My son, a middle manager at a medium sized manufacturing firm (yes, there are still some in America) grosses about $65,000 per year. He pays $4,030 in FICA tax, or 6.2%. His employer pays about another $2,000 on his behalf.
My daughter and her husband, both engineers, together gross about $150,000 per year. For 2008 they will pay $6,324 in Social Security tax (FICA), representing 6.2% of the first $102,000 of their gross salary (no deductions). That's about 4.2% of their actual gross.
Bill Gates, Warren Buffet and those bank CEOs who bring in millions per year each pays $6,324 in Social Security tax, or six hundreths of one per cent on a $10 million pay package.
Does anybody see a way out of the looming bankruptcy of Social Security? Me too. Of course, most of those rich people are firmly against such a solution, calling it Socialism. They prefer a solution that would take part of the $6,324 and invest it in the stock market, quoting historical returns far north of the paltry interest rate on Treasury notes that Social Security funds are now invested in. How'd that work out for investors over the past six months? How about for the past ten years? That's how far back the current crash has taken stock market gains, with major indices now at about the same level as they were in 1999. Hmmm, that was the year before George Bush's trillion dollar tax cuts. You don't suppose...?
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Comments: 15
And here's another idea: Take a portion of the INCREASE, say what comes from the portion from $140,000 to $150,000 and put THAT into a 401(k) type account.
There are many ways to skin this cat. All it takes is some political will.
Or we could mimic another part of the SS program, making a donut hole. Pay 6.2% up to $70K, then zero up to $120K then pick it up again to $200K. We just have to get over being scared spitless by GOP howls of "Socialism!!"
We have a long history of progressive taxes in this country, Bob. Income taxes are a lot LESS progressive than they were fifty years ago, when the top rate was 91%! I am not suggesting that we go back to that, but just taking the cap off Social Security taxes doesn't seem like socialism to me. I also think that income taxes SHOULD be a lot more progressive than they are now, and the brackets should be indexed to inflation.
We can't increase revenue to help get over this crisis? Bullshit!!
So in addition to the lower capital gains taxes they enjoy, the rich pay no SS tax on a large part of their income. Most middle class people have very little investment income, so that is yet another way that income taxes are less progressive...indeed even regressive, like sales tax.
Supposedly, it "encourages investment," but clearly the vast majority of investments are by the rich, who hardly need a tax-break incentive.
But what it really does is subject the wages of working people to higher taxes than the investment income of (mostly) wealthy people. Or as one economist put it, "bad" dollars of wages from "good" dollars of investment. It hardly seems like a part of the democratic ideals our country was founded on.