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Old 10-21-2010, 07:37 PM   #121
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I think I paid in sufficiently to fund a $20,000/year payout, so I want that, not more, not less.

I will be fine with my misguided sense of entitlement. Believe me, I'll live with myself.

I will be fine kicking the can down the road. If the young folks vote politicians in that allow that, that's their issue.

But, I want my Social Security.
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Old 10-21-2010, 07:56 PM   #122
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Originally Posted by ziggy29 View Post
Higher? It's never been higher than 6.2% each:

http://www.ssa.gov/history/pdf/t2a3.pdf

40 years ago the SS contribution rate (minus Medicare) was a total of 8.4% (4.2% each) compared to the 6.2%/12.4% of today.

Also in 1970, the tax cap was at $7,800, barely half of the $15,000 you assumed was the entry-level salary.
You're right (I said it was a rough number, check my math, so thanks) - I used the source you linked, I saw OASI was higher in some years, I missed that the sum did not exceed 12.6%. And I missed the caps, but those are not hit for years 11-40, when most of the contributions are made. Unfortunately, that pdf does not copy easily into a spreadsheet, the subscripts shift the columns all around.

But I think it still shows, in rough terms, that we are not talking such a huge delta between contributions and expected benefits (which may yet be stealthily reduced through taxation).

-ERD50
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Old 10-21-2010, 08:01 PM   #123
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I will be fine kicking the can down the road. If the young folks vote politicians in that allow that, that's their issue.
Come again? It's the *young* voters who are supporting the "kick the can" candidates where it comes to SS?
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Old 10-21-2010, 08:06 PM   #124
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Seems fair really. If they paid 6.75% for the entirey of their working life and the employer paid additionally 1.45%, they are entitled to what that begets them.
That is not how it works. Both employee and employer pay at the same rate, on the same amount of earnings.

Federal social insurance taxes are imposed equally on employers[8] and employees.[9], consisting of a tax of 6.2% of wages up to an annual wage maximum ($106,800 in 2010) plus a tax of 1.45% of total wages.[10]
Payroll tax - Wikipedia, the free encyclopedia
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Old 10-21-2010, 08:12 PM   #125
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If over the course of our lifetime our government runs up a huge amount of debt (spending > than taxes) AND we require future generations to pay a higher level of taxation than we paid to fund benefits we promised ourselves, ...
This is a defective premise, unless you can say just how many future generations there will be. For if the next generation doesn't care to pay the appropriate level of taxation, they can put it off on the generation after that, who, if they choose can put it off yet another generation, and so on, ad infinitum.
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Old 10-21-2010, 08:18 PM   #126
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This forum really needs an "embedded quote" option, gawd this is tedious to get the Q, reply and next Q for context...

G4G: At the very least they can admit that they already consumed benefits roughly equal to the taxes they paid...

ERD50: Debatable, very debatable - and I solidly do not agree.

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How?

If over the course of our lifetime our government runs up a huge amount of debt (spending > than taxes) AND we require future generations to pay a higher level of taxation than we paid to fund benefits we promised ourselves, how can it be that we didn't consume more, far more, in government services than our taxes paid for? It seems a mathematical impossibility for it to be otherwise.
It is a mathematical impossibility, but not a practical one.

For easy arithmetic, let's just say the Govt collects $100 in taxes from me, and spends $150 adding $50 to the deficit. So while they spent $150 for my $100 input, due to inefficiencies and the fact that I didn't get to specify how I wanted the money spent, maybe I only got $25 'worth' of benefits out my $100. But I could have got $100 worth out of that $100 if I kept it. So clearly, I did not "consume benefits roughly equal to the taxes I paid", since $25 is far less than $100.

Sure, I just pulled those numbers out of the air for illustration, but let's go back to the fact that us higher wage earners pay the vast majority of Fed Income Tax, that the Feds are handing out money to pay for my neighbor's "clunker" or my neighbor's high efficiency furnace, or electric car or whatever. I don't think it's a stretch that we wont get what we pay in, even if we ignore the future cost of that debt (which we will be paying also).

-ERD50
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Old 10-21-2010, 09:28 PM   #127
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We sure as heck are not guilty of over-benefiting with respect to SS. We dutifully paid in SS tax, as did our employer, if we are not yet collecting SS, we have received nothing yet in terms of a benefit.

But it si tru that we ALSO paid income tax into the general fund. Now if there were tax breaks that over-benefited us and exceeded our tax input to the general fund, hey, that is over-benefiting with respect to that tax scheme.

