Today, for the first time in a while, I gave my pay check stub a really close look. And this FICA thing, I've decided that I don't want to pay for that anymore. Not that it matters, because obviously I don't have a choice -- But it really sucks to see so much money going out to such an albatross. I know it's probably a selfish stance, and that anyone can become disabled and unable to work at any given time, but there has to be a better way. Or is the system working? Any thoughts on what can, could, or should be done? I'm not the most knowledgeable when it comes to taxes.
Many people hate it until they need it. It's like insurance... car insurance is a waste of money until you get into a wreck. Or is it just social security and medicare? Even so, I think if it wasn't mandated, too many people wouldn't save for their own retirement/benefit and be screwed when they get old. Sure, it'd be their own fault, but our education system is so terrible at educating people about all of this (as clear from my lack of knowledge on what FICA is actually for), I can't fault them a gigantic amount. That said, payroll taxes do seem like they're getting a bit out of control: We need more of a balance between personal and corporate taxes, IMO.
But isn't it fair for a 27 year old to question whether or not it'll even be there when I actually need it?
Yep, totally fair. It definitely won't be there if no one pays it, though. Unfortunately, the current generation in power seemingly cares very little about our generation (I'm 30).
Yes, but you are probably one of the few of your generation that question it or get active about it. Senior votes. 18-30 don't vote. Who is drawing money from FICA funds now? You see the problem. (and politician can't get there acts together to improve and address a very fixable problem). It's also very demoralizing when you thinks about the system. It doesn't have to be this way (to be in danger, but really it's not that much in danger - media like to make you think it is). Contributions can be much fairer. Funds can be more solid if it's left for its intended purpose instead of being drawn away for unrelated things. I would even said, if the tax system if fairer, the % being paid can be lowered for everyone. The bigger problem is the overall tax system. It's outdated, not fair, not effective and unnecessary complex.
Of course you hate it. You get no benefit from it right now. Social Security was put into place because something like 1 in 4 senior citizens were living in poverty at the time. People are HORRIBLE at planning for retirement. (particularly in this country where the savings rate is more or less non-existent) This has been further compounded by the fact that company provided retirement like pensions and health care don't exist anymore. All we have now are 401K packages which vary greatly across companies (my 401k matching policy isn't particularly generous which doesn't exactly incentivize contributing for retirement) I do think its fair to be incredibly angry at the elderly today. You have people to do that are crying about the need to slash spending on things like education and other government investment (which disproportionately affects people who are working) but then turn around and demand we preserve medicare and social security at all costs. The elderly say that the current generation is spoiled but I'd counter that the boomers are one of the most spoiled generations in history. They got the fruits of the post WWII economy and safety net. They got pensions, lifetime health care, etc.. that were all funded by the WWII generation and then decided that it would be better to cut taxes for themselves in the 80s and create huge deficits that our generation is now footing the bill for. So in turn, our generation is facing massive budget cuts and tax increases to fund elderly retirement programs that those same elderly underfunded when they were working. So yes, the baby boomers suck. They bankrupted this country and my generation is stuck footing the bill for their health care and social security because they were too busy robbing Social Security and medicare to pay for their fiscal mismanagement. But unfortunately unless you plan on cutting social security and medicare for the elderly, we're stuck footing the bill. It's a ****ty situation but that's how it is.
Sure question it, but don't be fooled by the propaganda put out by the Wall Street guys who want to make a percent or two off the trillions that the SSA administers. They know better. Also don't be fooled by the relatively mindless government haters who for the most part don't know better. Now use your head. Social Security can't fail because if the checks would not come out then you would an overwhelming number of the House GOP'ers claiming to be the first to bail it out. Social security is solvent for many years and can pay out something like 70 odd percent. To pay 100% involves only minor tweaking but the two groups mentioned above won't admit it. google Dean Baker and social security solvency if you want the real info from an economist who is not an anti government nut or Wall Street guy.
http://www.nber.org/bah/summer04/w10466.html Elderly poverty in the U.S. decreased dramatically during the twentieth century. Between 1960 and 1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent, and research has documented similarly steep declines dating back to at least 1939. While poverty was once far more prevalent among the elderly than among other age groups, today's elderly have a poverty rate similar to that of working-age adults and much lower than that of children. Social Security is often mentioned as a likely contributor to the decline in elderly poverty. Enacted in 1935, the Social Security system experienced rapid benefit growth in the post-WWII era. In fact, there is a striking association between the rise in Social Security expenditures per capita and the decline in elderly poverty, as Figure 1 illustrates (with both series scaled to fit on the same figure).
Part of it goes to support the medicare benefits of the low income people. So you are actually doing something good for the society. I hope this can at least help you to feel better.
Fair Tax benefits the Rich and Business. The poor would pay more of their income...percentage-wise than Billionaires.
I don't know what the average MPC is for high-income earners but let's just use hypothetical numbers. Say Bill Gates spends maybe 30% of his income each year and saves the rest. Say he makes $100 million a year. If he's spending 30mil and that is only getting taxed at 23% then his effective tax rate is going to be around 6.9%. Whereas for poor people with an average MPC of 90%. Say someone makes around $30,000 a year and spends 90%. His effective tax rate is going to be 20.7%. Those purchases are on essentials, so no they can't spend less. This is a regressive tax. The only people able to consume more are the rich + the government spending from increased revenue will tack on to that consumption boom. Then you're going to get rapid inflation thanks to the removal of the capital gains tax. Stock market speculation, increased consumption from the rich when they realize that extra income is going to be effectively taxed less than before. That inflation will demolish the poor. Wages don't keep up with inflation. This will widen the wealth equality gap. Anything that is not a progressive tax will widen that gap.
We don't have a progressive tax system. .1%'ers and MNCs enjoy tax breaks the working class can't access. The difference with his plan at least is that they can't opt out as they can currently. US can't do it though, eliminates the need for a lot of white collared people stashing those really rich people's money away and in to captive insurance fronting companies in Bermuda, Cayman, Isle of Man etc.
Eliminates tax fraud and money stashing; irrelevant. Rich people still don't spend that much as a percentage relative to the middle class and the poor.
