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View Diary: Barney Frank: Save Social Security by making the near rich pay a little more (146 comments)

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  •  Why alienate the upper middle class? (5+ / 0-)

    Or whatever label you want to apply to those in the $113k-$450k income levels. Speaking electorally, there's a lot of votes and donations there, so why would Democrats want to piss them off if it can be avoided?

    What about a Middle Class Social Security tax holiday? Let the SS withholding tax end at $113k, but then it kicks in again at a higher level, say, $450k, with NO cap above that. This gives a nice little tax break to all those small business owners, "job creators", etc., whom we've been told to place on a pedestal, while raising a decent amount of money to devote to a SS fix from those who can most easily afford it.

    Is there any reason why this wouldn't work? And would anyone other than the craziest of Teabagger Congressmen vote against it?

    •  alienate them? (21+ / 0-)

      sorry, but down here below 100K, my partner is going to be paying a tax increase (FICA). and I'm unemployed. Since it's gonna hit us, I don't feel really sorry for people making over a quarter of a million a year taking the same exact hit.

      if necessary for years; if necessary, alone

      by SouthernLiberalinMD on Tue Jan 08, 2013 at 03:38:48 PM PST

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      •  So is everyone else with an income. (6+ / 0-)

        The temporary FICA reduction in the stimulus package was designed to be just that--temporary. That is a completely different issue from dealing with the strains caused by all of the baby boomers who are now beginning to retire in some numbers.

        •  Strains caused by the baby boomers? (2+ / 0-)
          Recommended by:
          sfbob, cybersaur

          Nah. Strains caused by the looting of our Treasury for tax breaks and useless wars--as well as by the crappy gutless way our government has been around the issues of Medicare, health care reform generally, and controlling health care costs in particular.

          And no, I don't just mean Obama; I'm talking about over the last 12-13 years. That whole Medicare part D thing was ridiculous.

          Honestly, if the government could stop engineering massive giveaways to individuals and companies that are already really REALLY rich, maybe we could pay for things that most of us agree are valuable and worth spending some money on.

          if necessary for years; if necessary, alone

          by SouthernLiberalinMD on Tue Jan 08, 2013 at 10:42:34 PM PST

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          •  Indeed, (1+ / 0-)
            Recommended by:

            what you point out is a long-term problem, and Medicare D (D for Deficit? Debt?) was truly ridiculous.  Thank you Billy Tauzin, GWB and the GOP Congress.

            That said, Obama's problem is that, AFAIK, he never even proposed revamping Medicare D -- for example, to allow the .gov to negotiate prescription drug prices.  And that's because he made a temporarily-secret deal with Big Pharma that if they didn't oppose what became the ACA, he wouldn't push for that.

            Which, in my book, is a failure of leadership.

        •  yeah, I know. (0+ / 0-)

          I just don't see why I should be overwhelmed with pity for people who are making 1/4 million/year, when I'm trying to support 3 adults on around 120K.

          if necessary for years; if necessary, alone

          by SouthernLiberalinMD on Tue Jan 08, 2013 at 10:44:27 PM PST

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    •  Alienate me? (15+ / 0-)

      Yes, me. I "cap out", and have for the past 2-3 years. OK, I may lose my job this year, but even if it happens as looks likely, I will cap out before that happens. I thought the 2% "holiday" was a bad idea, and I think the $113K limit is even more stupid.

      Don't assume that if someone makes over that limit that "they" (we) will be alienated, or not vote Dem, or not donate. It's not the case at all. Many of us are offended by it, in fact, because we're the closest to it. We do rely on social security to be there for our own retirement, we know people on disability who depend on it entirely - we "get it" that it matters, and "get it" that the line separating us from those who don't cap out is a fictitious one indeed.

      It's not a huge benefit to me to cap out - I don't make so much money that the few months without that 6.2% tax makes a huge difference in my standard of living. It won't even pay for a decent vacation, really. It's a few more groceries - but we're OK for groceries. It strikes me as manifestly unfair, really, that I get to stop paying.

      I have an alternate proposal, though - what about giving everyone a break on the first $30K of their income, and then taxing (at present rates) up through $500K? Or maybe no cap at all?

      "I like to go into Marshall Field's in Chicago just to see all the things there are in the world that I do not want." M. Madeleva, C.S.C.

      by paxpdx on Tue Jan 08, 2013 at 04:04:17 PM PST

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      •  You are unusually altruistic. (0+ / 0-)

        And that is absolutely a compliment. But most people in your bracket are not so inclined, and my proposal is as much political as it is actuarial, so as to attract their support.

