All the candidates for President have schemes to “save” Social Security. Here is a simple summary to date. Of course, Republicans propose to trim future benefits while Democrats want more taxes and even higher benefits and liabilities. They are all nuts.
The Center for Retirement Research at Boston College published the Social Security FiX-it book exploring various proposals to fix Social Security with their pros and cons. One proposal is to simply raise the payroll tax. Doing so will fix Social Security for the next seventy-five years. Of course, the “con” is that it will raise everyone’s taxes and hurt the lower-income worker the most. That scenario is usually accepted out of hand. But let’s think about that for a minute.
The tax would have to be raised by 1.45% on workers (and employers). For the worker earning $50,000 that equals $13.94 a week which seems a small price to pay for future financial security. For a worker earning $40,000 it’s $11.15 a week.
Even lower-income Americans can find that kind of money, but even in the worst case, based on MAGI offset all or a portion of the additional tax with an income tax credit which of course spreads some of the burden on higher income tax payers.
In 2011 and 2012 the payroll tax was decreased by 2% for workers. I talked to dozens of people about saving that 2% in their 401k; none of them even knew the tax was reduced. When it was finally raised to the correct amount did people even notice, did the sky fall? Do you even remember the tax reduction and increase? Do you realize it was funded with debt to be paid by future generations?
Can workers afford a 1.45% increase? Sanders and Clinton would say, he’ll no‼️ But why not? As always, it’s a matter of setting priorities.
And it’s those who can least afford to lose any money who are most likely to be buying tickets. Low-income people account for the majority of lottery sales, while sales are highest in the poorest areas. One study found that the poorest third of households buy more than half of the tickets sold in any given week. Source: Thinkprogress.org
Exactly what is unfair about asking everyone who enjoys the benefits of Social Security to fairly share the cost burden? [especially given the lower-income citizen receives a disproportionately larger benefit] We are not talking about people unable to buy food or shelter, we are talking about perhaps skipping a few lottery tickets or other small non necessity or working one hour overtime a week.
The real crime here is that if Congress had acted back in 2000, the required tax increase would have only been 0.95%🙄
Of course there is another option, start a national lottery and dedicate all the proceeds to Social Security … wait, that means the same lower-income Americans would be paying more than their fair share 🤑🤑🤑🤑🤑
Categories: Social Security