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View Diary: Anyone That May Receive Social Security Must Read This (192 comments)

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  •  Removing the cap would create a 10-13k (6+ / 0-)

    monthly check.

    To paraphrase FDR

    If we take nothing from capital we owe nothing to capital.

    We got the Earned income Tax Credit passed to compensate for the cap. Remove the Cap and will the GOP want the EITC repealed?

    If we remove thew cap and then cap benefits, we just means tested SS and made it welfare, and as such will be more vulnerable to GOP attacks on welfare queens.

    Folks should look past the first order effects, to the second, third and fourth order effects.

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Sat Dec 08, 2012 at 05:25:27 PM PST

    [ Parent ]

    •  You can have 'uncapped' benefits, but treat it as (4+ / 0-)

      banks do interest these days.

      Along the lines of when you get to $1m in taxed salary, an additional $1M in gets you back $10 or so in benefits.

      We don't want our country back, we want our country FORWARD. --Eclectablog

      by Samer on Sat Dec 08, 2012 at 05:35:50 PM PST

      [ Parent ]

      •  Youre testing for income, thats a means test. (3+ / 0-)
        Recommended by:
        Sparhawk, Argyrios, ozsea1

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Sat Dec 08, 2012 at 05:38:12 PM PST

        [ Parent ]

        •  No reason to cap benefits. (7+ / 0-)
          It's true that the tax is not progressive -- those earning $100k pay the same percentage as those earning $20k, while and those earning, say, $213,600 (twice the cap) pay half the rate on their total income.   But the benefits reaped constitute strongly diminishing returns as one's income increases.  Benefits are based on a taxpayer's  average indexed monthly earnings (AIME) up to the taxable cap. Of those earnings, averaged over 35 years, those who retire at age 66 currently get the following in SS benefits:

          * 90% of the first $761 of AIME

          * 32% of the AIME between $761 and $4,586

          * 15% for the AIME above $4,586 (up to $8900, beyond which there's no tax or benefits).

          At present, if your work life is completed and your AIME is $8900, your monthly takeaway is $2,556, or 28.7% of your AIME.  At an AIME of $4586 (roughly $55k/year), you'd get $1909, or 41.6%.  If you earned just $3k/month over your working life, your monthly SS payment would be $1401, or 46.7% of your AIME.  For an income of $2k per month, the payout would be $1081, or 54% of income.

          http://www.theatlantic.com/...

          So remove the cap on earnings subject to the tax; AND remove the cap on benefits; but high earnings would accrue benefits at the 15% of AIME rate. This would still be a huge boost to the solvency of the system.

          "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

          by HeyMikey on Sat Dec 08, 2012 at 08:26:53 PM PST

          [ Parent ]

        •  See the post below; I'm not suggesting reducing (2+ / 0-)
          Recommended by:
          ER Doc, vigilant meerkat

          payouts per se.

          What I'm saying, and as HeyMikey points out quite nicely, is that the extra payments accrued should diminish based on income, as they already do.

          Now that I know what the formula is, I'd say that for incomes in the millions, the benefits should be something like 1% or 0.5%. I have no problem with paying them more, just that the marginal benefit should be less for top-0.01% incomes than for middle-class ones.

          Of course, if dividends aren't exposed to SS taxes, then the millionaires who depend on them are SOL anyways.

          We don't want our country back, we want our country FORWARD. --Eclectablog

          by Samer on Sat Dec 08, 2012 at 09:41:19 PM PST

          [ Parent ]

        •  There are options (1+ / 0-)
          Recommended by:
          ER Doc

          One would be to lift the cap to $1M. Index the benefit increase on a decreasing and "progressive" curve.

          The real trick is to recapture the msm framing; which, at the bidding of their Wall Street owners, will scream "welfare program !"

          Calmly and repeatedly push back and say, even the wealthy are getting benefits increases, just not as much. They don't really need it , do they? Do you really really really want your mom to eat Cat Food??"

          Wash, rinse, repeat.

          The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

          by ozsea1 on Sun Dec 09, 2012 at 09:31:30 AM PST

          [ Parent ]

    •  The SS formula already is skewed toward the lower (4+ / 0-)
      Recommended by:
      gerrilea, HeyMikey, NoMoreLies, ER Doc

      incomes so another tweak that maintains that skewing for higher contributions would be easy to do. And if there are one or two billionaires who get $10K a month from SS, who cares?

      Just another faggity fag socialist fuckstick homosinner!

      by Ian S on Sat Dec 08, 2012 at 05:54:40 PM PST

      [ Parent ]

      •  Who cares? Thats cold hearted (1+ / 0-)
        Recommended by:
        Argyrios

        We got the EITC passed because of the income cap. Handing the GOP a gift=bad.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Sat Dec 08, 2012 at 06:12:31 PM PST

        [ Parent ]

        •  All I'm saying is that we can keep... (2+ / 0-)
          Recommended by:
          joynow, vigilant meerkat

          the advantage for lower income folks' SS benefits by making sure higher contributions don't get proportionately higher payouts. That's the way it is now if you've studied the formula: higher income folks' contributions yield far less payback on SS compared to contributions of low income folks. The EITC should be kept; I see no need to involve it in negotiations to remove the SS cap on contributions.

          Actually, I see no need to do anything about SS at this point but if you must do something, then increasing or elimination the cap on contributions would be the thing to do.

          Just another faggity fag socialist fuckstick homosinner!

          by Ian S on Sun Dec 09, 2012 at 09:45:37 AM PST

          [ Parent ]

    •  we can RAISE the cap without removing it (12+ / 0-)

      see the 83% vs. 90% argument posted above.

      We can raise the cap to 184,000 without capping benefits, and still come out ahead.

      •  Thats my comment (6+ / 0-)

        you make an important distinction though. And though some may not see a huge difference, there is a huge difference.

        90% gives seniors a sizable increase in benefits, it increases revenues and avoids all the pitfalls I've outlined elsewhere. Add in job creation and wage growth and you've just about guaranteed SS is good thru 2090, as indicated in the SS Trustees low cost scenario.

        FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

        by Roger Fox on Sat Dec 08, 2012 at 07:09:58 PM PST

        [ Parent ]

        •  ha! missed that you were the original commenter (2+ / 0-)
          Recommended by:
          Roger Fox, ozsea1

          that I was referring too. (scrolling is haaard!)

          Yes, removing the cap entirely doesn't sound like a good idea to me at all, which is why I commented. I agree that it would bring in means testing for benefits, which would make it welfare and thus vulnerable to cuts. but I'm all for raising the cap.

    •  Thank you for this... (2+ / 0-)
      Recommended by:
      Roger Fox, ozsea1

      every so often I make the comment that means testing and raising the cap are economically equivalent -- literally equivalent, as a matter of mathematics, using time value of money formulas -- but people here don't seem to get it. The only difference is in terms of when you test for wealth to lower IRR, at the time the tax is imposed vs. the time the benefit is received. Raising the cap is viewed as the perfect solution, and means testing is viewed here as something unacceptable. It's bizarre and I've never received a satisfactory explanation as to why one is to be preferred over the other.

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