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Proposed SS fix

Home Tax Reduction Proposed SS fix

  • Avatar ITEngineer 
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    This is my beef with politicians who will never give straight answers.

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    There is a difference between a vague proposal from a politician trying to get elected, and how the system is currently run. You know that SS is a ‘pay-as-you-go’ system. It has been since inception. There is no savings. There never has been. Unless something changes, their never will be. Your SS benefits will be paid by your children and grand children. We know hundreds of baby-boomers are starting to collect every day further draining the system. We know people are having fewer and fewer kids, reducing the base of the pyramid. We know immigration is down, further restricting the tax base.

    Just looking at my own immediate family……(lets see if I can explain this to make sense)
    My 93 year old grandfather is still alive. He has 4 kids and 11 grand kids. Who pays his SS?

    Just me (one of his grand children)

    None of his children contribute anymore (all retired) and all collect benefits.

    All of his grandchildren work in jobs that don’t pay SS (Teachers/Police/etc) or stay at home; except me.

    So while the actual ratio of Worker:Beneficiary is 2.9:1, in my little micro family, it’s 1:5.

    I’m not sure why people feel so strongly about their FICA taxes but not their Income taxes (or property taxes) in the sense that they feel like they need to get some back someday. We don’t demand repayment of our Federal Income taxes? I understand it’s expectations…….but it ceased to be your money the moment the federal government collected it. And that check you are spending if you are collecting SS? It’s someone else’s money you’re spending.

    #188657 Reply
    Liked by MaxPower
    Avatar Kamban 
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    All of his grandchildren work in jobs that don’t pay SS (Teachers/Police/etc) or stay at home; except me.

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    That might be a part of the problem. Maybe we should have a system where all pay the SS taxes and all collect.

     

    I’m not sure why people feel so strongly about their FICA taxes but not their Income taxes (or property taxes) in the sense that they feel like they need to get some back someday. We don’t demand repayment of our Federal Income taxes? I understand it’s expectations…….but it ceased to be your money the moment the federal government collected it. And that check you are spending if you are collecting SS? It’s someone else’s money you’re spending.

    Click to expand…

    Maybe you feel that once taxes are collected they are gone and why have any attachment to it. I don’t feel that way. I pay federal taxes and know what it is used for by the country. Same with my state. And my county proper taxes. So when they have been collecting the FICA taxes and sending me yearly statements on the estimated money I could be entitled to at age 65 when I retire, you bet I am interested in it. If they try to change the rules midway in the game I will be angry since what they said all these years and what they plan to do now are different. I am sure your retired grandfather and uncles will also feel the same if they are suddenly told one day that the system needs overhaul and they got back what they had paid into it many times over and hence no more checks will be mailed to them. And I am sure you will be too should you pay for 30+ years and be told on the last day that nothing will be given to you at the end.

    #188719 Reply
    Liked by Tim, jfoxcpacfp
    jfoxcpacfp jfoxcpacfp 
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    This is my beef with politicians who will never give straight answers.

    I’m not sure why people feel so strongly about their FICA taxes but not their Income taxes (or property taxes) in the sense that they feel like they need to get some back someday. We don’t demand repayment of our Federal Income taxes? I understand it’s expectations…….but it ceased to be your money the moment the federal government collected it. And that check you are spending if you are collecting SS? It’s someone else’s money you’re spending.

    Click to expand…

    It’s because that’s the (purported) rational for FICA – you pay in to be supported in retirement. I really don’t give a flying fart that the government can’t stand by its promises and our “officials” continue to lie about SS in order to be re-elected. That doesn’t mean I am supposed to rationalize and excuse OUR legislators for spending my money on their pet projects OR that they can’t do basic math. At least we have a couple of senators in KY who don’t simply vote what is expected. I don’t always agree (lol…Rand Paul?!?) but I’m happy to support those who will at least make waves as long as I can see where they’re going and can get excited about the destination.

    You’re right that we’re withholding taxes we’ll likely never get back but that doesn’t mean that I am going to roll over on my back and wait for the sheet to be draped over my head.

