Dean had a great idea last night and I will tell you why...

[kentuck]

He proposed that the limit on FICA taxes (Social Security) be increased from the present $85,000. Since Bush has cut taxes on the wealthy by huge amounts, we are going to be operating with revenue losses for as far as the eye can see, it seems. And once taxes are cut, it is never easy to increase them afterwards. This has put our economic house in financial disorder.

However, one way to get a huge start on decreasing our deficits and saving the Social Security system is to insist, or demand, that every working person - making 10K per year or $1M per year- pay the same amount of taxes into the SS system. It is the fairest way to resolve this very serious problem of revenue losses from the Bush taxcuts. Because Bush took the money from the SS system to pay for the taxcuts, we should look at it as paying back what they stole.

[idontwantaname]

1. not as good as you would hope

actually id like to see dean balance the budget by cutting back on military spending. especially to furthur nuclear research.

[kentuck]

4. Whaddya mean? You're already paying the max on FICA taxes !

So how is it a bad idea if you're not "rich". Please explain.

[papau]

6. The math is great - very progressive - Dean has a winner here

and it brings the tax system back closer to ability to pay does pay - rather than screwing the poor and retirees and future generations.

[papau]

2. I agree - with SS money paying for FIT cuts for rich - "not fair" isn't

As we are conmingling the payroll tax as is to pay general expense like Defense now that the FIT take is too small, it would be "unfair" to say that the millionair does not get a great return on his payroll tax - who could say what part of his payroll tax went for defense?

Plus an extension of the SS benefit schedule to all income would be simple - we just use the current top end "15% factor" that applies to the top end average income and apply it to all income at the top end.

The rich get a larger benefit, the rich they are - granted the benefit progressive with the poor getting more for their dollar, but as long as the more you make, the larger the benefit you get, this could easily be sold to the public.

The old "unfair to the rich" arguement is Dead post Bush SS payroll money finacing of the tax cuts for the rich.

[wryter2000]

3. I like Dean, but that's not a good idea

FICA is paid by working people. That's the single tax that Bush and his type will never cut because their constituency make their money off stocks and capital gains. Increasing that is playing right into their hands.

Dean's my man, but that's not my idea of how to proceed.

[kentuck]

7. I disagree.

Why? Explain further why it is a bad idea?

[papau]

8. Deans not increasing what working folks pay - rate stays the same.

Rich pay NOTHING on income in excess of $85,000 annual income or so.

All he is doing is ending this bias in favor of the rich.

Medicare tax is already on "all income".

This put both payroll taxes on same basis - easier to administer!

:-)

[lastliberalintexas]

10. Why not?

"Increasing that is playing right into their hands."

He's not talking about an increase in the percentage (the 7.5%), he's saying that the INCOME level which is subject to that tax should be raised. Currently only the first $85,000 an individual earns is subject to the FICA taxes. Why should EVERY dollar that you or I earn be subject to the FICA/SS taxes, while only the first $85,000 that Joe Blow makes of his $150,000 salary is? Or only the first $85,000 of someone making $750,000? That is the most regressive part of our increasingly regressive federal tax system. Dean's idea sounds like a wonderfully progressive idea concerning our tax structure.

And all types of income (earned and unearned) should be subject to any taxation.

[Warpy]

5. Removing the cap on FICA makes sense for a lot of reasons

...not the least of which is the fact that all the money which doesn't go directly to the elderly gets sucked into the general fund, where all the income taxes go. Therefore, FICA has been a back door income tax increase on the poorest workers since Ronnypoo doubled it in the 1980s.
Since so much of it is thinly disguised income tax, it only stands to reason that all income should be taxed.

The wealthy have long championed a flat tax. Well, let's give them a real one to test their fortitude. Since FICA isn't that large a tap, falling far short of the usual 15-20% hit proposed by flat-taxers, it's a perfect place to start.

I say do it now. Let them pay, and let them see what they've done to the rest of us with the most regressive tax of all.

[carolinayellowdog]

9. Why increased, rather than removed?

I have a hard time feeling worried about those who make more than $85000 not being able to make ends meet once they have to pay the same percent as the rest of us. But would like to know how much revenue this would generate.

[MGKrebs]

11. I personally like the idea, but

I don't think you could ever sell it.
The SS contributions are capped because so are the payouts. If you extend the contributions, it is plain income redistribution. Never sell. I think someone else was saying to have different payouts for different contribution levels, but that seems like an administrative nightmare, and I don't see where it solves the problem anyway.

