This page was last updated on March 19, 2010.
A quick way to fix Social Security; Thomas Taylor; Beaver County Times; March 19, 2010.
Two previous letters from Mr. Taylor were entitled “Impeach Bush and Cheney” and “Mukasey a failure as attorney general.” That tells you pretty much what you need to know about where Mr. Taylor lies on the political spectrum and the letter below confirms it.
Below is a detailed critique of the subject letter.
“Monday’s article ‘Social Security to start cashing IOUs’ basically stated how underfunded the program will be when all the baby boomers retire and more funds will be paid out than taken in.
“Here’s the quick and easy fix - remove $106,800 salary cap so everyone pays the same 6.2 percent.”
[RWC] This is a recurring proposal and it’s wrong.
The SS tax is 12.4%, not 6.2%, and employees pay it all. The myth employers pay half is simply accounting sleight of hand mandated by law to understate the actual impact on the employee. The same is true for the Medicare tax. Since 1950, Congress increased the Socialist Security tax rate 20 times! At 12.4%, the current level is 6.2 times its original 2% rate.
The max taxed earnings cap increases every year by law and is now more than twice what it was in 1990 ($51,300). In constant dollars, the original earnings cap of $3,000 in 1937 should be $45,154 today, not the $106,800 it is.
“When you do the math, 6.2 percent of $106,800 a year is $6,621. That’s all anyone earning more than $106,800 has to pay. So a person earning $200,000 is paying 3.3 percent, a person earning $500,000 is paying 1.32 percent, and a $1 million salary pays a measly 0.662 percent.
“If those same people were paying the same 6.2 percent as the rest of the poor working folk, the $200,000 wage earner would pay his/her fair share at $12,400; the $500,000 guy’s share would be $31,000; and the million-dollar man’s fair share would be $62,000.”
[RWC] “[T]he poor working folk?” We’re to assume higher-income earners aren’t also “working folk.”
“This would coincide with the $40,000 wage earners $2,480 share at 6.2 percent and the $80,000 earners $4,960.”
[RWC] Is Mr. Taylor telling us $4,960 (12.4% of $40,000) equals $9,920 equals $24,800 equals $62,000 equals $124,000? I don’t know Mr. Taylor’s age, but could he be a victim of “new math?” <g> Keep in mind, though SS favors low-income workers a bit, it was not designed to take money from “the million-dollar man” and give it to “the poor working folk.” There’s more about this later.
“If everyone paid their fair share of 6.2 percent, we wouldn’t be worried about the system failing.”
[RWC] Not exactly. Back in 2005, an Associated Press story (“Social Security tax may mean more money”; Laura Meckler; February 18, 2005) indicated completely eliminating the max taxed earnings cap would only push back SS’s critical dates by 7 years (when outlays exceed taxes) and 38 years (when the surplus is exhausted). That’s because Socialist Security is a Ponzi scheme and it cannot be fixed by continually raising taxes.
I noted above SS isn’t intended to be a wealth redistribution program. Mr. Taylor ignored or doesn’t know Socialist Security benefits are determined in large part by how much we as individuals pay in taxes over our working life. That is, the more taxes you pay, the greater your benefits check. Therefore, increasing the tax on those persons earning more than $106,800 would also increase the benefits (increasing SS future obligations) that must be paid to those employees.
“But then again, nothing in life is fair.
“Just ask the rich and well-connected people who write the rules in their favor.”
[RWC] Finally, Mr. Taylor appears to ignore the fact that the more you tax an economic activity, the less of it you get. Does Mr. Taylor really believe it’s wise to increase taxes on the economy?
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