    And, yes, I feel just as strongly about income and property taxes, but I have not been promised a future benefit, only that they are needed to support our bloated government (UGH). Still an evil, I acknowledge.

    btw, if and when I start collecting SS, it will be MY money, not someone else’s. Didn’t you say “it ceased to be my money the moment the federal government collected it”? With all due respect (and I do respect you @itengineer), make up your mind.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #188737 Reply
    Liked by Dreamgiver, Tim, Kamban
    Avatar ITEngineer 
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    btw, if and when I start collecting SS, it will be MY money, not someone else’s. Didn’t you say “it ceased to be my money the moment the federal government collected it”? With all due respect (and I do respect you @itengineer), make up your mind.

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    Did I hit a nerve? I cannot tell. That was not my intention. I’m just having a friendly discussion about one of my favorite topics 😉 I did not mean to ruffle any feathers. Here … have a fresh baked chocolate chip cookie…..(where is the cookie emoji?)

    I was just trying to point out that when you receive a SS check (and you will…..the amount might vary from what has been promised…..but you will receive a check because I don’t see the program going away, nor do I want it to go away) it’s not your money that is being withdrawn from savings somewhere, to be given back to you (as the annual statements imply). It’s someone else, whom is currently working and paying taxes, whom will be paying for that check. It’s an income transfer from workers to those over 62.

    What I do want to see is a solvent system that is not regressive from a tax perspective. That is (I would argue) what EVERYONE wants to see. Why do we really want to continue to debate this? Lets setup a system that can at least fund itself indefinitely (or at least for 75+ years), make minor tweaks along the way when necessary, but in general……not worry about where it comes from or where it’s going. I want to sleep at night. I’m sure everyone whom collects it does too.  It’s nice to have reliable electricity. It’s nice to have reliable transportation. Lets have a reliable elderly safety net.

    #188882 Reply
    jfoxcpacfp jfoxcpacfp 
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    Did I hit a nerve? I cannot tell. That was not my intention. I’m just having a friendly discussion about one of my favorite topics I did not mean to ruffle any feathers. Here … have a fresh baked chocolate chip cookie…..(where is the cookie emoji?)

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    I am honestly LOL. Well, GOL. Here you go: ?

    You’re right, I got worked up enough to use the “f” word. Nothing against you personally but didn’t agree with your points. While I am afraid the chances of your getting your wish are somewhere between Mr. Slim and Ms. None, you are right that I would like to see the system changed.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #188883 Reply
    Avatar FIREshrink 
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    All of his grandchildren work in jobs that don’t pay SS (Teachers/Police/etc) or stay at home; except me.

    Click to expand…

    That might be a part of the problem. Maybe we should have a system where all pay the SS taxes and all collect.

     

    I’m not sure why people feel so strongly about their FICA taxes but not their Income taxes (or property taxes) in the sense that they feel like they need to get some back someday. We don’t demand repayment of our Federal Income taxes? I understand it’s expectations…….but it ceased to be your money the moment the federal government collected it. And that check you are spending if you are collecting SS? It’s someone else’s money you’re spending.

    Click to expand…

    Maybe you feel that once taxes are collected they are gone and why have any attachment to it. I don’t feel that way. I pay federal taxes and know what it is used for by the country. Same with my state. And my county proper taxes. So when they have been collecting the FICA taxes and sending me yearly statements on the estimated money I could be entitled to at age 65 when I retire, you bet I am interested in it. If they try to change the rules midway in the game I will be angry since what they said all these years and what they plan to do now are different. I am sure your retired grandfather and uncles will also feel the same if they are suddenly told one day that the system needs overhaul and they got back what they had paid into it many times over and hence no more checks will be mailed to them. And I am sure you will be too should you pay for 30+ years and be told on the last day that nothing will be given to you at the end.

    Click to expand…

    Kamban, your SS statement has said for many years that there are enough funds to pay out current benefits until the 2030s or so, after which you (and every other beneficiary) will be paid about 75% of their accrued benefit. It’s no secret, there’s no changing of rules, it’s there and has been there in black and white for years. If you want to receive more than the benefit which has been promised you, then the system needs fixing. What fix do you propose to get a 33% bump in the benefit you’ve been promised?

