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Old 07-23-2016, 08:22 PM   #61
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CBO also assumes, as do most economists, that the employers share of payroll taxes is passed on to employees in the form of lower wages than would otherwise be paid.
While I see their point I don't necessarily agree because the converse would be that if the employer match was abolished that employee wages would go up.... and if one believes that is true then I have a bridge that I would like to sell them.

Or if payroll taxes increased that wages would go down... wages are a matter of demand and supply and the employer match does not affect demand or supply.
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Old 07-23-2016, 08:44 PM   #62
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... wages are a matter of demand and supply and the employer match does not affect demand or supply.
?? that extra money removed from employers by the government doesn't impact the overall demand for labor or the compensation an employer can offer an employee while still making a profit?
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Old 07-24-2016, 05:42 AM   #63
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?? that extra money removed from employers by the government doesn't impact the overall demand for labor or the compensation an employer can offer an employee while still making a profit?
So you really think that if the match were abolished that employers would increase employee compensation?

In high theory perhaps it affects demand, though a few posts ago Independent opined that it was just passed on to the consumer in product prices, which seems to me much more plausible than affecting demand, but in reality it is so trivial that it is probably close to last on the list of factors considered by a business in expanding or contracting their workforce.

In all my years of work I can never recall a meeting discussing staffing levels where anyone said... "But don't forget now, if we hire this person that we need we're going to have to pay payroll taxes on their pay so maybe we should hold off".
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Old 07-24-2016, 05:46 AM   #64
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If the employer match to SS were really an absolute wash, no one would care one way or the other. It's becomes a mute point. I imagine the truth is that no one knows what wages would do if the employer tax were shifted to the employee. We each have our predictions on this but, if it is a wash, what does it matter if it remains as it is?
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Old 07-24-2016, 06:11 AM   #65
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. It's becomes a mute point.
does that mean we can't talk about it?
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Old 07-24-2016, 06:12 AM   #66
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In all my years of work I can never recall a meeting discussing staffing levels where anyone said... "But don't forget now, if we hire this person that we need we're going to have to pay payroll taxes on their pay so maybe we should hold off".
true, but fica/futa is certainly part of the benefits/tax load on comp
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Old 07-24-2016, 06:13 AM   #67
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What? Then is it possible that free health insurance from employers isn't really free?
I think most employers that provide coverage pick up 80% of the cost
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Old 07-24-2016, 06:42 AM   #68
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In all my years of work I can never recall a meeting discussing staffing levels where anyone said... "But don't forget now, if we hire this person that we need we're going to have to pay payroll taxes on their pay so maybe we should hold off".
I don't know that pay would go up that much (I would hope, but not count on it), but I do know that decisions between FT and Contract employees are made every day based on fully loaded costs.
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Old 07-24-2016, 06:50 AM   #69
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So you really think that if the match were abolished that employers would increase employee compensation?
Yep, on this I agree with "most economists" and the CBO. Supply and demand.
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Old 07-24-2016, 09:21 AM   #70
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While I see their point I don't necessarily agree because the converse would be that if the employer match was abolished that employee wages would go up.... and if one believes that is true then I have a bridge that I would like to sell them.

Or if payroll taxes increased that wages would go down... wages are a matter of demand and supply and the employer match does not affect demand or supply.
The impact may not be immediate, but it would settle itself out in a few years.

The demand for employees is much less flexible than the supply. That's why the economic incidence falls on the employee.

As I pointed out, the business has multiple ways of getting the work done without being an employer -- just outsource to a self employed contractor, for example.

That's what my employer did. They made no bones about the fact that contractors got more cash than employees doing the same job, and the workers understood why that happened.
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Old 07-24-2016, 09:32 AM   #71
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So you really think that if the match were abolished that employers would increase employee compensation?

In high theory perhaps it affects demand, though a few posts ago Independent opined that it was just passed on to the consumer in product prices, which seems to me much more plausible than affecting demand, but in reality it is so trivial that it is probably close to last on the list of factors considered by a business in expanding or contracting their workforce.

