% US, mega-cap tech heavy broad indices). Yeah, maybe they'll get good return if they don't try to trade the index (in or out is all the control they really have) and panic sell the next crash, but the immediately benefactors are the majority owners of those mega cap tech stock who capture the power of that capital immediately, incl. tech founder billionaire cronies of the admin. Index investing is good when the market has the choice, not when it becomes a forced piling of money into stocks regardless of fundamentals which creates bubbles, malinvestment, and further concentrates wealth and power.
JohnSith | a day ago
Available at 18 with huge penalties and in reality, actually available at 65.
Slumunistmanifisto | a day ago
Soft sell < manufacturing consent.
bk7f2 | a day ago
What looks strange for me is the cruelty of what this regime do. They quickly do everything in most radical form. At this pace, most of population will end up with unlivable conditions in years. This is unsustainable without really high level of violence from the regime.
By contrast, the EU approach in a compromise. Many European countries have high level of inequality but the system works because of social security and universal healthcare. So the very rich can coexist with the poor because those poor are not at the edge of surviving.
Looks like the US rich decided that this is not enough for them, they want everything. So fuck compromises.
Taako_Cross | a day ago
The longer Congress waits to act the worse the solution will need to be.
However a majority of the current Congress has proven they’d rather sit on their hands than do the right thing.
They could just reintroduce SS tax on earnings above $400,000 to help alleviate the burden on middle class.
korinth86 | a day ago
The current majority of congress wants to end social security. Its part of the reason they created the while Trump accounts thing. Ted Cruz said it the other day.
They can't take away older people's SS but people under 18 "can" start building now and it'll easier to get rid of.
Hopefully they do but as it is people dont put away enough for retirement.
MrsMiterSaw | a day ago
Please do the math for us on how SS could be phased out; especially explaining which people will pay in and not receive benefits and how you think they'll be OK with that.
wastingtoomuchthyme | 17 hours ago
They're just going to privatize social security and steal the money and make it vulnerable to all the predators on Wall Street..
It's not going to end well for the vast majority of people.
OddlyFactual1512 | 22 hours ago
>majority of the current Congress has proven they’d rather sit on their hands than do the right thing.
One party has put forward many bills to help improve the solubility of the trust fund, including raising the cap on SS payroll tax, increasing the OASDI rate for employers and employees, and adding non-payroll taxes.
The other party has put forward many bills to reduce SS benefits.
Neither is doing nothing ("sit on their hands"), but only one puts the people before the billionaires.
padizzledonk | a day ago
RAISE THE FUCKING FICA CAP
While youre at it put a 0.5% tax on all stock trades to go toward it too
Its that simple, fixed forever, youre all welcome i saved social security, Bronze is my preferred medium for my future statues all across america as the savior of Social Security
I dont understand why this is such a mystery
QV79Y | a day ago
Why might be because many people do not actually want to see the system fixed.
SenorCustomer | a day ago
Those who believe they gain nothing from the system don't object to its destruction.
The frog is enjoying his soak lmao
IM_A_MUFFIN | a day ago
The same people that believe government is a business instead of a service for the betterment of the place you live.
DrawesomeLOL | a day ago
Ya got Ted Cruz admitting Trump accounts are thier vehicle to privatize social security the other day.
jondubb | a day ago
People in control either don't want it fixed, or feel fomo and want their cut before it implodes.
SnowdensOfYesteryear | a day ago
Right. The people who are 'paying' for social security don't need social security
Jest_out_for_a_Rip | a day ago
Raising the FICA cap, even if you didn't give high earners a credit for the extra wages that are now subject to the tax, is not enough to make the program solvent. They tax rate also needs to be raised on everyone from 12.4% to 14.4%.
This isn't a radical solution. It's been the solution to looking insolvency since the beginning of the program. The tax rates have been raised about 20 times since the program started. Every generation has paid more than the previous one.
https://www.crfb.org/socialsecurityreformer/
https://www.ssa.gov/oact/progdata/taxRates.html
snowtax | a day ago
What about after the baby boomers?
Jest_out_for_a_Rip | a day ago
Still no. It actually needs to be slightly higher than a 2% increase in the tax rate to keep the program solvent over 75 years.