    #188886 Reply
    Avatar ITEngineer 
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    If they try to change the rules midway in the game I will be angry

    Click to expand…

    Do you agree that we (America) have to change the rules though? The longer we wait, the more dramatic the rule changes will need to be (tax increases or benefit cuts). Changes to SS have been made many times. Regan made major changes in the 80s raises taxes and the retirement age to 67, but even Obama cut benefits a little for high earners (that was a rare instance of democrat/republican cooperation)

    Higher taxes are needed to maintain current benefits or benefits need to be reduced. No one wants to see a bankrupt America where the checks just stop. That would be a disaster (for all, young and old)

    Side note – I have no idea how you start collecting from Police/Teachers/Firefighters but I’m guessing they will not be a happy bunch. It’s funny though, they get much higher benefits (assuming their pension is solvent) because they collect and invest. There is nothing stopping us from doing that nationally….(is that the win-win scenario?) with a SWF (as been mentioned by others)

    #188895 Reply
    Avatar Kamban 
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    Status: Physician
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    Kamban, your SS statement has said for many years that there are enough funds to pay out current benefits until the 2030s or so, after which you (and every other beneficiary) will be paid about 75% of their accrued benefit. It’s no secret, there’s no changing of rules, it’s there and has been there in black and white for years. If you want to receive more than the benefit which has been promised you, then the system needs fixing. What fix do you propose to get a 33% bump in the benefit you’ve been promised?

    Click to expand…

    Actually I was responding more to the statement that Bill Gates does not need the money and in order to keep the program solvent, it needs to be means tested. I argued that it punishes the diligent savers who have not only paid the SS contributions but also led a frugal life and saved a tidy bit and now suddenly they are being asked to forego their share so that others who have lived a good life and are now broke can get their portion. I was not addressing the 25% reduction.

    In reality I should not need the SS income should my passive income in retirement hold up ( but anything can happen) and I would like to give that SS amount away to charity. But that should be a decision i should be allowed to make and not have the SS administration make it for me.

    #188898 Reply
    Liked by Vagabond MD
    Avatar ITEngineer 
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    I got worked up enough to use the “f” word.

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    Fun? Fantastic? Fabulous? I’m not sure what “F” word you are referring too 😉

    I’m not sure what I wished for (I need to go back and read my previous posts) My intention though was just to point out facts about the system with example for areas to change it without the impact being too great. For the record…..my personal wishlist would go something like this:

    1. Means testing, reducing the benefit for those with sufficient assets over $xxx amount (my wag would be $1-1.5M indexed for inflation…but lets debate different numbers and see the potential savings vs impact)

    2. Less regressive collection method of FICA Taxes (first $20k of income for all workers is now FICA tax free, but the new ‘cap’ is $160k or something that offsets the loss in revenue)

    3. Investigation of all the ‘disabled’ people on SS Payroll. On the surface, it appears there is a lot of fraud given all the growth of those labeled as disabled. Not sure how this is done in a sensitive and professional manner. I would not want a witch hunt but it appears it’s too easy to become ‘disabled’ and collect a check.

    Once again, I’m having a friendly discussion. Not upset with anyone, nor is my goal to make anyone upset.

    #188904 Reply
    Liked by Kamban
    Avatar ITEngineer 
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    Actually I was responding more to the statement that Bill Gates does not need the money and in order to keep the program solvent, it needs to be means tested

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    To me, it seems morally wrong to take money from someone making less than $130k/year (it could be someone making $40k/year and trying to support their family) and give it to someone worth almost $100B. Granted, the max benefit he can collect once he is 70 is $45,240/year.

    Warren buffet is probably a better example as he’s over 70 where Gates is only in his mid 60s. So Buffet definitely collects $45,240/year.

