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1 edit | reply to Mr Matt
Re: The Two Percenters are at it again. said by Mr Matt: It was just brought to my attention, on a talk show, that all employed persons pay a 15% payroll tax until they have earned over 100,000.00 Then they stop paying the payroll tax. The payroll tax is regressive. I like a lot of what you've said. But, you're not describing the above accurately.
I believe you're referring to Social Security, which is (technically) an insurance premium (Google for "FICA" which is called "insurance.").
Although the "premium" stops at $100k of income, it is very far from "regressive."
Go here and download the PDF (top-right corner). Print it, and "figure" your Social Security benefit by hand.
You'll see:
• The first 90% of your monthly benefit comes from the first $700 of monthly income.
• The next $3800 in monthly income contributes just 32% to your monthly benefit.
• The next $4000 in monthly income contributes just 12% yo your monthly benefit.
It stops there because earners didn't pay "premiums" on incomes above that level.
So, as you see, on the receiving side, it's significantly progressive. People who earned more, paid more, and didn't receive a proportional benefit.
Maybe it should be more progressive. Maybe the "disability" component of Social Security should be removed and treated like the welfare program it is. Maybe Social Security "retirement" benefits treated more like an annuity (real insurance).
But, it's misleading to focus on the 15% (employer/employee) "contribution" as a flat (regressive) tax without revealing how that 15% is distributed when a "claim" is filed. We'll never have thoughtful reform if we don't understand what it is we're reforming. (Like the other side who mislead people by saying it's a savings account, and they can do better with private savings.). |