In all my years of work I can never recall a meeting discussing staffing levels where anyone said... "But don't forget now, if we hire this person that we need we're going to have to pay payroll taxes on their pay so maybe we should hold off".
I said that a gasoline tax would be passed on to the consumer, not a payroll tax. When the gov't taxes a transaction, the tax falls proportionately according to relative elasticity (opportunity to change behavior and not do this transaction at all). The gas tax taxes a transaction between businesses and consumers, the consumers pay because consumers have less flexibility. A payroll tax taxes a transaction between businesses and employees, the employees pay because they have less flexibility.

I've done multiple CBAs related to outsourcing or automating decisions. In every case, I've included the total cost of employees - wages, benefits, taxes, an any other variable cost (like equipment, supervision, office space). Corp finance would have laughed at me if I hadn't.
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Old 07-24-2016, 09:40 AM   #72
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If the employer match to SS were really an absolute wash, no one would care one way or the other. It's becomes a mute point. I imagine the truth is that no one knows what wages would do if the employer tax were shifted to the employee. We each have our predictions on this but, if it is a wash, what does it matter if it remains as it is?
It matters if you're discussing certain changes to SS.
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Old 07-24-2016, 01:41 PM   #73
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I don't know that pay would go up that much (I would hope, but not count on it), but I do know that decisions between FT and Contract employees are made every day based on fully loaded costs.
I agree- any decent HR department can tell you what % of wages to load on for benefits, and many actually communicate the costs of benefits to employees annually.

Some interesting thoughts here: first, if employers simply paid their share of the SS tax to employees it wouldn't be zero-sum: employees would now pay both halves of the tax out of taxable income. Round numbers: let's say the total SS contribution is 14% and you make $50K per year. Right now, you pay $3,500 to SS and your employer pays another $3,500. If your employer raises your pay to $53,500 and then takes the total $7,000 out of your gross pay, you just got stuck with another $3,500 in taxable income.

On spousal SS: we HAVE to have something. I have a wonderful DDIL who's a full-time Mom for my delightful granddaughter (and another on the way) and she has very little earnings record on her own. We can't have a system that leaves full-time parents and other caregivers with nothing as they age. I like the idea of splitting a married worker's SS contribution and putting half of it on a spouse's record with an accrual formula (possibly increasing their % contribution to do so).

There will still be losers, though. I've been married 26 out of the last 32 years so, in theory, have been paying for Spousal benefits all my life. So did my previous and current husband. I remarried at age 50 so had no claim on the Ex's SS. Neither did his first wife, who was able to collect on her own record (precious metals chemist with an armload of patents). DH is unlikely to live till I reach FRA at age 66 (just diagnosed with acute myelogenic leukemia and he's 78). I may get Widow's benefits for a few years but will collect my own SS at 70. And no one will collect Spousal SS on me. If I outlive DH I'm open to the possibility of the companionship of a good man but not marriage.
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Old 07-24-2016, 03:03 PM   #74
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In all my years of work I can never recall a meeting discussing staffing levels where anyone said... "But don't forget now, if we hire this person that we need we're going to have to pay payroll taxes on their pay so maybe we should hold off".
Every staffing meeting I attended for the last 20 years included the 1) 8 hour cost of an employee and 2) cost for 2 hours overtime, 3) 8 hours of time and a half, and 4) plus 2 hours double time. We produced 6 days a week, 24 hours/day , maintenance on Sunday. Every employee had to be cost justified.

The last year I worked, when we had shift meetings, employees were told how much they added to production cost even when they took a sick day, or just simply missed. It cost $115.00 when someone missed, IIRC.
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Old 07-24-2016, 03:16 PM   #75
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And, at some level, it hardly matters if the company consciously zeroes in on the labor costs. The market knows, and over time compensation (and staffing levels) adjust accordingly. To claim otherwise we'd need to also say people don't particularly care how much they earn and/or that companies are okay with paying people more than the need to.
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Old 07-24-2016, 06:51 PM   #76
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Some interesting thoughts here: first, if employers simply paid their share of the SS tax to employees it wouldn't be zero-sum: employees would now pay both halves of the tax out of taxable income. Round numbers: let's say the total SS contribution is 14% and you make $50K per year. Right now, you pay $3,500 to SS and your employer pays another $3,500. If your employer raises your pay to $53,500 and then takes the total $7,000 out of your gross pay, you just got stuck with another $3,500 in taxable income.