People are living longer and having fewer kids. That means there are fewer workers supporting each retiree and each retiree has to be supported for longer. Taxes have to go up.
danjayh | a day ago
It hasn't been proposed, but I think that a great option would be to scale benefit amounts with the number of children a person has had. The biggest problem with social security is the current era's vanishingly small fertility rate. People who are doing their part by having kids should get more than people who aren't, especially considering that the enormous cost of raising kids probably means those people have had more limited opportunities to save. Obviously we could make exceptions for people who are medically unable, but in general, if you don't have kids, you should get less out.
Jest_out_for_a_Rip | 22 hours ago
I think it would probably be better to have higher rates on people without children. Most people aren't basing their decisions on what's going to happen 30 years in their future. The investment in raising your children should be considered part of your contribution and if you aren't making that investment you should be taxed more so that you still are investing in the program.
danjayh | 14 hours ago
That's actually an awesome idea. Raise the rate 6% and knock off 2% for each dependent child. If everyone had three kids, the program would have no problem at the current rate. I'd still like to see some components of benefits tied to children, since the people who chose not to have any children over the past 20 years and caused the problem the first place shouldn't really get off scot-free.
Jest_out_for_a_Rip | 12 hours ago
Seriously. All of retirement systems took for granted that people would have kids But then people figured out the neat life hack of not having kids, not investing time, money, and resources in the next generation, which allowed them to have more resources for themselves and then other people's kids would support them in their old age. We really shouldn't let people play society for a bunch of suckers like that.
snowtax | a day ago
That makes sense. I’m very frustrated with Congress that they didn’t bump the rate just a little decades ago. It’s not like we didn’t know this was coming.
Jest_out_for_a_Rip | a day ago
It is what it is. If you read into the history of Social Security, they usually wait until the last minute to fix it. It's just not a pressing issue until then.
emp-sup-bry | a day ago
And hence their .5% on stock trades.
Jest_out_for_a_Rip | a day ago
It's easier to reform the program the way it has been done 20 times than to create entirely new funding mechanisms.
emp-sup-bry | a day ago
I don’t care what is easier. I care what is better and more decent.
Jest_out_for_a_Rip | 18 hours ago
I'm not seeing anything indecent about workers supporting the elderly and disabled as they have for 90 years. That sounds like how it should work. That's the social contract. You work when you are able and provide support to those who can't.
emp-sup-bry | 15 hours ago
You are acting saintly in your please for the elderly and disabled to get 70-80% of what the sane people today get, aren’t you.
Remove the cap, the rich pay their share same as I do and we protect those people you describe. The wealthy don’t even notice and it is zero change to their lives while it saves lives of our own people, just the way it’s been. Your prayers are answered.
Jest_out_for_a_Rip | 15 hours ago
While we're at it, we should raise tax rates on everyone, because your can't cover the gap by removing the cap. That only closes half of the short fall. Americans are just going to have to grow up and pay more taxes.
I think Americans need to realize that they've spent the past 40 to 50 years having their taxes cut and government benefits expand and they've been getting a free ride. Your parents paid more in taxes than you do, as did your grand parents. Let's go back to that. You should have some skin in the game, rather than saying it's someone else's responsibility to pay. Almost every other developed country taxes it's middle class and poor far more heavily than the US.
https://taxpolicycenter.org/statistics/historical-average-federal-tax-rates-all-households
Expandexplorelive | 21 hours ago
That's an attitude that will result in nothing getting done. Putting all the effort into what might be the better but harder solution means if that solution doesn't happen because there isn't enough political capital or whatever, then no solution happens.
emp-sup-bry | 15 hours ago
Taking the easy, particularly the easier pro-corporate, way is a large part of why we are fucked today. I’m fucking sick of the greatest, most powerful country on earth making excuses why they can’t even compete with moderate European countries.
danjayh | a day ago
Just get it over with and bump taxes by 5% for everyone. It's fair and it closes the gap. If people feel that is too much, cut initial benefits until people are happy with the required tax increase to keep what's left. Personally, I favor a 3% tax increase and 10% initial benefit cut.
WingerRules | a day ago
You can also greatly reduce the tax needed to raise to 1% by increasing retirement age by 1 year.
Here's a social security budget simulator
It can also be fixed simply by removing FICA cap and means testing high income earners.