        •  I don't think so... (3+ / 0-)
          Recommended by:
          Odysseus, MPociask, BusyinCA

          And that's not been my experience, either. And trust me, I work with some pretty conservative folks, most of whom make more than me, but still mostly below $300K. "Free money," as Rabel described it below, pretty much sums it up. The difference - we see it, because our checks aren't so huge that it's entirely unnoticeable - but we also get it that what is a little bonusy to us is really significant to others.

          At higher incomes, where people perhaps "pay" only a check or two per year, maybe it'd be more dramatic. For those of us who pay into it most of the year before we cap out, we know that those extra few hundred dollars (or whatever) isn't a good thing. How can I say "Oh, it's my Christmas present money" when a colleague doing pretty much the same thing I do, but a couple years more junior, doesn't get it? It would make me feel a little slimy to be celebrating that extra bump, honestly, when some of my peers don't get it.

          We're not rich, but we know a bit more about how tenuous paychecks can be, I guess. So raise the cap, and make more people more stable.

          "I like to go into Marshall Field's in Chicago just to see all the things there are in the world that I do not want." M. Madeleva, C.S.C.

          by paxpdx on Tue Jan 08, 2013 at 05:11:30 PM PST

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          •  I know what you mean (0+ / 0-)

            I cap out near the end of the summer each year (earlier if I'm doing better) and it almost does feel a little shady.. knowing that almost everyone else is paying

          •  And Rush Limbaugh caps out (0+ / 0-)

            before his first hour of work is done on Jan. 1 of each year.  Just past the first half-hour in fact.

            Assumption 1: The drug-addled gasbag has a $400M annual contract.  I think that's right.

            Assumption 2: The drug-addled gasbag works a 2000-hour year.  That's actually a highly dubious assumption; I suspect it's significantly less.  In which case he caps out well before that first half-hour of work is done on Jan. 1 (okay, Jan. 2, assuming he's back on the air after the legal holiday).

            Those assumptions yield an hourly compensation of $200,000.

            This is a semi-random thought.  If I weren't fatigue-addled myself I'd find a better way of making it on-topic....  but the bottom line, there's no good reason why incomes like this shouldn't be taxed to pay for decent retirements for normal people.

      •  Same here (8+ / 0-)

        Lonemorriscodem isn't right, at least from my perspective and from people I know who all hit the income cap.  Raise it, we don't care.  It's free money as far as we're concerned when all of a sudden you start getting a little more in your paycheck because you've hit the cap.

        I would say that we should also raise the total amount one can receive from SS based on the income level you've been contributing at. That will make an increase in the payroll tax cap more easily accepted by people making more than $110,000 per year. Raise the cap and raise the maximum benefit amount as well.

        I also don't think the cap should be extended to more than $250,000 or so because once you're making more than $250,000 per year (or 300k, or up to 450k) you have your own sources of retirement income and the money you get from SS when you retire is absolutely, definitely, your money that you deserve (assuming you contributed to SS through payroll taxes) but it's probably just "extra" money you're getting on top of maxed-out 401(k)'s, investment income, etc...  

        Which is the whole point of the payroll cap.  People making a lot of money just don't benefit very much from the benefits they receive from SS when they retire and I sympathize a little bit with them saying that it's somewhat unfair.

        Anyway, this is a great idea and Barney Frank is just the guy to promote this progressive idea.

        [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

        by rabel on Tue Jan 08, 2013 at 04:42:41 PM PST

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        •  Ditto. Eom. (2+ / 0-)
          Recommended by:
          rabel, ferg

          When banjos are outlawed, only outlaws will have banjos.

          by Bisbonian on Tue Jan 08, 2013 at 04:45:13 PM PST

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        •  Same here too... (5+ / 0-)
          Recommended by:
          rabel, MPociask, No Exit, BusyinCA, paxpdx

          I know this sounds stupid and callous to those for whom a few extra hundred a month around the holidays would be a godsend, but I actually find the income cap more annoying than anything.

          It seems like once I finally get used to my higher take-home pay, then BAM, January brings a tax increase and I need to adjust my expense budget again.

          I also agree that there's no need to raise the cap beyond $250k.  This is meant to be a pension contribution from working people's wages, and if you're making more than $250k/year then it's likely that you're not making that much from working a day job as somebody else's employee.

          The political cover for raising the cap is the statistical evidence that higher-income workers tend to live longer lives.  So even if you don't increase the benefits for higher incomes, you can make the argument that they will get more out of social security because they will draw from it longer than those who made less money.

          I've hit the cap sometime around August for the last 3-4 years, and I'm telling you, lifting the cap is NOT a big deal to those in my income bracket, and is a no-brainer way to solve social security's problems forever.

