Carol Gaido-Schmidt – 9/10/06

This page was last updated on September 10, 2006.

Don’t exempt the wealthy; Carol Gaido-Schmidt; Beaver County Times; September 10, 2006.

Below is a detailed critique of the subject letter.

“The time has come to increase the income limits subject to Social Security taxes.”

[RWC] The max taxed earnings cap increases every year by law. The limit for 2006 is $94,200, an increase of $4,200 over 2005. That’s an increase of $68,300 over 1980’s limit of $25,900. As a reminder, there is no limit for the Medicare tax (2.9%).

“Wages are falling. Workers are paying more and more of their own health care costs. Few employers offer pensions, and the number of those who do continues to fall with each year.”

[RWC] Real wages are increasing, not falling. I covered this in my critique of the Post-Gazette editorial entitled “Honoring labor.”

Regarding healthcare costs, we’ve always paid for them. It’s just now that we’re seeing those costs.

While I believe Ms. Gaido-Schmidt’s assertion about pensions, I believe you’ll find businesses are mostly shifting from defined benefit programs (like pensions) to defined contribution programs like 401(k)’s.

“They tell us to save for retirement, but most of us live from pay to pay. We shop for bargains and clip coupons, but we get less and less each year for our dollars. Our cars take much of our money with the price of gas and costly repairs to try and meet inspection and emissions regulations. Every dental or medical need adds to our woes and our home equity loans. Property taxes, school taxes, the list goes on and on.”

[RWC] Anyone who takes out a home equity loan to pay for ongoing expenses makes a huge mistake.

“My wages are about a dollar more an hour than they were ten years ago, but many of my bills have doubled. How can I save?”

[RWC] If this is true, why doesn’t Ms. Gaido-Schmidt get a better paying job? I don’t know the details of Ms. Gaido-Schmidt’s situation, but for the vast majority of us, our financial situation is the result of a lifetime of choices. For example, if you choose not to work hard during high school, you put yourself on a road to poverty.

Research shows there are simple steps you can take to avoid long-term poverty.

First, graduate from high school. I could be wrong, but I suspect graduating with better than a D average helps too.

Second, if you choose not to go onto higher education (apprentice program, trade school, college, et cetera), immediately take and keep a job regardless of how much it pays. It not only puts money in your pocket, it gives you needed experience when you want a better job.

Third, don’t have a baby before you are married.

Fourth, don’t get married too young. The younger you are when you marry, the more likely it is you will divorce, and long-term marriage tends to help your economic situation. Most mention of this appears to consider marriage before 20 or 21 to be too young.

Fifth, don’t have a baby before you can afford a baby without requiring government handouts. Providing for children is a lot more expensive than most young adults recognize.

Sometimes these items are combined into a list of three.

“Most of my peers are in the same boat. The only thing we have to rely on for the future is Social Security. Now it is in real danger. I understand that those who earn higher incomes do not feel that they should have to support the rest of us in retirement by taxing their earnings. I also should not have to pay to send people on medical assistance to the dentist when I cannot afford it for myself, but I do. We all pay taxes that fund medical assistance and welfare.”

[RWC] Those who earn higher incomes already take a hit relative to lower income earners. Relative to higher income earners, lower income earners get a higher proportion of their Socialist Security taxes back in benefits. That’s even more the case for Medicare where you get the exactly the same benefits regardless of how much you paid in taxes.

Outside of Socialist Security, those who earn higher incomes bear an even greater tax burden. See my letter to the editor entitled “Lottery winners – not.”

Finally, Ms. Gaido-Schmidt asserts that because she must help pay for other’s medical assistance, someone should help pay more for her retirement. Did it ever occur to Ms. Gaido-Schmidt that we’d all be better off if we simply paid our own way?

“There is no good reason to exempt higher wage earners from paying Social Security taxes. It will help secure the future of Social Security and is in the best interests of the country.”

[RWC] “Higher wage earners” are not exempt from paying Socialist Security taxes. They simply don’t pay SS taxes on wages over an ever-increasing limit.

Regarding the “It will help secure the future of Social[ist] Security,” that’s hogwash. Since 1950, Congress increased the Socialist Security tax rate 20 times! A 12.4%, the current level is 6.2 times its original rate. Socialist Security is a Ponzi scheme and it cannot be fixed by continually raising taxes.