Cap on Social Security

[SamSpade]

I'd like someone to explain to me why we have a cap on it at all.

Forget if you don't care for Social Security. Why is their a cap on the salary that is taxed? It's always set at a level much higher than what the average American makes, so for the majority of us, it's a fixed percentage of our income, and since it rises over time, it will always be the same percentage.

But if you make a LOT of money, the percentage is so small, it's negligible.

I could understand if the very rich didn't ever collect any of it - but they do.

What's the reasoning behind a cap?

 

[Larry Gude]

I'd like someone to explain to me why we have a cap on it at all.

Forget if you don't care for Social Security. Why is their a cap on the salary that is taxed? It's always set at a level much higher than what the average American makes, so for the majority of us, it's a fixed percentage of our income, and since it rises over time, it will always be the same percentage.

But if you make a LOT of money, the percentage is so small, it's negligible.

I could understand if the very rich didn't ever collect any of it - but they do.

What's the reasoning behind a cap?

The cap is tied to the expectations of the maximum you would get back. Even Ponzi Schemes have limits.

 

[philibusters]

I don't mind the cap. I rather keep the cap and place a means test on social security so that those people with an income over a certain amount (say $200,000) don't get social secruity. If their economy dips later they could of course get it.

Not capping social security just makes it another tax on the rich and that is not what social security is about. It should be a forced saving plans of sort, not a tax on the rich.

 

[Larry Gude]

I don't mind the cap. I rather keep the cap and place a means test on social security so that those people with an income over a certain amount (say $200,000) don't get social secruity. If their economy dips later they could of course get it.

Not capping social security just makes it another tax on the rich and that is not what social security is about. It should be a forced saving plans of sort, not a tax on the rich.

OASDI Old Age Survivors and Disability Insurance.

It was never meant to be 'forced' savings. It was set up whereby, at the time, something like 20 workers were chipping in for one old or disabled person. Demographics have changed over the years so it is no longer sustainable. Not enough people putting in for what is going out. However, because of the 'insurance' part, whereby there is no actuarial proving out going on, congress and the potus can just change it and modify it as they see politically expedient. It can be anything. But, it is not solvent as most people understand the term.

If you or I set up a system like this, it would be called a Ponzi Scheme and we'd go to jail.

The cap is an attempt at a pretense of fairness.

 

[Vince]

OASDI Old Age Survivors and Disability Insurance. It was never meant to be 'forced' savings. It was set up whereby, at the time, something like 20 workers were chipping in for one old or disabled person. Demographics have changed over the years so it is no longer sustainable. Not enough people putting in for what is going out. However, because of the 'insurance' part, whereby there is no actuarial proving out going on, congress and the potus can just change it and modify it as they see politically expedient. It can be anything. But, it is not solvent as most people understand the term.

If you or I set up a system like this, it would be called a Ponzi Scheme and we'd go to jail.

The cap is an attempt at a pretense of fairness.

OK, why has the employee deduction for OASDI reduced from 6.2% to 4.2% ? And it's just for the employee portion. The employer contribution is still at 6.2%

 

[Gilligan]

OK, why has the employee deduction for OASDI reduced from 6.2% to 4.2% ? And it's just for the employee portion. The employer contribution is still at 6.2%

That was one of the 'bones' that got thrown to placate Dems in the recent bill extending the Bush-era tax rates.

 

[Vince]

That was one of the 'bones' that got thrown to placate Dems in the recent bill extending the Bush-era tax rates.

Kinda stupid. It didn't put much more in my paycheck and it probably would have helped in the Social Security Disability Dept. So did they reduce SS disability payments because of this?

 

[philibusters]

Kinda stupid. It didn't put much more in my paycheck and it probably would have helped in the Social Security Disability Dept. So did they reduce SS disability payments because of this?

Wait I thought conservatives liked lower taxes and keeping more of their money.

Tilted covered the purpose of the tax cut in another thread. Since Social Security is capped (which means for the very wealthy it is a relatively small tax rate), this was a way to give the middle class and lower classes a small one year tax cut.

 

[Vince]

Wait I thought conservatives liked lower taxes and keeping more of their money.

Tilted covered the purpose of the tax cut in another thread. Since Social Security is capped (which means for the very wealthy it is a relatively small tax rate), this was a way to give the middle class and lower classes a small one year tax cut.

Guess I could use the extra money to put towards disability insurance because when the liberals get done raping the system, I won't have much left.

 

[Gilligan]

Wait I thought conservatives liked lower taxes and keeping more of their money.

Tilted covered the purpose of the tax cut in another thread. Since Social Security is capped (which means for the very wealthy it is a relatively small tax rate), this was a way to give the middle class and lower classes a small one year tax cut.

Exactly..it's mainly targeted to benefit the only employees that would really notice it at all..those in the 50% or so of us who pay little or no income taxes.

 

[Rommey]

OK, why has the employee deduction for OASDI reduced from 6.2% to 4.2% ? And it's just for the employee portion. The employer contribution is still at 6.2%

If they were going to do this, they should have raised the income cap to $157,642. That way, there would still be some that would contribute the maximum dollar amount (had they not done this percentage reduction) of $6,621. I don't know how many it would affect but it would mitigate some of the loss.