General Discussion
In reply to the discussion: Help Me Debunk This Argument : Medicare Is Not An Earned Entitlement, It Is Welfare Program [View all]Bobcat
(246 posts)What is being discussed in the original post is actually the benefits received principle. The benefits received principle states that the benefits one receives from government should be based on how much people pay in taxes. Those who pay more in taxes should get more in benefits from the government. Those who pay less to the government should get less back in benefits. The problem lies with the fact that it is impossible to measure the value of a government benefit. Who benefits more from the highway nearby - me or you? It is impossible to accurately measure the benefit each receives and thus levy the tax accordingly. That's why we administer the income tax according to the ability to pay principle. Income lends itself quite readily to accurate measurement. The more income one earns the higher tax bracket one finds oneself in. This is the essence of progressive taxation.
Actually the FICA tax is a proportional (flat) tax. We all pay the same rates - 6.2% for social security - up to the first $113,700 earned annually and 1.45% for Medicare with no annual income limit. The effective SS tax rate for high income earners is actually lower than for low and middle income earners since every dollar earned above the annual limit of $113,700 is not taxed (for SS). So an earner making $227,400 annually is taxed (for SS) at a rate of 3.1% - half the rate of low and middle income earners. The tax system that funds Social Security is a regressive one. The one thing the "cat food commission" will not discuss is eliminating the cap on income applicable to the SS tax. Any reasonable person knows the system is inequitable. If average income earners can afford to pay the full 6.2% SS tax on every dollar they earn so can high income earners.