Intelligent_Royal_57 | a day ago
Yea. It's ridiculously simply how easy this is and frustrating it hasnt' been done.
danjayh | a day ago
Eliminating the cap only covers 50% of the shortfall, unless you intend to have those people pay in without getting credits for the additional money they paid, in which case i still only covers 68% of the shortfall. That, however, is a terrible ideas because one of the reason Social Security has been so long-lived and untouchable is because it's a "benefit for everybody". Add to that that even the current benefit formula is highly progressive, and no cap with no additional benefits is likely to cause people to start attacking social security in earnest.
Source: https://www.crfb.org/socialsecurityreformer/
OkProcess5800 | 23 hours ago
yawn
Like social security hasn't been under attack since at least the Bush years.
Dems default position these days is "don't do anything, just hide in a corner or Republicans might make it worse later!"
danjayh | a day ago
Eliminating the cap only covers 50% of the shortfall, unless you intend to have those people pay in without getting credits for the additional money they paid, in which case i still only covers 68% of the shortfall. That, however, is a terrible ideas because one of the reason Social Security has been so long-lived and untouchable is because it's a "benefit for everybody". Add to that that even the current benefit formula is highly progressive, and no cap with no additional benefits is likely to cause people to start attacking social security in earnest.
Source: https://www.crfb.org/socialsecurityreformer/
SillyOyx | a day ago
For a long time I didn’t know about the cap but when I found out about it I couldn’t believe it. It’s actually staggering how much wealth has been kept out of the social security system.
Mundane-Charge-1900 | a day ago
The cap has nothing to do with wealth. It only applies to income from working a job, not investments.
dotcomse | a day ago
You’re missing the point. Captured W2 income over the current limit becomes wealth in the Social Security trust fund.
Nessie_of_the_Loch | a day ago
You're missing his point. By applying it to only earned income (not investments), it misses the vast majority of where wealth is accumulated. Apply it to investment income over 250K per year, and that'll collect far more than removing income caps.
mxzf | a day ago
Y'all are both right.
Removing the cap wouldn't capture a most of the income from billionaires and such. But it is a relatively simple thing that would dramatically improve things without hurting anyone financially.
ABobby077 | a day ago
That would be a difficult number to determine, though, in a fair manner. I think all compensation has a value that could be determined as it is provided to an employee. Set up a compensation revenue source for higher earning people (with a match from the employer, like the rest of us have for our earnings). Also, no one should be receiving $100,000 per year in benefits, either imo. There needs to be a cap on yearly benefits received, too.
Nessie_of_the_Loch | a day ago
No "one" receives 100k in benefits. That occurs when BOTH spouses have worked, BOTH maxed out their payments for 35 years, AND BOTH delayed payments till they hit 70, and you combine BOTH benefits.
Also, people aren't stupid. If you put a hard cap, people will move their numbers around to avoid it by retiring earlier and/or starting benefits earlier, making SS even less viable as those are the people who get the least back in terms of what they've paid in.
Again, tying payments only to employer-provided compensation leaves the bulk of actual wealth accumulated off the table for social security. There really shouldn't be any reason why that's the case, particularly when capital gains rate is just half that of income tax at the highest brackets.
Jest_out_for_a_Rip | a day ago
That is not true. W2 income over the limit is not taxed or captured. And it doesn't count towards your AIME for Social Security payments.
https://bipartisanpolicy.org/explainer/social-security-benefit-formula/
dotcomse | a day ago
Look at what I wrote. Notice where I say “over the current limit.” Envision a world where I might be describing a hypothetical instead of talking about the current system. Try to show me where your correction applies.
Waterwoo | a day ago
The benefits are also capped, that's why the contribution cap exists. But isn't that interesting, everyone thinks of social security as 'their' money because they pay in, even though current benefits are way more than anyone paid in, and to fund it, you just want more of other people's money.
dotcomse | 18 hours ago
“You”? Excuse you. I was explaining something, perhaps you can go make assumptions and be rude somewhere else.
SillyOyx | a day ago
You missed my point entirely. I’m pointing out all the wealth that is left out of the social security system from investments. Elon Musk famously gets like a 60,000 dollar a year salary from both Space X and Tesla yet his ownership of stock in both companies makes him worth hundreds of billions. That’s money that does not make it back into the system.
