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."
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.
ReplyDeletesource: 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.
ReplyDeleteIIRC 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).