Hear those jingle bells in the distance? It's a sleigh coming up the drive, led by that chubby, jolly, old... conservative brother-in-law.
What with Christmas upon us and the family coming around, it's time for the next edition of what to do when that pesky brother-in-law, or aunt, or whomever, hits you with so many Fox canards that you can't even enjoy your new iPod.
[Earlier editions: here, here, and here.]
I like those flat tax plans from Perry, Gingrich, and the rest of them... those guys really get what wrong with our crazy tax system!
Response: Yeah, those plans do sound simpler than the current mess, that's for sure -- but I'm afraid they're not as simple as you might think. Or as fair. (Dramatic pause, as your audience looks up expectantly from their figgy pudding.)
First off, if we really want everyone to pay one tax rate and we set that rate so as not to lose a lot of revenue, a lot of people's taxes could go up. Remember old Herman Cain's 9-9-9 plan... sounds pretty flat, right? Well, over 80% of taxpayers faced higher payments under his flat tax plan. And the ones with the biggest breaks on these flat plans are the richest taxpayers. Rick Perry's flat tax lowers tax payments for multi-millionaires by a cool $1.5 mil.
Now look, we all know every tax change is going to have winners and losers, but I don't think most people want to whack the middle class so the rich can do a lot better.
What's that? You're willing to trade a little more on your tax bill for simplicity?
I hear you but here's the problem. Flat taxes can end up being more complicated than they sound. They often work like national sales taxes -- like in Europe, just a straight 20%, say, on what you buy. But in those cases, they usually exclude basic necessities so now you have to keep track of that, and fight over what get exempted.
Next, to make sure you avoid the Cain problem of some people paying more, both Perry and Gingrich proposed that you could either pay the flat tax or stick with the current system. So, guess what? Now you get to figure out your tax bill both ways so that you can figure out which is cheaper. That sure doesn't sound simpler to me.
Anyway, you know what makes the system we have complicated? It's not the different rates. If that's all it was you could just look your income up in a set of tax tables, find your liability, and be done with it in literally seconds. And that would be true whether we have one rate or a hundred rates.
What complicates things are all the exemptions, credits, and special privileges for different types of income. For a lot of people, you pay a higher rate for money you earn teaching children, like Aunt Debbie does, than for money you make when you sell a stock. That's both unfair and too complicated.
So I say let's add simplicity and fairness by just taxing every dollar as a dollar no matter who earned it on which day of the week. And keep the progressive rates in place, so everyone can pay their fair share.
You liberals love Social Security, but everyone knows it's a dinosaur program, about to go extinct. None of you kids are ever gonna see a dime from it, so you might as well drop it.
Response: That's a mistake a lot of people make, bro, but it's simply not true. In fact, the folks who keep the books on this point out that for about the next 25 years, Social Security can pay full benefits. After that, it will be able to pay 75% of scheduled benefits. And by the way, even with that reduction, those benefits will be higher than they are today (that's because they're scheduled to go up over time, so even with the reduction, they'll be higher than today's).
Still, you've got a point--there's not enough retirement security in America. The real dinosaur in the room, unfortunately, is the guaranteed pension. Fewer and fewer jobs provide that anymore -- it's all 401(k)'s, where you get to bet your future on the stock market-good luck with that these days (note heads nodding in affirmation). In fact, if you think about it, the only guaranteed pension you can depend on is... wait for it... (dramatic pause)... Social Security! And believe it or not, a lot of conservatives want to turn Social Security into a stock market plan-(shake head despondently, with pity for those who don't get what a bad idea this is...).
So we've got to mend it so that it can pay full benefits, not just 75% over the long-term horizon. One thing to keep in mind is that the funding shortfall of the program is just about equal to the high end part of the Bush tax cuts--the part that just goes to households about $250K and that's supposed to expire at the end of 2012. So fixing the program in perpetuity shouldn't be that hard a lift.
And there's other stuff we could do. Did folks know that the tax to fund the program only hits salaries up to $110,000? That means that if you make a million bucks, about 90% of your salary is tax free when it comes to the payroll tax that funds Soc Sec. That ain't right.
So rest assured, with some smart, fair tweaks, the program will be around for many Christmas's to come. The bigger concern is that Social Security on its own won't provide enough income to provide a comfortable retirement for a lot of folks. But it's still a solid foundation for folks to build upon, one that we should be sure to make more solid for generations to come.
This post originally appeared at Jared Bernstein's On The Economy blog.
Only solution is not to invite them. Sad.
Here is what people should know and understand. These are FACTS
in 1951 Highest TAX rate was 91% .................NOW it is 35 %
in 1951 POPULATION was 151 million.................NOW it is 308 Million people
It has also been claimed that the FED REVENUE is about the same all through these years
CONCLUSION : Since Population has more than DOUBLED the Constant REVENUE really REALLY MEANS : the FED Revenue has REALLY been decreased by 50% because the population has doubled ....the revenue has dropped to 1/2 of what it was when calculated .. PER CAPITA
PLEASE have your people MAKE A GRAPH of these FACTS .......because a GRAPH IS WORTH 1000 words.
