Deficit panel leaders' plan curbs Social Security and Other Sacred Cows

[FreqFlyer]

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Originally Posted by Gone4Good If I read the press correctly, neither Republican nor Democratic members of the commission are endorsing the report . . . that must mean the proposal achieves a fair balance that will actually correct the problem. It also means that the children we've elected to represent us will use this occasion to misrepresent the report and then use those misrepresentations as justification for doing absolutely nothing. We've seen this movie before.

Well said.

I like the idea of lowering the tax rates in exchange for elimination of deductions. We need to simplify the tax code.

I don't have high hopes of any real progress being made soon. I'm too cynical. I'm curious to see polling data on the public's reactions to the sacrifices that will eventually be required.

[samclem]

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Originally Posted by dex Do you know of any USA or foreign country that asks the taxpayer to compute net worth for something? I don't - just asking.

I think qualifying for Medicaid fits this. You've gotta be broke.

[FinanceDude]

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Originally Posted by MasterBlaster This should get a lot of press. Round 1 of unaffordable entitlements bills coming due. Expect lots of screamin' and Moanin' going forward. Deficit panel leaders' plan curbs Social Security - Yahoo! News-

Is Paul Ryan on that commission? If not, shame on POTUS. Ryan makes the most sense about these matters of anyone........

[samclem]

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Originally Posted by FinanceDude Is Paul Ryan on that commission? If not, shame on POTUS. Ryan makes the most sense about these matters of anyone........

Yes, he's on it. All the current officeholders who are on the commission are hanging their necks out if they vote for a final recommendation that skewers any of their own sides' sacred cows.

This is a trial balloon, obviously. I'm glad the White House hasn't joined the chorus of those shouting down the effort based on this first release of "what we're thinking about" info. Lots of other folks have gone straight into orbit, making themselves and their groups sound ridiculous. All the interest groups want to scream murder and move the starting line right now before the hard negotiations/trading begins.

[samclem]

Here's a link to a brief Reuters "Factbox" listing the panel's members and their backgrounds.

[Nords]

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Originally Posted by samclem Yes, he's on it. All the current officeholders who are on the commission are hanging their necks out if they vote for a final recommendation that skewers any of their own sides' sacred cows. This is a trial balloon, obviously. I'm glad the White House hasn't joined the chorus of those shouting down the effort based on this first release of "what we're thinking about" info. Lots of other folks have gone straight into orbit, making themselves and their groups sound ridiculous. All the interest groups want to scream murder and move the starting line right now before the hard negotiations/trading begins.

I think they should invoke the old rulebook used with the 1993 round of Base Realignments and Closures-- vote for the whole slate as proposed or stand up for continuing to waste the money. It was about the only way to get Congress to agree to "repurpose" all the military real estate in their districts...

[dex]

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Originally Posted by samclem I think qualifying for Medicaid fits this. You've gotta be broke.

Then there is a precedent.

[Alan]

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Originally Posted by dex Do you know of any USA or foreign country that asks the taxpayer to compute net worth for something? I don't - just asking.

The UK certainly does. You have to have less than $x in savings or investments to qualify for several benefits.

In France there is a wealth tax based on net worth above a certain value.

Wealth tax in France - a tax on your fortune from FrenchEntre.com

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Wealth tax does not exist in the UK, and the concept sometimes comes as a surprise to the British, since not only are you paying an annual tax on the value of assets that you built up out of your taxed income, but the authorities also oblige you to list everything you own, which can leave some people feeling that their privacy has been invaded.

[clifp]

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Originally Posted by dex Do you know of any USA or foreign country that asks the taxpayer to compute net worth for something? I don't - just asking.

Plenty of programs in the US from college loans, to free/subsidized insurance for children require the applicant/taxpayer to list their assets and those with too much money are are ineligible or see reduce benefits (example college loans)

[dex]

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Originally Posted by Alan The UK certainly does. You have to have less than $x in savings or investments to qualify for several benefits. In France there is a wealth tax based on net worth above a certain value.

Bear Stock Market
Reductions in SS?
Increased Taxes?
Precarious investment environment?
Terrorists
Wealth Tax?
VAT?

It will be a challenging 30 years in retirement.

[Animorph]

The Social Security proposals sound a little drastic for what should be the easiest to fix deficit. Bet they're trying to make it so the govt never has to pay back all the money they've borrowed from SS, and pull in any future extra funds to pay non-SS bills.

[youbet]

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Originally Posted by dex It will be a challenging 30 years in retirement.

Long suffering DW, who is well worn form listening to me piss and moan about politics these past 40+ years, suggested that if blessed with 30 years of happy, healthy retirement, then a few more idiotic moves by our gov't should be blown off and not fretted over. Don't know if I can do that, but she's probably correct. Last time I checked, it looks like we're gona be dead for a long time.........

[meierlde]

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Originally Posted by dex Do you know of any USA or foreign country that asks the taxpayer to compute net worth for something? I don't - just asking.

While it is done by the executor have a look at a form 706 (the estate or death tax) which is a wealth tax. The form is huge and relies on lots of schedules.

[meierlde]

Note that the extension of the age for SS to 68 in 2050 hits only those 28 or younger, and to 69 in 2075 hits 4 year olds. If you are a boomer its already happened to you.
The 15/30 standard deduction would wipe out the need for mortgage interest in all except the coasts, as 20k a year would buy a 400k house at 5% which except on the coasts and near Chicago is quite a house.