To me, the only problem with SS is that the Treasury keeps borrowing money from SS, and someday they will have borrowed so much they won't be able to pay it back. We need to get back to the "lockbox" concept.

[Warpy]

13. Income redistribution?

Hell, that's what we've got NOW, with the poorest people paying the full amount of FICA, which is then robbed by the general fund and shifted to fat cats in the form of tax breaks for the rich, corporate welfare, and a host of other fatten-the-rich programs. Anybody who is afraid that income may be redistributed downward for a change and the sky will fall doesn't belong on this board.

[MGKrebs]

17. My post was referring to "plain", or obvious,

income redistribution, and it's "sellability".. I have no problem with it (as I said). I just think it would be too obvious for many to swallow at this time.

I hope Dean can refine that point and make it a winner. We shall see.

So please READ THE POST next time before you tell somebody they don't belong here.

[kentuck]

18. "..too obvious for many to swallow..."

What do you mean?

[MGKrebs]

19. My initial reaction

was that if (wealthy) people pay more in, but don't get more out, it will be viewed by many as a redistribution to poorer people, since SOMEBODY would be getting that money. I don't think that is an accurate way of looking at it, since the additional revenue actually applies to us in the future, and future generations, but it might not be seen that way if not presented well.

So the plan would be to present this as "raise the cap or there may be no SS in the future"? That's a tough road too. Rolling back the * tax cuts AND raising this tax might be too much for some folks.

Anyway, I'm sure Dean is smarter than I am, and he can come up with a good plan and articulate it well. I look forward to seeing it.

PS- My personal observation is that many people (that I come in contact with) do not recognize SS as the INSURANCE policy that it is. We pay premiums, we may or may not collect, depending. They view it instead as a retirement savings investment account. Everyone should get at least as much out of it as they put in. Therefore, putting more in and getting the same out is a bad investment for them. The debate about whether SS should be privatized is rooted in this perception.

I wish they would change the name of SS. The proper name is Social Security Insurance (SSI), but the "I" part is routinely dropped, so everybody knows it as "Social Security". Sounds like an investment plan. It should be changed to "RIP" (hehe), "Retirement Insurance Plan", or "Retire in Peace". OK, maybe not that one, but you get the idea. Or maybe " Federal Supplemental Insurance", or "BFIP- Basic Federal Insurance Policy".

[TahitiNut]

20. It's called Old Age, Survivors, and Disability Insurance (OASDI)

Your wish was granted years ago.

[kentuck]

14. But the "payouts" will be zero if....

there is no SS system. And the poor folks that paid in all their lives will have nothing because it was given to the wealthy in the form of a taxcut and then they bitch about not getting it back. Well, let them bitch...It's an insurance system...not there for their investment portfolio. If they had been true Americans, they would not have accepted the taxcut - knowing that it came from the Social Security System...but they stuck it in their deep pockets anyway. I feel no sympathy for those types of "compassionate conservatives"..

[Jacobin]

22. They've increased the cap a number of times over the years

Its time to raise the cap or eliminate it.

[TahitiNut]

12. Do you realize...

... that Social Security tax (OASDI) collections are currently about 35% greater than what's needed to pay current benefits??

[WhoCountsTheVotes]

15. you mean same percentage?

I think removing the cap on SS is a very good idea - it's been proposed a billion times, but so far Dems have given us lip service.

SS tax should be on dividends and investment income too - not sure if it is.

[kentuck]

16. Absolutely !

Otherwise, our nation is going down the drain. We have to get our fiscal house in order. It is an absolute necessity. Is there a better way?

[denverbill]

21. Dang. That's a fabulous idea.

I'm truly surprised he's advocating it, but it's something I've wanted for YEARS. Right-wingers keep harping about a 'flat tax', but they don't want a flat tax for Social Security. Since CEO's and fat-cats have pretty much stolen pensions and 401K's, the least they can do is pony up 8% of their salary to bolster Social Security. IMO, that idea is a BIG winner!!

[w4rma]

23. I *love* that proposal! Although, I'd prefer the cap removed. (n/t)

[theriverburns]

24. I'll be damned...

...just as I was going to write Dean off as just another pretty face (mostly because of his obnoxious supporters) he says something this good! He keeps coming up with ideas like these and he will have won another supporter.