Mundane-Charge-1900 | a day ago
And raising the cap would do nothing to change that at all. We need to be raising the NIIT instead of more taxes on people who work a job for a living.
They did it for Medicare tax. Why not social security?
SillyOyx | a day ago
It should be a combination. The cap is 184,000 as far as I remember. Uncapping that would ensure that high wage earners are taxed appropriately if they are high earners . A tax on investments should also be implemented.
You talk about Medicare but you do know Medicare isn’t capped right and there’s even a 0.9% higher tax for high earners?
Mundane-Charge-1900 | a day ago
Yes, my point is we need to not just raise taxes on people who work for a living. If they captured all investment income, maybe they could even reduce the rate for those who work.
justice9 | 20 hours ago
What evidence exists that high wage earners are not already taxed appropriately? The top 10% have a 50% share of income while paying over 70% of taxes. The bottom 50% have a 12% income share and pay 2% of taxes.
The premise that high wage earners aren’t taxed fairly does not stand up to scrutiny. Saying billionaires and wealth aren’t taxed appropriately is one thing - suggesting the most productive members of society relying on income that already pay way more than their fair share need to somehow pay more is disgusting. We should reward the ambition, perseverance, and sacrifice it takes to become a high earner. Not penalize them because others have poor financial discipline and feel entitled to more.
DeathMetal007 | a day ago
The money does make it back to the system as Space X and Tesla pays salaries for doing business which is then taxed. Stock is not money sitting in some bank account doing nothing.
Jest_out_for_a_Rip | a day ago
Social Security is not a pension, nor was it intended to be. Social Security is an insurance program. It insures again complete destitution.
The tax you pay on your wages, insures a portion of them, should you become old or disabled. The portion of wages that you don't pay taxes in aren't insured and you don't get a portion of them once you can no longer work. You also get a smaller and smaller portion of your wages insured as your earn more and more. The points at which further dollars insure less are called bend points.
People over the cap aren't paying anything or getting anything back.
https://bipartisanpolicy.org/explainer/social-security-benefit-formula/
SillyOyx | a day ago
It was not designed to be one. Sure. However, when FDR pitched the program he also pitched an additional system of voluntary annuities that would basically supplement the benefits and provide a more wholistic retirement. That part of the program failed and subsequently over American history social security has been broadened out to basically be the retirement program for Americans. I don’t care that much about how Social Security was designed compared to how it functions for America today.
Jest_out_for_a_Rip | a day ago
It didn't really fail in the sense that we have them now in the form of IRAs. We very much have the system he envisioned. Americans don't save enough for retirement despite having some of the highest levels of disposable income on earth.
emp-sup-bry | a day ago
Bullshit they aren’t getting anything back. They are the few actually getting to live the American dream. They are getting it back in spades.
Jest_out_for_a_Rip | a day ago
They aren't getting anything back from the program for the money that isn't taxed. They also subsidize everyone else in the program. Because they are only getting back 15% on most of those dollars, 85% goes to other people.
It's a very progressive program.
https://bipartisanpolicy.org/explainer/social-security-benefit-formula/
emp-sup-bry | a day ago
Sure, as it should be. Again, we exist within a series of communities. Just because a few of us is able to insulate themselves from the tiresome toil doesn’t mean they should be excused from contributing to the society that, largely because of those same tired toilers, built their wealth.
Jest_out_for_a_Rip | a day ago
They do contribute to society. They subsidize you directly and substantially.
emp-sup-bry | a day ago
Well, guess what? They can have the privilege of doing so at rates similar to a kindergarten teacher or manager at Arby’s
Jest_out_for_a_Rip | a day ago
They pay far more in taxes than kindergarten teachers. They subsidize you on that front as well. The US relies heavily on people far above median income for it's tax revenue. Your effective tax rate doesn't rise above zero until around median income.
https://taxfoundation.org/research/all/federal/who-pays-taxes-federal-state-local-tax-burden-transfers/
I'm starting to think you might not understand the tax code any better than you understand Social Security. The United States has one of the most progressive tax codes on Earth and has high earners bear the vast majority of the tax burden. Most developed nations tax people with lower incomes at much higher rates.
https://www.oecd.org/en/data/indicators/tax-wedge.html
okiedokiesmokie23 | a day ago
This person doesn’t seem to have much interest in how SS works?