It might help those who have been BRAINWASHED by GOPers TALKING POINTS see the LIGHT.
Your basic presumption is that we are competing against ourselves. No, we are competing against the rest of the world. In 1951, we were one of the few industrialized nations still relatively unscathed from WWII. Now, we are competing with countless industrialized nations, many of whom we subsidized to compete with us.
High taxes means lower productivity, less investment, less take home pay, increases the demands for higher wages, all driving more industry overseas.
We need much less government, less income redistribution by government, and less welfare. Illegal aliens were streaming across the border in the 1990's to take jobs, some paying up to 50-60,000 dollars to do jobs Americans on welfare turned down. Even today so many people would rather collect welfare than work hard. People get social security disability for "stress." Who isn't stressed?
Nope, decrease the government largesse, and overregulation, and our economy will grow again.
Corporate welfare and the shipping of the manufacturing sector overseas and south for cheap labor is what caused our current boondoggle. American corporations began buying land in Mexico and Central America in the 50's salivating for when the dream of NAFTA would come true.
Sure no one paid 91z% and that was really too TOO much and UNFAIR but as you insinuate they were always finding some loopholes, and in your Proposal even after all loopholes are TAKEN AWAY , they will FIND a way to put them back in.
Look everybody knows that GOV spending should decrease for everything but also tax revenues should INCREASE too. Otherwise NO DEAL
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Oh My, you are so uniformed. SS is running deficit right now as we speak.
read this:
http://www.ncpa.org/pub/ba662
YES just SCRAP THE CAP on SS ................voila problem solved.!!
and I would also suggest that in order NOT TO HURT the EMPLOYERS ( JOB CREATORS )..........we could LEAVE the % for them as is ie only to the cap.
faved
That a lie which is half a truth is ever the blackest of lies; - Tennyson
http://cnsnews.com/news/article/cbo-social-security-run-45-billion-deficit-2011
http://www.usatoday.com/money/economy/2011-01-27-social-security_N.htm
Actually, the exact figure is $106,800 until 2012, when it will be raised to $110,100. High earners have been getting this sweetheart deal ever since the Social Security tax cap was created, and there's no reasonable justification for it. According to a CBO study, eliminating the tax cap entirely would stabilize Social Security for the next 75 years, with no means testing or other adjustments required.
Naturally, many high earners are opposed to elimating the cap. They want to keep getting their sweetheard deal, of course. They argue that being required to pay the same rate as everyone else is unfair, since their benefits wouldn't increase commensurately. A specious argument. That's like arguing for special express lanes for folks who pay a greater share of highway taxes.
The Social Security tax cap should be eliminated so that high earners start paying their fair share.
SCRAP THE CAP on SS and it is solved.
THERE is a song saying just that..
and you are right..............there are also 232 MILLIONAIRES inthe CONGRESS that is they want Sweetheart deals and that is also why they do not want the MILLIONAIRE SURTAX..
That is also why the big shots on CABLE do not want that either and are trying to SWIFTBOAT the DEMS and make them lose the ELECTION 2012 so the GOPers come back to POWER
LET US MOBILIZE and RE ELECT ALL DEM MAJORITY better than in 2008
YES WE CAN .................!!!
faved
Are you "Jed" Bernstein, Livingston High 1966? I was in your class...just curious.
--Mike Bodkin, who was chosen as valedictorian but decided not to speak.
http://www.theatlanticwire.com/entertainment/2011/01/why-did-keith-olbermann-leave-msnbc/21406/
This is a blatant falsehood. Either the writer is uninformed or just lying. There isn't any actual money in the so called "Social Security Fund" and there never has been. By law the money left over after SS recipients are paid is replaced by interest bearing Treasury instruments. Then the actual money is spent on whatever the government wants to spend it on. At some point in the near future (about 2018) there won't be enough SS money coming in monthly to pay all the SS recipients. When we reach that point the Treasury will have to start cashing in some of those Treasury instruments to make the required payments. So in other words the Treasury takes our actual SS money replaces it with a piece of paper and then sells that piece of paper to us. We get to pay the interest too. What a deal!
WORTH looking into this idea.
In any case the fact that TAX rates have been cut from 91 % to 35 % means that The RICH got RICHER while UNCLE SAM got POORER by same amount ............so it had to BORROW $$$$$$$$$$$$$ to service the Safety nets of a DOUBLING POPULATION from 1951 to 2010.
So, If you want to know why UNCLE SAM was MADE to BORROW .......look no further than the GOP policy to STARVE the GOV in order to FEED TAX CUTS to the RICHEST.
the US DEBT is the result of GOP TAX CUT policies .
end of story.
The gambling of business ruins more lives than the business of gambling.
[noun] [verb] MESSNBC [derogatory remark]