Josh Barro Don’t Cut Social Security, Expand It "Despite its problems, Social Security is the best-functioning component of the U.S.'s retirement-saving system. Instead of cutting, the federal government should be expanding its role in retirement saving."
2 comments:
They should also raise the limit on how much income can be taxed for Social Security and in the FICA taxes (6.2% from me, 6,2% from my employer) from my paycheck. Capping it at $113,700 (in 2013) makes this tax pretty regressive. Collect on incomes all the way up. Some rough calculations of my own show the potential extra taxes collected would be $175 Billion/year compared to the $805 billion collected and $736 Billion distributed for the Old Age and survivors insurance and the disability insurance portion. Use the extra to build up a buffer for when those hated baby boomers retire.
source: rate and limits http://www.ssa.gov/policy/docs/quickfacts/prog_highlights/RatesLimits2012.html
distribution of incomes:
http://politicalcalculations.blogspot.com/2011/09/distribution-of-income-for-2010.html
SS payments and distributions:
http://www.ssa.gov/oact/trsum/index.html
Yes, I've long said that's the right thing to do. The argument for a cap was that since benefits are capped the taxes should be too. But the taxes didn't keep up with the change in income disparity. When setup, 90% of all income was subject to FICA, now since more total income is in the top 1% it's only 83% of total income that's subject to FICA.
IIRC changing the cap to something like $140K means that Social Security is fully funded for 50 years (I'm sure I have some details off). When some say "entitlements" are the problem, they're often corrected that social security isn't really a problem, this is why. There are simple fixes to social security, there's not need to privatize (which would be much worse).
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