OddlyFactual1512 | a day ago
There is no cap on the Medicare portion of FICA. There is a cap on the SS portion. What you're trying to say is "raise the income cap on SS tax"
zhnki | a day ago
FICA is capped because benefits are capped. I don’t understand why this is such a mystery.
padizzledonk | a day ago
If the current fica tax isnt funding the program it needs to be raised and/or other supplemental funding added
This isnt rocket science
Waterwoo | a day ago
Why is your solution to raise the cap and not raise the rate on everyone. That would be more fair, wouldn't it? And you think SS is a great program worth saving, don't you? Just not with your money I guess? Odd.
1-Dollar-Doge-Coins | 21 hours ago
Why stop there? Why not have a flat tax and have the minimum wage cashier pay the same tax rate as the billionaire? Fairness, right?
Waterwoo | 19 hours ago
Don't put words in my mouth. For better or worse we have a progressive income tax system. However SS is intentionally structured how it is so everyone's supposed to pay in. It already is progressive, but it's not meant to just be a transfer. That's why you earn credits towards it as you work.
1-Dollar-Doge-Coins | 19 hours ago
That’s fine, as long as the current system allows it to remain properly funded. If not, there needs to be a change.
emp-sup-bry | a day ago
No it’s capped because the wealthy are wealthy and wealth bring power and power brings corruption. Wealthy people who purchased legislation dont want to contribute and live as sociopaths. That’s why there is a cap.
It’s fucking unamerican to have a class of kings, IMO.
Firetalker94 | a day ago
It's not a mystery. People understand that. But that doesn't change the fact that FICA should be uncapped, while leaving the cap on benefits. It's how you fix the problem.
NeglectedDuty | a day ago
Or raise the retirement age or reduce benefits instead of stealing more from others
Firetalker94 | a day ago
Yeah no. The wealth gap in this country is massive. Making the rich pay more is a far better solution than forcing the working poor to work into their late 70s.
NeglectedDuty | a day ago
You are going to reduce the wealth gap by taxing people making an income such that they can't get wealthy? Sounds genius!
Firetalker94 | a day ago
I doubt it would reduce the wealth gap meaningfully. Or prevent people from becoming wealthy. But it would solve social security funding problem. Which is the main point
MCB1317 | 23 hours ago
> Or raise the retirement age or reduce benefits instead of stealing more from others
Stealing? Damn ... everybody, we've got a temporarily embarrassed billionaire over here!
AENM1776 | 6 hours ago
Whats your definition of theft? And please explain how the FICA tax doesn't fit into that definition.
We will all await your mental gymnastics to justify force and coercion.
justice9 | a day ago
Are we raising benefits with the cap!? I already pay a 50% effective tax rate and get FUCKING NOTHING for it. I see plenty of people with no financial discipline complaining about how taxes are too low while contributing nothing.
When are we going to have a real conversation about our spending issues? Why are we fucking over the W-2 workers who are the most productive, intelligent members of society who are loaded with student debt and can’t afford a house?
Taxing billionaires is one thing, but raising the FICA cap just fucks over the people who already pay the most and receive least. Anyone who actually understands economics knows this is not the way forward.
dax331 | a day ago
I’d love to do this but raising the cap increases the payouts. Someone with an average salary of $1 mill would be getting like $13-15k/mo. The increased revenue would be null as it is.
Plugging that hole requires Congress to rewrite social security entirely because by law the money paid out is proportional to what an individual paid into it. And in Congress’ current state, they can’t even agree to get rid of daylight savings.
kaplanfx | a day ago
Won’t somebody think of the poor extremely wealth people? They will have to pay a tiny extra tax that will functionally not impact their lives at all. It’s way too unfair.
TheTav3n | a day ago
You’re asking politicians to raise taxes?! In a year that starts with 2?! What world do you live in?
Mamdani getting something on the vacation houses of multimillionaires in NYC was nothing short of a miracle.
Bubbly_Mushroom1075 | 13 hours ago
That will not fix it forever if the population trends keep on going the way they currently are, along with people liveing longer. Also a 0.5% tax on every stock transaction is both a really bad idea because you're destroying liquidity in the market, but also won't get you nearly the ruturns you may think because people are going to act far different if such a tax were implemented.
xoxide | a day ago
pretty simple stuff
ohhhbooyy | a day ago
That dosent fix it. Postpones it yes, but not fixed. Then 5-10 years later same issue. What’s next to raise the tax rate more?
