this post was submitted on 04 Jun 2024

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The Social Security Fix Nobody Wants to Talk About | A small tax increase would make the essential national retirement program secure for decades, our columnist says, but lawmakers would have to act (www.nytimes.com)

submitted 5 months ago by [email protected] to c/[email protected]

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[–] [email protected] 17 points 5 months ago

"An increase in the 12.4 percent Social Security payroll tax of 3.5 percentage points — half borne by employers and half by employees — is all that’s needed to keep full Social Security benefits flowing in the 2030s and beyond, Professor Munnell explained in a telephone conversation."

You don't have to increase the percentage with-held AT ALL.

The 12.4% payroll tax only applies to the first $168,600 of earned income.

Source: https://www.irs.gov/taxtopics/tc751

So what you do is eliminate that cap, like we ALREADY do for the Medicare tax.

In fact, if you removed the cap AND applied the tax to other forms of income, such as capital gains, we could probably reduce the percentage and bring in more money.

[–] [email protected] 23 points 5 months ago (1 children)

Nationalize healthcare and boom, so much money saved you can afford it

[–] [email protected] 8 points 5 months ago

Best we can do is nothing

[–] [email protected] 2 points 5 months ago

So would taxing the rich, like people that own the NYT

[–] [email protected] 14 points 5 months ago

Remove taxes going to the military complex and tax the rich appropriately. Stop putting tax burdens on the middle and lower classes

[–] [email protected] 46 points 5 months ago (2 children)

The ultrawealthy should pay for this since they took away our pensions. They wouldn't even notice the amounts missing from their accounts if they didn't have an accountant hired to find it all and make them pissed.

[–] [email protected] 17 points 5 months ago (1 children)

The ultrawealthy should pay for this since they took away our pensions.

Just put another $10k into your 401k. We promise the market will always go up forever and you'll be able to retire on it. It won't be like last time.

[–] [email protected] 7 points 5 months ago

Or the time before that, or the time before that...

I can't tell you how many times I've seen my co-workers borderline suicidal because their 401K tanked.

[–] [email protected] 9 points 5 months ago

At least take away the contribution cap which limits SS taxes to the first $168k of income.

[–] [email protected] 78 points 5 months ago (3 children)

Ah yes, just increase the tax on working people. So simple. Don’t look too closely at the yearly cap that prevents rich people who will never need it from contributing meaningfully. Let’s be careful to not consider a simple progressive tax that would easily correct the issue by putting an unnoticeable tax increase on the very people who are responsible for making sure normal Americans can’t fund their own retirements in the first place.

[–] [email protected] 1 points 5 months ago (1 children)

Wouldn't removing the cap just delay the issue? You get more out of SS the more you put in. The cap exists because there is a maximum amount you can get out of SS. If they remove the input cap, then that implies they'd remove the output cap too. In which case, the immediate result is a lot more money flowing into SS, but over time, a whole lot more money will start flowing out, too.

[–] [email protected] 5 points 5 months ago (2 children)

Nah you just make it needs based. Rich ppl don't get a check from ss

[–] [email protected] 1 points 5 months ago

Eh. One may be rich today and poor tomorrow.

I think Social Security income is taxed above a certain limit as well.

[–] [email protected] -2 points 5 months ago

Needs based support is definitely a good thing, but that's not what SS is. That's closer to welfare and would require a much deeper look into people's financial situation than a retirement program like SS.

I could make $500k/yr while working then experience some disaster/disability that takes it all away. Conversely, I could be homeless then suddenly come into massive wealth later in my life. Or, I could live a lavish life because my parents/SO are extremely wealthy, yet I am dirt poor on paper. SS is not designed for these situations, and attempting to modify it to fit them is probably a worse idea than bolstering other entitlement programs that are designed to fill in the gaps.

[–] [email protected] 15 points 5 months ago

This is the correct answer. They need to remove the cap before doing anything else.

[–] [email protected] 61 points 5 months ago* (last edited 5 months ago) (2 children)

The article explicitly talks about lifting that cap:

Raising the cap that way — taxing affluent people more and everyone else less — would reduce the 3.5-point tax increase needed to fully fund Social Security to as little as 2.45 points, the Social Security system estimated.

[–] [email protected] 17 points 5 months ago (1 children)

Still, raising the tax nearly 2.5% on working people is bullshit. Hey guys, we know inflation is hitting hard and most of you haven't had a meaningful raise...ever but how about if we lower your current and all future earning potential by 1/40th?

[–] [email protected] 12 points 5 months ago

Wouldn't it be more like a 1.25% increase for most people since that part of the payroll tax is split half and half between employers and employees? I might be reading it wrong but sounds like they're proposing raising the entire 12.8% or whatever it is payroll tax that much. So it'd go from like 6.4% to like 7.7%.

[–] [email protected] 11 points 5 months ago

This is the way