Why do working class and middle class Americans pay payroll taxes on 100 percent of their incomes when high wage earners pay payroll taxes on 50 percent or less of their incomes? Why not raise the level on which payroll taxes are collected on income? Maybe you could set a lifetime maximum amount to contribute for those with really high incomes.
How about Americans who have been the most fortunate, the financially independent, the ones who really don't need the benefits, foregoing collecting Social Security benefits? I know they paid in--- but we're talking the common good.
---C.S., by e-mail
A. In my experience, when people start talking about "the common good" they are usually cooking up a plan to take someone else's' money and spend it. This is what politicians do for a living and we should try not to emulate them.
Already, the Medicare portion of the employment tax (2.90 percent, employer and employee combined) has no limit. It applies to all earned income so there is no way of giving more of the bill to higher income earners.
In addition, while few realize it, Social Security already redistributes from high earners to low earners. It does this through the benefits formula which, awards about 6 times more benefits for the first dollar of earnings than for the highest. This year the employment tax is limited to 12.40 percent of the first $76,200 of earnings. Viewed another way, about 94 percent of all workers in America pay employment taxes on every dime of their earnings. Only 6 percent of all workers earn over $76,200 a year.
If the wage limit was raised and benefits were increased, the liabilities of the system would increase in parallel with the increased tax income. If the wage limit was raised and no benefits were added, the system would become even more of a welfare and redistribution program than it already is. Many fear that public support for the program would decline if it were clearly seen as welfare.
Millions of Americans are already returning some of their Social Security benefits "for the common good." They do this through the Federal Income tax. Since 1983, when the tax laws were first changed to make a portion of benefits taxable, tax collections have risen to $10.9 billion in 1999. (You can see this on the web at http://www.ssa.gov/OACT/STATS/t4a1Income.html.)
In effect, this has already made Social Security a "means tested" government benefit. What most people don't like is that the governments' idea of people who are so well off that their benefits should be taxed is a lot lower than theirs--- $32,000 for a joint return and $25,000 on a single return, to be precise.
Finally, there is already a great deal of sharing for the common good through the Federal Income tax. A recent study by the Tax Foundation, for instance, shows that the top 1 percent of all earners in 1997(those with incomes over $250,756) paid 33.2 percent of all income taxes while the top 25 percent (incomes over $48,173) paid a whopping 81.7 percent of all income taxes. The top 50 percent of all earners (incomes over $24,393) paid 95.7 percent of all income taxes. (You can see these figures and more at http://www.taxfoundation.org/prtopincome97.html)
The same study shows that top earners are paying a lot more of the total tax burden today than they were in 1987. It could be argued that we are developing a dangerous dependence on the "rich" (as defined by politicians) to sustain government.
There is a great line in the movie Apollo 13 that should be required listening for all who deal with Social Security. Shortly after the spacecraft develops severe, life threatening problems and may not be able to return to Earth, the engineers are all arguing and pointing fingers of blame.
"Gentlemen! Gentlemen!" Actor Ed Harris calls out. "Let's work the problem. Work the problem."
That's what we need to do with Social Security. Work the problem.
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