Social Security Taxes

[demsformd]

With President Bush preaching to the American people about the terrible morals of double taxation, I have been in the mood to look into the issue. Now President Bush has decided that that double taxation should end, even though it does not benefit the vast middle part of America. While I feel that double taxation is wrong, I just cannot see the justification for completely eliminating the double taxation if people that make $45,000 only receive a $12 tax break. This while CEO's receive millions in a tax break. Such a plan is exactly like the supply-sided ideas of the Reagan era. They offer little innovation and will only place this nation back into even greater debt. It does little to stimulate the economy and its prospects for future benefits are also low.

Thus I feel that instead of ending the dividend double taxation, it is time to end the double taxation of Social Security benefits. This position will definitely not receive the support of the Democratic Party and it would be more receptive in the GOP (John Ashcroft in fact introduced such legislation in 1998 I believe), but it is still the much more stimulating thing to do for the economy. Currently Social Security taxes take money from our paychecks yet we still have to claim that money as income for our personal income taxes. This double taxation causes average Americans to pay thousands more in federal income taxes than they should. Ending Social Security double taxation would provide much more to an average family than this dumbass dividend cut plan that President Bush is pushing. Ending the double taxation on Social Security would benefit ALL parts of society because all of us have to pay those taxes while the Bush plan boils down to a tax cut for the elite rich. It is time to hand the tax cuts out equitably rather than giving the rich all of the money that the Bush White House hands out.

 

[Heretic]

Hmmm if we truely want to end double taxation federal employees should not have to pay income taxes either.

Im all for that one.

I think taxing social security benefits is silly, however it does take them back from people that have other substantial incomes so it kinda/sorta helps benefit the elderely with less cash flow than it does those with plenty of cash flow.

But as always I think we should shitcan social security as it is today, I can earn more on my SS withholdings buying US government savings bonds (read NO RISK) than the SS fund generates.

 

[Heretic]

True

I read a book last year that showed how there never was a government surplus but the politicians found a new way to cook the books. Neither side wanted to expose it because they all had more money to spend that way.

The book was quite convincing.

 

[Bruzilla]

Maybe I'm out in left field...er... right field, but when did Social Security become a tax? To the best of my knowledge Social Security has never been a tax aside from people mistakenly calling it one. Social Security payments are set asides from your salary, which are invested by the Government for return to you when you retire. Taxes are monies that are deducated for the purpose of funding government spending. Granted that the Social Security surpluses have been raided for additional tax revenues for decades, but that is not the intended purpose of Social Security payments. So I'm afraid that your attempt to equate Social Security with the double taxation of dividends is wrong.

Like a good Democrat, you mention the "millions" that CEOs will be receiving in tax breaks without mentioning the fact that anyone who gets a million dollar tax break from this change to the tax code is paying multiple millions in taxes. You try to make it sound like this change will result in CEOs paying greatly reduced or no taxes, which is also wrong.

Do Democrats ever stop to think where all the money they want the government to spend comes from? It comes from the CEOs and Big Business-types that they are so eager to attack for making too much money. When these people and companies make more money, the tax base goes up and government spending increases. When they make less money the opposite is true and your beloved social spending programs get cut. Talk about cutting off your nose to spite your face!!! Reducing the costs of investment increases business investment and growth, which increases tax revenue. If Dems weren't so dang near sighted on economic issues they might be able to see they are fighting the wrong battle.

 

[Frank]

Originally posted by Bruzilla
Maybe I'm out in left field...er... right field, but when did Social Security become a tax? To the best of my knowledge Social Security has never been a tax aside from people mistakenly calling it one. Social Security payments are set asides from your salary, which are invested by the Government for return to you when you retire. Taxes are monies that are deducated for the purpose of funding government spending. Granted that the Social Security surpluses have been raided for additional tax revenues for decades, but that is not the intended purpose of Social Security payments. So I'm afraid that your attempt to equate Social Security with the double taxation of dividends is wrong.

Well, everyone in government calls it the "payroll tax", probably because everyone pays the exact same percentage regardless of income. And it isn't "set aside and invested" - that would be *intelligent* - it is all spent immediately, and replaced with an IOU from the government, that they will pay it back with interest. Had they *actually* invested it originally, way back when there was a HUGE 'surplus' rather than spend ALL of it, we might be in better shape nowadays.

I think the fact that it is called a tax, qualifies it as one.

 

[Kyle]

Originally posted by bluto
Okay maybe I need an education but as far as I know Social Security withholdings are not invested in ANYTHING. They go into the hopper and are used to fund the current years budget. Anybody? Beuhler?

They aren't!

Never have been.