[cb7010]

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Originally Posted by dex Do you know of any USA or foreign country that asks the taxpayer to compute net worth for something? I don't - just asking.

Not sure what you are implying by this question, if anything? Using net worth is just an example of means testing. And, yes, I can think of several programs here in the US that use means testing as a way to determine who gets benefits (welfare, food stamps, unemployment, etc.)

If I wasn't clear in my previous post, I was simply trying to point out that we have a system going broke and one way to help right the ship would be to stop paying benefits to those that don't need them. Of course, as I have posted before we first really need to come to a universal agreement on what Social Security is supposed to be. Is it a safety net for those who need it or a retirement program for everybody? I'd like to think it's the former because I don't think any of us can honestly think the federal government should be our first choice in money and retirement portfolio management.

[samclem]

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Originally Posted by meierlde The 15/30 standard deduction would wipe out the need for mortgage interest in all except the coasts, as 20k a year would buy a 400k house at 5% which except on the coasts and near Chicago is quite a house.

A slide presentation of the co-chair's draft report is here. One of the tax reform options (number 2, see slide 26) says: "Limit mortgage deduction to exclude 2ndresidences, home equity loans, and mortgages over $500,000." This same slide also offers the $15K/30K standard deduction.

I think it would best if the standard deduction were lower than this. In my opinion, those not in poverty should be paying federal taxes, even if the rate is very low (5%). Setting a high standard deduction produces a huge constituency of voters with no stake in restraining government spending or in reducing tax rates. That's not good for the country. 47% of Americans pay no federal income taxes.

[79protons]

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Originally Posted by cb7010 If I wasn't clear in my previous post, I was simply trying to point out that we have a system going broke and one way to help right the ship would be to stop paying benefits to those that don't need them. Of course, as I have posted before we first really need to come to a universal agreement on what Social Security is supposed to be. Is it a safety net for those who need it or a retirement program for everybody? I'd like to think it's the former because I don't think any of us can honestly think the federal government should be our first choice in money and retirement portfolio management.

Well, how about at the same time we get rid of government pensions for people who don't really need them, and also extend the pension retirement age to 62 or 66. State and Federal govt. should not be the first choice in any retirement.

[kyounge1956]

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Originally Posted by FreqFlyer Well said. I like the idea of lowering the tax rates in exchange for elimination of deductions. We need to simplify the tax code. I don't have high hopes of any real progress being made soon. I'm too cynical. I'm curious to see polling data on the public's reactions to the sacrifices that will eventually be required.

I was going to make a poll, but IIRC the maximum number of options on a poll is 20, and there are a lot more suggestions in the report than that.

[clifp]

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Originally Posted by samclem A slide presentation of the co-chair's draft report is here. One of the tax reform options (number 2, see slide 26) says: "Limit mortgage deduction to exclude 2ndresidences, home equity loans, and mortgages over $500,000." This same slide also offers the $15K/30K standard deduction. I think it would best if the standard deduction were lower than this. In my opinion, those not in poverty should be paying federal taxes, even if the rate is very low (5%). Setting a high standard deduction produces a huge constituency of voters with no stake in restraining government spending or in reducing tax rates. That's not good for the country. 47% of Americans pay no federal income taxes.

Actually the 15/30K standard deduction is one of my favorite things about the proposal. One of the goals if the reform is to broaden the tax base I think it does this. Right now the median household income is 45K and approximately 30% of household incomes under 30K per year. Assuming that most all deduction other than the 1K tax credit per kid are wiped out I would think this would drop the number who don't pay taxes from the 47% rate to a number in the 30-35% rate, which looks like an improvement to me.

The reason I like the high standard deduction is really simplifies taxes for the vast majority or Americans and discourages the minor cheating. E.g. claiming that underwear you donated is worth $5/pair or fudging on your prescription cost etc. If you have to get $30,000 worth of deductions people will just claim the standard deduction and move on.

BTW, as one of the 47% of American who haven't paid federal (or state) taxes for the last few years, I still feel an obligation to reduce the debt, even if it means reduced benefits or future higher taxes.

[chinaco]

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Originally Posted by 79protons Well, how about at the same time we get rid of government pensions for people who don't really need them, and also extend the pension retirement age to 62 or 66. State and Federal govt. should not be the first choice in any retirement.

Pensions are not charities. People worked for them. People do not work for free (capitalism).

The government has to exist and it takes people to work for the government. If you want smart people in govt (and we do)... the govt needs to pay some mix of wages and benefits that approximates the private sector.


It is not fair (or right) to just yank people's pensions. Most older people factored into their retirement plans.

Now if your point is:

We need to trim the size of the government workforce (trim jobs) and reevaluate pay and benefits for the employees to make sure they are competitive... I would agree.

BTW: I do not work for the govt or have any pension coming from them ... except SS.

As far as SS goes... most americans that worked paid into it(along with their employer). It would not be reasonable to just take it away (regardless of their wealth).

The American way will be to tax income and ultimately to recapture it at the end (estate taxes). IOW... you can use it while you are alive... but in the end, they will recapture taxes on unspent money if one is "Wealthy". It results in the same outcome... Higher taxes to pay for the programs. Just like there is a constant stream of income that can be taxed.... there is a constant stream of deaths!