On Sun, 8 May 2016 15:56:11 -0700, Josh Rosenbluth
Post by Josh Rosenbluth Post by mg
On Sun, 8 May 2016 13:40:23 -0700, Josh Rosenbluth
Post by Josh Rosenbluth
"Financial or other aid provided, especially by the government, to
people in need"
My question is whether or not you agree with that definition
Yes, I do.
Post by mg
so, would you please explain why you believe that raising the cap
makes it more of a welfare program.
Currently, the Social Security tax rate is 12.4% (employee+employer
share) applied to a cap of $118,500 of income per year. Thus, a person
making $10,000 a year pays $1240 each year into Social Security, whereas
a person making $118,500, $500,000, $1,000,000 or $10,000,000 a year
pays $14,694 each year.
The person making $10,000 a year will receive $9000 as their annual
Social Security payment. The people making at least $118,500 a year
will receive about $34,000 as their annual Social Security payment.
So, the ratio of annual benefit to annual tax payment is 7.3 (9000/1240)
for the person making $10,000 a year, and 2.3 (34,000/14,694) for a
person making at least $118,500 a year.
Would you agree that because the benefit-to-payment ratio is higher for
low-income earners than high-income earners, the current Social Security
has a welfare aspect to it because "financial [...] aid [is] provided
[...] by the government [...] to people in need"?
Assume Social Security is changed so that the benefits for people making
$100,000 or more were reduced by 40% without any cuts for those making
less than $100,000, and without any tax increases on anyone. A person
making at least $118,500 would have a benefit of $20,400, and a
benefit-to-payment ratio of 1.4. I believe you characterized such a
change as making Social Security more like welfare, and that sounds
right to me to because it would further provide "financial [...] aid
[...] by the government [...] to people in need".
Now, what would happen if instead we raised the cap to $10,000,000? A
person making $500,000 would now pay $62,400 in annual Social Security
taxes and receive an annual benefit of about $91,000. That results in a
benefit-to-payment ratio of 1.5. The $1,000,000 earner has a ratio of
1.3, and the $10,000,000 earner a ratio of 1.2. And that too would
further provide "financial [...] aid [...] by the government [...] to
people in need", and thus make Social Security more like welfare.
Thank you for the numbers. Yes, indeed, I agree that the SS program
has a (large) welfare aspect to it, already. My highest priority and
biggest concern is that the current plan to cut benefits for the
higher wage earners and not the lower wage earners will eventually
result in the destruction of the SS system. I think Democrats see
that solution as a clever way to solve the problem, but I think they
are falling into a Republican trap that will kill the Social
Security program when we eventually get an aggressive Republican in
office who points out that the returns are absolutely atrocious for
the "middle class" and that they could do much better by simply
investing in their own retirement plan.
My second biggest concern is that I believe that everyone should
contribute to welfare programs via a progressive tax system and they
should not be financed by only a selected segment of society.
Therefore, I don't think it's fair for those who made above
approximately ~$60K a year and less than ~$120K per year to shoulder
the entire burden for this welfare program. Other than that, I'm
open to a whole variety of possible solutions.
My absolute favorite solution would probably be to remove all the
welfare components out of the SS program and then let the benefit
float up and down based on the amount of payroll taxes going into
the SS fund. Then I would create a new (welfare) program that
supplements the retirement benefits for those on the bottom half of
the income scale and it would be paid for out of the general fund.
In regard to what makes a welfare program "worse" or "better" or
bigger or smaller, etc., the definition of welfare is, "financial or
other aid provided, especially by the government, to people in
There's nothing in the definition about how the government acquires,
or collects the money. That's a
political/philosophical/ethical/psychological issue. So the method
of acquisition is irrelevant. The welfare system isn't worse or
better if you get all the money from one person, or you get the
money from 300 million people. In the context that we are talking
about, the welfare program gets worse if the total amount of money
the government pays out becomes greater and the welfare program gets
better if the total amount of money the government pays out becomes