 

[Bruzilla]

I guess we need a Social Security expert then. It's always been my understanding when dealing with federal money that the Government cannot maintain any funds across fiscal years, with the exception of Social Security funds. Tax monies must be expended or returned to the government for reallocation. Exscess Social Security funds are supposed to be kept in a trust fund earning interest, i.e., invested.

In either case, Social Security funds are not suppossed to be used for government spending and cannot be considered a true income tax as the money is intended to eventually be returned to you.

 

[Frank]

"Tax monies must be expended or returned to the government for reallocation. Exscess Social Security funds are supposed to be kept in a trust fund earning interest, i.e., invested."

Well they aren't, and haven't been. For decades, that money just gets thrown in with the rest of the budget, spent, and guess what? They STILL have a deficit, after that. In years past, they spent WAY more than they were taking in, even with the SS "surplus". Even when they first began to balance the budget, the remark was still "but it isn't balanced if you factor out the SS surplus", which everyone pretends is "off-limits" but NEVER is. That 'lock-box' is full of IOU's, just like the movie "Dumb and Dumber", and I hope you aren't banking on them being able to pay up, because by the time most of us will retire, there just won't be enough money taken in to honor those IOU's.

"In either case, Social Security funds are not suppossed to be used for government spending and cannot be considered a true income tax as the money is intended to eventually be returned to you."

I don't agree with this, on two counts - lots of people receive money from the government that they don't even PUT in, in benefits. Redistribution of wealth IS part of what the government does. So just because it's coming back to ME in the form of a check doesn't warm my heart that they didn't take it away from me.

But second and more importantly, unless something drastic occurs, what you'll see in twenty to thirty years is that there's no money to give out! They took your money and winked saying "trust us, we're from the government, and it's not *really* a tax". But if something drastic doesn't happen, there's no chance there will be a dime to give to you. Don't bet the farm that Uncle Sam will ever be able to pay you back. He won't.

Which means, an *intelligent* thing to do - aside from killing the whole thing off altogether - would be to phase in an investment plan where the monies ARE invested, and the dollars ARE off-limits, and incoming workers could allocate their funds just as govt workers do now, in different combinations of stocks and bonds. Of course, the Democrats always scream with terror at such a thought, because to them "investment" means "spend it today on something I think I want". They're horrified at the idea of putting government funds in stocks and bonds, even though their own govt retirement accounts already do that. I guess you can always drum up class warfare fears when you put the words Republican, investment and stock market together. There's an immediate presumption that they'll steal it if it ain't in a lock box they have the key to - although the alternative is to leave money in Washington, and we always know money left in Washington gets SPENT.

 

[Kyle]

Originally posted by bluto
I was just at the Whitehouse.com website and they refer to it in the budget as Social Security Tax Receipts. Good enough for me.

WhiteHouse.com said that huh?

 

[vraiblonde]

If I understood it correctly, they don't put the SS into the general fund. What they DO do is "borrow" from it. Remember Al Gore saying repeatedly that he'd put SS in a "lockbox"? (Not that I want to beat a dead horse but why didn't they do that during the 8 years of Clinton?)

And anyway, we don't get OUR SS money back - we get someone else's. The whole thing is a pyramid scheme and should be illegal. I know I will never see all the money I (and my employers) have contributed to "my" SS - and I've always been a low to middle earner, not "wealthy" by any stretch.

For an eye-opener, request your SS statement:
https://s3abaca.ssa.gov/pro/batch-pebes/bp-7004home.shtml

You can apply online and they'll send it in the mail to you in about 4 weeks.

 

[Bruzilla]

Again, Social Security funds are NOT suppossed to be used as tax revenue, even though we all know that they are. Dems point was that these funds constitute double taxation, which they do not.

I don't see Social Security as a pyramid scheme. I see it in the same light as insurance. You pay into your insurance company, and the company pays your money out to others. Many people People get more out of Social Security than they put in. My parents have certainly gotten more, but it really all depends on how long you live. If you start collecting at age 65 and die six months later, you're screwed.

 

[Warron]

As far as I'm concerned, whenever the government requires I give them some of my money, regardless of the reason, It's a tax.

Ideally, I should get something in return for every dollar the government gets from me. Roads, police and fire protection, or financial support in old age. Its all the same.

 

[Kyle]

Originally posted by Warron
... Ideally, I should get something in return for every dollar the government gets from me. Roads, police and fire protection, or financial support in old age...

You do!

They lighten the burden on you of carring around that heavy wallet and dealing with all those awful financial statements from investment houses.

 

[alex]

A real double tax for everyone is the requirement on the Federal Income tax forms to report state income tax refunds from the previous years. Just because I paid more in one year and it was refunded in the next shouldn't mean I have to pay taxes on that same income AGAIN!