          (One thing I would like to see considered, though, is raising the income cap but compensate for that somewhat by slightly lowering the contribution percentage.  I can tell you that I would much rather pay 5% or 5.5% year-round than 6% for only 7-8 months out of the year.  This would actually be a tax decrease for over 90% of Americans, but I think it could actually increase Social Security's revenues overall).

      •  How about... (0+ / 0-)

        get rid of the payroll tax altogether and just raise the income tax 7.5% (warning: back of envelope math) across the board?  This would make the overall tax system much more progressive and would implement a sort of "automatic" payroll tax cut in times of recession.

      •  Waiving tax on lower end -- yes (0+ / 0-)

        As paxpdx mentioned, another angle at this is waiving the tax on the first 30k or 25k of income, which would help everyone at the lower and lower/middle end of the scale a whole heck of a lot. I would totally support this as long as it was paired with a robust maybe muti-tier tax on the above 113k range to compensate. It would make FICA much more progressive -- and it would be a HUGE stimulus bc all those folks for whom the waiving of the tax would mean more money to spend on necessities and are struggling to get by on 30k or 50k, this would inject a ton of $$$ and fast into our economy.

        "The country we carry in our hearts is waiting." ~ Bruce Springsteen

        by abs0628 on Wed Jan 09, 2013 at 07:26:14 AM PST

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    •  alienate them? (10+ / 0-)

      Give me a break.  My crappy GOP governor raised my taxes so he could cut taxes on business and the rich.   I got back another tax increase when the payroll tax expired.   Why aren't you worried about alienating me?

      Screw em.  Raise the payroll cap and sign the petition.   We want to throw as much sh!t into the GOP's game as possible.  

      What we need is a Democrat in the White House.

      by dkmich on Tue Jan 08, 2013 at 04:04:29 PM PST

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    •  The Willie Sutton approach. (8+ / 0-)

      We have to go where the money is.  There are a lot more people in the $113 - $450K bracket than there are in the higher echelons.  If you can get $10 from 100,000 people, you are better off than getting $20 from 10,000 people.

      I capped out last year, for the first time.  Surprised the hell out of me, and I went to our corporate payroll people to investigate because I was afraid they had screwed up my health insurance deductions or something.  

      The extra money was nice, especially around Christmas.  But I didn't need it, could have done just as well without it, and it isn't something that most people budget on.  Most people budget based on their normal paycheck, and when the cap hits toward the end of the year, it is just a nice little surprise, nothing more.

      I am not alienated.  Raise the cap.  I'll give cookies next Christmas.

      "He that would make his own liberty secure must guard even his enemy from oppression." -Thomas Paine

      by sierrak9s on Tue Jan 08, 2013 at 04:34:40 PM PST

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    •  A better idea... (5+ / 0-)

      why don't we exempt the first $25k of earnings and remove the cap altogether?

      Never attribute to malice that which can be adequately explained by stupidity.

      by reflectionsv37 on Tue Jan 08, 2013 at 04:35:26 PM PST

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    •  Some proposals cap out at a certain salary (2+ / 0-)
      Recommended by:
      basket, BusyinCA

      and then pick back up at a higher rate - in other words you pay incrementally after a certain point which means that you potentially earn more from SS at retirement if you make a higher salary.  These increases are not without reward for people who are paying in - even for the high earners.

      Given the new and breath-takingly extreme range of potential earnings, the current cap seems incredibly low.

      Also FWIW - People making $400,000 a year who fall prey to a bad investment - like the entire stock market was as we saw in 2008 - would likely be pretty happy to have more from the reliable Social Security fund to help maintain their lifestyle.

      My parents managed to put together a pretty healthy 401k and Mutual Fund retirement package for themselves and retired just two short years before the market crashed.  That Social Security was super important to them for a while and they've never accrued the original value of their market holdings that they had prior to the market crash partly because they had to use more funds because of the crash and partly because the rebound didn't hit 20% which is about what they lost.  

      Meanwhile... Social Security stayed consistent.

    •  I don't really feel bad for them. (0+ / 0-)

      As someone who is currently struggling and unemployed, I see nothing wrong with making the upper middle class pay more.

       If alienating them means saving Social Security and progressive taxation, then so be it.

      •  People pay into SS so they receive back (1+ / 0-)
        Recommended by:

        a guaranteed pension based on their earnings - it's an ingenious system designed to reward people as they make more but topping out at a reasonable amount so the system isn't paying gargantuan monthly payments. The fastest way to destroy it is to start forcing people to pay into it without awarding them commensurate increases in their benefits when they retire. At that point more people will look at it as welfare, which it isn't. Just give the right-wing that meme to run with. Up until now they've not been successful in peddling it - after forcing this on people they will.

