NO TAX INCREASE - Wages covered under SS are annually increased

[papau]

BUT WE DO NOT CALL IT A TAX INCREASE because the MAXIMUM benefits paid also get larger.

Since covering all wages - meaning no wage cap - ends the Social Security problem for 75 years, why is this not the GOP approach.

Indeed, the other idea of covering more of the wages paid in the US in the Social Security System - namely forcing all state and local government workers into the system - is but another variation of the universal coverage of wages paid in the US started by IKE in the 50's.

What could be wrong with this idea?

[papau]

1. 2001 SSAB says only 88% of deficit is taken care of by wage base, but

things have improved to 2004.

Saddly the above SSAB report is the last one that is useful to the debate (I do not find similiar post Clinton reports).

The dates we discuss today - 2018 which is the first date a small portion of the Soc Sec Trust Fund Assets are projected to need to be sold, and 2043 which is the first date the payroll tax take plus asset sales will not cover the benefit payout - are 2016 and 2038 in this report, so the situation has improved.

Plus it discusses the effect of various solutions in terms of the percentage of deficit that is taken care - where deficit is the hoary old average (add each of 75 years over funding or under funding percentage to get an average for the 75 years). The Problem with this approach is that it was designed and chosen as an early warning system - not as an exact calculation of what additional percentage tax is needed. The actual tax increase needed will be much smaller because of the interest earned on the Trust Fund assets.

In any case it is safe to say that with the 2038 of 2001 becoming the 2043 of 2004 we can expect the "88%" of deficit paid off by eliminating the wage cap and paying benefits on all wages that is in the 2001 report to now be closer to 100% of deficit.

And indeed I am told that a no wage cap 75 year run out ends up quite positive under the intermediate projection. But God forbid Bush would allow the Social Security Administration Actuaries to publish such a projection.

And God forbid that the payroll tax be applied to income - including unearned income - rather than just wages. The Bush mantra is to not tax the 90% of their yearly income that is investment income.

http://www.ssab.gov/NEW/Publications/Financing/actionshouldbetaken.pdf


Report from the Social Security Advisory Board -- page 21


Increase the amount of earnings subject to the Social Security tax.

In 2001, earnings in employment covered by Social Security that
exceed $80,400 are neither subject to payroll tax nor considered for
calculating benefits. This "contribution and benefit base" increases
automatically each year with increases in the average wage. Currently,
about 84 percent of all covered earnings are below the base, but this
percentage has been falling from about 90 percent in 1983 and is
projected to continue to fall to about 83 percent in 2010.

Making all earnings covered by Social Security subject to the payroll
tax beginning in 2002, but retaining the current law limit for benefit
computations (in effect removing the link between earnings and
benefits at higher earnings levels), would eliminate the deficit. If
benefits were to be paid on the additional earnings, 88 percent of the
deficit would be eliminated.

Making 90 percent of earnings covered by Social Security subject to
the payroll tax and paying benefits on the additional earnings
(phasing in these increases in 2002-2011) would eliminate 37 percent
of the deficit. This would increase the estimated maximum amount of
earnings subject to Social Security taxes in 2011 to $241,200,
compared to the projected level of $125,100 under present law (in
current dollars). These changes would cause higher-paid workers and
their employers to pay higher taxes. They would mean that higher-paid
workers (those above the current taxable maximum) would receive a
lower average rate of return on their Social Security taxes than they
do today.

[whistle]

2. The top wage rate that payment for social security stops....

...is now $90,000.00 I believe. It would actually solve the problem if the cap was set at $250,000.00 which would capture 98% of all wage earners:


Category.................... 1999 2000 2001 2002 2003 2004
20th percentile upper limit 17196 17920 17970 18020 18070 18121
50th (median)................. 40816 42000 42100 42200 42301 42401
80th percentile upper limit 79375 81766 83500 85271 87079 88926
95th percentile lower limit 142021 145220 150499 155970 161640 167516



<snip> For the University of Utah

Payroll Tax Deductions

Social Security and Medicare Tax

The FICA tax rate, which is the combined social security tax rate of 6.2% (FICA) and the Medicare tax rate of 1.45% (FICA-MD HI). Student-Employee might be exempted from FICA tax, Application for Student FICA exempted.

The Social Security Administration has announced that the 2005 social security wage base will be $90,000, up from the 2004 wage limit of $87,900. The maximum social security tax employees and employers will each pay in 2005 is $5,580.00. This is an increase of $130.20 from the 2004 maximum of $5,449.80. There is no limit on the wages subject to the Medicare tax, therefore, all covered wages are subject to the 1.45% Medicare tax. For more information, visit the Social Security Administration Home Page. General information help line 1-800-772-1213, and BBS 1-410-965-1133 via modem.


Social Security Tax Rate and Wage Base
Year FICA Base FICA Rate FICA Max Med-HI
2004 $87,900 6.2% $5,449.80 1.45%

2003 $87,000 6.2% $5,394.00 1.45%

2002 $84,900 6.2% $5,263.80 1.45%

2001 $80,400 6.2% $4,984.80 1.45%

2000 $76,200 6.2% $4,724.40 1.45%

1999 $72,600 6.2% $4,501.20 1.45%

1998 $68,400 6.2% $4,240.80 1.45%


<more> http://www.payroll.utah.edu/tax_deductions.html

[EVDebs]

3. We need to give reasonable GOP congressmen political 'cover'

in order to raise taxes, just as with Reagan's raid of Social Security in 1982-83 in order to pay for his tax cuts of 1981. Back then they simply called tax increases 'revenue enhancements' and were done with the problem.

Bush's crazy super-tax-cuts-for-the-rich have to be paid for somehow...and what we're seeing is they are being taken out of the SS surplus, just as with Reaganomics. You don't make up for tax cuts with spending increases, which these guys are doing right now ! Supply side economics has been proven bogus now. The problem is getting them to admit it, just as they cannot admit a miscalculation in Iraq.

Pride goeth before a fall, and this time the old folks ain't gonna like it one little bit. There goes the Grand Old Party, right down the tubes.

Not a tax increase; REVENUE ENHANCEMENT. Repeat Not a tax increase, REVENUE ENHANCEMENT.

[papau]

4. A wage base change is a "coverage change" - not revenue increase or

enhancement or tax increase.

We just want more of the wages paid in America covered by this great community building system.

[EVDebs]

5. Great ! The wealthiest 'coverage change' is how to phase it

The problem is, as David Cay Johnston's book "Perfectly Legal" shows--the poor and middle class subsidize the rich by way of payroll tax FICA deductions...the rich are able to HIDE their wealth since they aren't on payrolls mainly but clip coupons. I think it's Chapter 8 that you should look at ! BTW, Johnston should be on the Prez's tax reform panel.

[papau]

6. I TOTALLY AGREE - GET JOHNSON ON THE TAX REFORM PANEL

but I fear the wrong fellow takes the oath on 1/20 for that to happen.