    #188909 Reply
    Zaphod Zaphod 
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    Actually I was responding more to the statement that Bill Gates does not need the money and in order to keep the program solvent, it needs to be means tested 

    Click to expand…

    To me, it seems morally wrong to take money from someone making less than $130k/year (it could be someone making $40k/year and trying to support their family) and give it to someone worth almost $100B. Granted, the max benefit he can collect once he is 70 is $45,240/year.

    Warren buffet is probably a better example as he’s over 70 where Gates is only in his mid 60s. So Buffet definitely collects $45,240/year.

    Click to expand…

    I think most agree that does no good, but where you draw the line really matters. The reality of the situation is that there is only so much wage base above x dollars per year, and where you place that threshold has serious consequences.

    No one likes to even mention it, but truth is there is so much more money at the median/average wages you just need so much less to generate meaningful revenue. I’d be all for corporations not having so many loopholes and paying little taxes and sheltering overseas, etc…theyve really made out over the last several decades.

    #188914 Reply
    jfoxcpacfp jfoxcpacfp 
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    Fun? Fantastic? Fabulous? I’m not sure what “F” word you are referring too

    Click to expand…

    I guess you’ll have to re-read my post to figure it out. I use that word very rarely, even though I think it would probably be allowed in WCI’s living room.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #188923 Reply
    Liked by Anne
    Avatar Kamban 
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    Disability Insurance

    Means testing, reducing the benefit for those with sufficient assets over $xxx amount (my wag would be $1-1.5M indexed for inflation…but lets debate different numbers and see the potential savings vs impact)

    Click to expand…

    To me, it seems morally wrong to take money from someone making less than $130k/year (it could be someone making $40k/year and trying to support their family) and give it to someone worth almost $100B. Granted, the max benefit he can collect once he is 70 is $45,240/year. Warren buffet is probably a better example as he’s over 70 where Gates is only in his mid 60s. So Buffet definitely collects $45,240/year.

    Click to expand…

    The problem with assets is that some assets might be high net value but not income producing and may even need money to keep it solvent. Like one of the posters here who has a 12M land but until it is sold and money obtained it is a money sucker as property taxes have to be paid. Even Amazon was not income producing as it was bleeding cash initially and later the profits were sloughed back to make it grow. So should on be forced to sell something so that others can benefit. If we decide income is a better way to means test then where do we draw the line. Most people always feel that is just above what they earn, just like taxes.

    The best option would be to give them what is owed to them and let them decide if they want to give it back. BTW, I hate Warren Buffet’s smug attitude about how the rich should pay more taxes when he pays less than many because he pays capitals gains tax and I pay as ordinary income taxes. I wish he would give back his wealth to the US government so that we can reduce US deficit and pay the poor people their SS benefits instead of him giving it to Bill Gates charity and then lecturing me about my taxes.

    End of rant.?

    #188924 Reply
    Liked by Vagabond MD
    Avatar ITEngineer 
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    I’d be all for corporations not having so many loopholes and paying little taxes

    Click to expand…

    IMO the easiest one to close is the deduction that allows debt interest to be deducted from corporate profits before taxes are paid.

    #188926 Reply
    Liked by Zaphod
    Avatar Kamban 
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    Side note – I have no idea how you start collecting from Police/Teachers/Firefighters but I’m guessing they will not be a happy bunch. It’s funny though, they get much higher benefits (assuming their pension is solvent) because they collect and invest. There is nothing stopping us from doing that nationally….(is that the win-win scenario?) with a SWF (as been mentioned by others)

    Click to expand…

    You bring up a point. The teachers and police and fire fighters pay the “SS” as a pension so it is clearly defined retirement plan. But then the common man like you and me are not told if this is retirement or a charity. Secondly, why should we support the disabled people and destitute with out SS contributions while the teachers and firefighters don’t help them out. If are in the suffering together, all of us should take part in it. I don’t care if they are happy about it or not.

    Which bring me to my original point. Make the scheme that all earners contribute to it. Make it that a certain percentage is kept aside as forced charity. I am also willing to accept that extra amount be collected only on the earnings of 100-300K so that the low wage earners see all their contributions go into a pension savings plan.

     

    #188927 Reply
    Liked by ITEngineer

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