A comment by member tle in my previous diary has me thinking about another formulation of the idea of a Flat, Fair, Low, Pro-Business Social Security tax structure as a structurally-progressive economic game-changer.
(In case you haven't met Flatfica Sam, he's the mascot of the Flat, Fair, Low, Pro-Business Social Security tax revolution; his "birth" is described in this diary)
Hi-res image here
See this diary, Could One Wonky Idea Save America? Economist Regulator William Black emails me, "Yes", for a fuller explanation of how this idea could work and could be the basis of a progressive economic revolution.
Original Scenario (#1)
- Uncap the Social Security income limit on Gross Pay (currently 106.8k)
- Lower the Social Security tax rate from 6.2% to 4.2% (estimated) for Employers and Employees
New Scenario (#2)
- Uncap the Social Security income limit (106.8k) and extend Social Security taxable income to include Capital Gains, Interest, and Dividends (exempting only non-taxable income such as IRAs, 401(k)s, and pensions)
- Lower the Social Security tax rate from 6.2% to 3.5% (estimated) for Employers and Employees
As both scenarios indicate, the 4.2% and 3.5% lowered rates are estimates I’ve put together talking with a few folks in the world of finance. I’d ask anyone who has connections to professional economists to ask them to run the numbers for both scenarios and give us a closer projection of how low the tax rate could go, provided that Social Security’s long-term solvency is protected/strengthened and current and future benefit payout levels are maintained/strengthened.
I’d personally favor the second scenario. I think it would rally that much more support from most taxpayers as well as most non-financial businesses (80-95%). It also could sell well under the banner of a "fair" tax (investors and financial corporations pay like the rest of us).
What do you think? Either one could be the basis for a progressive economic revolution, but which one is the optimal way to structure and sell the main idea (a fair, flat, low, and pro-business Social Security tax rate for employers and employees)?