Throwing more money at a problem then already gets trillions is not going to fix the problem.
Botasoda102 | a day ago
We might get a small increase in FICA tax, but I’ll bet money the cap won’t be completely removed mainly because if we can increase taxes on those making over roughly $200K by 12.4%, we need it for healthcare, education, deficit/debt reduction, environment, and much more.
Second reason is that group won’t get much in return because of the benefit curve.
If we are lucky, we’ll get a small increase in tax, a bigger than usual increase in cap, increase in full retirement age, etc. Enough to kick can down the road another 20 years.
alexunderwater1 | a day ago
Raise it? Just eliminate the cap entirely.
-_-k | 23 hours ago
As a millennial who will never see the benefits of decades of paying into SS.... Can I just stop paying and throw that money into my student loan?
rotervogel1231 | 22 hours ago
There will be a dramatic rise in senior homelessness and suicide. No way the regime will fix Social Security. They want it, and Medicare, gone. So do the majority of Americans, which is why they voted fir this.
jbochsler | 10 hours ago
Trump won 77,284,118 votes, or 49.8 percent of the votes cast for president. But only 65% of eligible Americans voted. There was never a majority.
The_time_it_takes | a day ago
Im 50 and will depend on Social Security in retirement and I am one with a 401k. There are many people my age with out any savings. If they take away social security there will be riots in the streets. I don't think they have thought through the desperation this will cause. maybe not giving billionaires and business owners tax cuts over the last 25 years could have helped avoid this.
ktaktb | a day ago
We will have robots and drones to deal w geriatric riots lol
UKEE93 | a day ago
If everyone on SS took a 20% cut, there’s going to be a mutiny toward CONgress. People may not care about much but be willing to riot if stuff like SS is cut. Many use it as their only source of income.
trickier-dick | 22 hours ago
Guys! Chill! They are working behind the scenes to put our social security money into high yield meme coins . The money we all make from those coins PLUS the beanie baby reserves will have us all living FAT!
MrsMiterSaw | a day ago
Let's all be clear: there is no easy way out of this.
If you attempt to transition to private accounts, that's money drained from the social security pipeline. But not enough money going into SS is already the problem, isn't it?
To actually end SS and transition to another system, you'd have to double charge people... To make the current payments and also to start funding the private accounts.
And then we have to talk about how those private accounts work. The last time I saw a serious proposal, enrollees were going to be offered a very limited number of choices of investment... becuase this money needs to be available. What good is a pension program where you can invest in Pets.com?
Instead, we could have been managing SS properly. FFS, it was a big issue in the 2000 debates. Bush's ludicrous private accounts VS Gore's asinine "lock box". God forbid we make a hard choice to increase taxes or reduce benefits or... Means test (not a fan, but any port in a storm)
MCB1317 | a day ago
> Let's all be clear: there is no easy way out of this.
There absolutely is an easy way out of this.
1.)Eliminate the "salary cap" on social security taxation
2.)Raise taxes on the wealthy and on non-productive activities (like high frequency trading)
There ya go. Maybe you meant, won't be politically easy, and that's correct, but the solution is pretty simple. Hell, just eliminating the salary cap would fix social security for 2-3 decades.
MrsMiterSaw | a day ago
Fuck your pedantic bullshit. "politically" IS the goddamn hurdle. To get that passed will cost some politicians their jobs... Which means it's unlikely to happen. Or "hard".
Fucking blocked for this shit.
OkProcess5800 | 23 hours ago
Old people are anxious over Social Security benefits they expect young people to pay for after pillaging the entire global economy.
I'm really not anxious about something I already know I'm never going to get.
nadirw91 | 18 hours ago
If people are living longer today than they were when it was introduced why not just raise the age of collection by the equivalent amount of years and raise the cap a little bit. Everyone sacrifices a little
ProfessorSmoker | 22 hours ago
I wish they abolish it right now so boomers would finally be forced to sell their homes. The baby boomers created this mess so they should lose the funds, perhaps pause social security for ten years while we fund it for future generations.