        There are a lot better ways to provide for the long-term health of SS than by foisting off this dumb plan on higher income earners.

        "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

        by Shane Hensinger on Tue Jan 08, 2013 at 06:59:00 PM PST

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        •  Who cares what the right-wing thinks? (2+ / 0-)
          Recommended by:
          NonnyO, cybersaur

          I'm not saying that upper middle class people shouldn't reap the benefits of Social Security. I know they pay into it too.

           With that said and after reading your reply, I STILL don't feel bad for high income earners. If they buy into the right-wing's memes, then we know their true colors.

           What would be a better solution then that won't rip off poor, working and regular middle class people? Anything that favors high income people I personally reject by default. They have enough in their favor already.

          •  Puffed up with hubris (0+ / 0-)

            I've seen every newly-elected President and their "coalition" babble the same crap about SS - and fail.

            "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

            by Shane Hensinger on Tue Jan 08, 2013 at 07:31:55 PM PST

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            •  Then what's your solution? (0+ / 0-)

              Clearly you don't care what happens to people like me who aren't high income.

            •  And what hubris? (1+ / 0-)
              Recommended by:

              I'm angry about economic inequality. I don't see how opposing that is hubris. I fully support Social Security.

              •  How does taxing income (0+ / 0-)

                without paying additional benefits, which is the point of Social Security because it's not a parallel progressive tax system, going to address "economic inequality?"

                "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

                by Shane Hensinger on Tue Jan 08, 2013 at 07:39:24 PM PST

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                •  Here's my understanding. (0+ / 0-)

                  People of all incomes get the same benefits from Social Security, right? Why should people with higher incomes get more benefits? Why not support that with a progressive taxation system instead of letting high income people off the hook?

                   I'm not an economist, so I don't know. I resent that idea that high income people deserve more from Social Security or that in this recession that they shouldn't pay more since they make more.

                   Why not just set up a flat tax then if you want to save high income people from progressive taxation? Granted that would be horrible, but is that what you want?

                  •  No - Social Security benefits RISE (1+ / 0-)
                    Recommended by:
                    DSPS owl

                    the more you pay into the system - they are not equal at all. There's a maximum and a minimum and levels in between based on income earned over your lifetime. So it does depend on how much you pay.

                    "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

                    by Shane Hensinger on Tue Jan 08, 2013 at 07:53:20 PM PST

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                    •  That's true. (0+ / 0-)

                      I was just reading up on how it works, trying to education myself. Apparently FICA is a regressive tax. The way I see it, changing it to progressive taxation during and hopefully after the recession sounds like a good idea. Make high people pay more since they earn more. They can afford to pay into it at higher rates.

                       Perhaps it should become a system that benefits everyone equally with a progressive tax.

                      •  *educate myself (0+ / 0-)

                        Ugh. I'm so worked up over this. I'm sick of the rich getting their way and low income people getting the short end of the stick because of this country's love affair with those said rich people.

                        •  FDR put Social Security in place (1+ / 0-)
                          Recommended by:
                          DSPS owl

                          He was hardly a Republican shilling for the wealthy. He recognized that this was the best way of making sure everyone felt they were part of the program. The surest way to destroy it is to turn into what can be perceived, rightly or wrongly, as a welfare program.

                          "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

                          by Shane Hensinger on Tue Jan 08, 2013 at 08:24:43 PM PST

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                          •  I know the history. (0+ / 0-)

                            I know what Social Security does. I just wasn't clear on how FICA worked.

                             Anyhow I have no good answers of my own.

                          •  One last thought. (0+ / 0-)

                            Keep in mind Shane none of this is personal. I don't know you outside of DailyKos, so I can't judge your character.

                             If Social Security as a whole and FICA in particular could be turned into a thoroughly progressive system, in other words if it had a progressive tax scheme and distributed benefits equally, that seems like it would be an improvement over what we have now.

                             I can't bring myself to feel any concern for high income people. They can afford higher taxes and already have a plethora of tax cuts in their favor. Reducing the burden on the rest of us and making sure we all equally benefit from Social Security sounds way more important than high income people saving more money or what the right-wing thinks.

                          •  It's similar to all other pension plans (0+ / 0-)

                            The more you pay into the system, the more you get out. I like it that way and I don't want to change it - other than maybe increasing the tax so the system is viable for 100 years. It's not a progressive income tax not should it be - we do not need two progressive income tax systems operating in tandem.

                            "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

                            by Shane Hensinger on Tue Jan 08, 2013 at 09:08:24 PM PST

                            [ Parent ]

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