On spousal SS: we HAVE to have something. I have a wonderful DDIL who's a full-time Mom for my delightful granddaughter (and another on the way) and she has very little earnings record on her own. We can't have a system that leaves full-time parents and other caregivers with nothing as they age. I like the idea of splitting a married worker's SS contribution and putting half of it on a spouse's record with an accrual formula (possibly increasing their % contribution to do so).

There will still be losers, though. I've been married 26 out of the last 32 years so, in theory, have been paying for Spousal benefits all my life. So did my previous and current husband. I remarried at age 50 so had no claim on the Ex's SS. Neither did his first wife, who was able to collect on her own record (precious metals chemist with an armload of patents). DH is unlikely to live till I reach FRA at age 66 (just diagnosed with acute myelogenic leukemia and he's 78). I may get Widow's benefits for a few years but will collect my own SS at 70. And no one will collect Spousal SS on me. If I outlive DH I'm open to the possibility of the companionship of a good man but not marriage.
Yes, in an alternate universe where it's politically possible to be honest and say the employee pays both halve, tax brackets, ACA subsidies, food stamp formulas, etc would all need to be adjusted.

The spousal proposal is to split the earnings record, no need to accrue anything. All the complications in your last paragraph just disappear. There wouldn't be a widow's benefit, you'd get a regular retirement benefit based on your earnings record - which would include half your spouse's earnings and half your earnings in those years when you were married.
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Old 07-24-2016, 06:55 PM   #77
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The impact may not be immediate, but it would settle itself out in a few years.

The demand for employees is much less more flexible than the supply. That's why the economic incidence falls on the employee.

As I pointed out, the business has multiple ways of getting the work done without being an employer -- just outsource to a self employed contractor, for example.

That's what my employer did. They made no bones about the fact that contractors got more cash than employees doing the same job, and the workers understood why that happened.
Frustrating, there's an error in this post,. and I can't edit it. So I copied it here and corrected the error.
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Old 07-25-2016, 08:39 PM   #78
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Social Security has for its entire history been a tax that supplied a slush fund for the policitians to use, and of (in my opinion) NO benefit to those from whom the tax was taken. I have run spreadsheets that show that anyone subject to the SS tax would have been better off putting the same dollars into even US series EE savings bonds. Anything beyond the bonds would have been a greater benefit to those subject to this tax.
The slush fund benefit to the politicians is disappearing, and they are concerned for their ability to spread around money, not necessarily your SS “benefits”.
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Old 07-26-2016, 07:50 AM   #79
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I have run spreadsheets that show that anyone subject to the SS tax would have been better off putting the same dollars into even US series EE savings bonds.
(Bold added). Sorry, but this is just incorrect. There are plenty of people who draw out more in SS benefits than they could have drawn out by investing their funds in EE savings bonds. Obvious examples:
- The person who works 20 years at minimum wage, retires at FRA, and draws SS for 35 years.
- Case as above, but the person is married for 10 years to a person who earns $150K per year. SS spousal benefits would be far greater than what the person would have had on her own SS record, and much, much greater than what she would have been able to withdraw from a EE-bond savings account.

I fully agree that most people would come out financially ahead with private accounts, but that's not everyone. Overselling the idea hurts your case. And it sidesteps the very important issue that the recipient knows the SS won't run out (not true with any private investments given unknowable real returns and an unknowable drawdown timeline). It also ignores the role of SS as a part of the safety net (i.e. oldsters who don't save, or who make poor investment decisions, or who draw out too much, etc will wind up on the public dole anyway, unless we fundamentally change even more things.)
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Old 07-26-2016, 07:54 AM   #80
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^ he lost me at slush fund so I didn't bother to respond


Obviously, people like my father got a great return on SS. So did my sister who became disabled.


Disability benefits alone are a counterargument.
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