It has nothing to do with SS. Don't confuse the two. They are separate issues.
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Old 10-21-2010, 09:52 PM   #128
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Your quick calculation provides an absolute floor based on all of this, and the actual deal is considerably more generous than this.
There is another factor that is tougher to define, but while I used a 95% success rate to hit 5.2% SWR, I think that a fund that averages payouts over many years could be based on something much closer to 50% success rate, which increases the effective SWR significantly (>8.5%). We shoot for 95% or higher because it is a single point of failure for us. I don't think a general fund needs to be that conservative.

Which gets back to my thinking that we ought to have accounts with our names on them (like a 401K), but with the option to turn that over to the govt for an annuitized payout. They can average out that longevity risk, don't need to take a profit, low advertising/enrollment costs, and would have a very large group to average out.

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Old 10-21-2010, 10:11 PM   #129
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There is another factor that is tougher to define, but while I used a 95% success rate to hit 5.2% SWR, I think that a fund that averages payouts over many years could be based on something much closer to 50% success rate, which increases the effective SWR significantly (>8.5%). We shoot for 95% or higher because it is a single point of failure for us. I don't think a general fund needs to be that conservative.

Which gets back to my thinking that we ought to have accounts with our names on them (like a 401K), but with the option to turn that over to the govt for an annuitized payout. They can average out that longevity risk, don't need to take a profit, low advertising/enrollment costs, and would have a very large group to average out.

-ERD50
If the government would give me the money I paid in I would be more than happy to take my chances. I cannot imagine that I would mismanage it more than they will.
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Old 10-22-2010, 07:23 AM   #130
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If the government would give me the money I paid in I would be more than happy to take my chances.
You already spent it. But I suspect you'll never understand that because it isn't in your interest to.
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Old 10-22-2010, 07:29 AM   #131
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So clearly, I did not "consume benefits roughly equal to the taxes I paid", since $25 is far less than $100.

Certainly some people pay more, and some people get more. But regardless of whether any individual is getting a raw deal, we as a group spent more money than we paid in taxes. That is undeniable. So as a group, we need to have our benefits reduced, because, as a group, we took far more money out than we had any right to. I'll let you decide who's benefits get cut, but somebody's has to.
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Old 10-22-2010, 07:41 AM   #132
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What you say is true. No argument from me

Still we have to live in the real world.
In the "real world", we are going to need really big money to pay for future retirees. I forgot the exact figures, but when the time comes when SS must pay out some really big money, there will not be enough taxpayers to in America to generate that kind of money. SS benefits will eat up half the tax revenues.

That is not realistic to expect and still run a country. So if we don't have a big pot of money sitting in the SS Trust Fund, the country will just not have enough money to pay the benefits from tax revenue alone.

That is the reason why everybody expects SS benefits to be cut - because we will not have the money to pay existing benefits. Instead of getting $20k per year, you will get $10k per year... try to live on that!

That, in the real world, is what most people expect will happen.
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Old 10-22-2010, 07:45 AM   #133
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We sure as heck are not guilty of over-benefiting with respect to SS. We dutifully paid in SS tax, as did our employer, if we are not yet collecting SS, we have received nothing yet in terms of a benefit.

. They are separate issues.
Yes since you received the insurance coverage for disability and dependents from day one. Its is to be sure a welfare or social insurance benefit but it is clearly a benefit.
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Old 10-22-2010, 07:45 AM   #134
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Let's hope we follow some model other than Europe's proven failed system.
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It looks like we're currently following Japan's proven failed system.
I agree with Jacob that we appear to be following Japan's path. What 'failed system' in Europe are you referring to? On every measurable scale I am aware of, they have a higher standard of living, and are much happier overall. If you want to get all preachy about failed systems, get your own house in order first.

US salaries are nominally higher, but when you take into account health care, paid vacation, pensions, social security safety nets, it is abundantly clear that Europe is not failing at all.

They may not live in McMansions and drive gargantuan SUVs, but they also aren't up to their necks in personal debt.
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Old 10-22-2010, 07:46 AM   #135
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Naturally, because in Lake Woebegone where everyone is above average, everyone also pays above average taxes and receives below average benefits.
Totally inapplicable. Our progressive tax system and deductions shifts averages and means.

In this case, those who paid more into SS over their careers on average paid much more than average in Fed taxes. The top half of taxpayers paid almost all the Federal Income tax. So if we are lumping all this money together, half of the taxpayers are getting close to a free ride off the other half. And since that 50% split point is just $33,000 I think it's fair to say that most FIRE people were in the group that paid the vast majority of FIT.

Couple that with the fact that SS payments are very progressive, capped for the higher wage earners, I don't see where averages play into it at all. You could try to make that case if SS and FIT was a "head tax", but not under the current system.

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Old 10-22-2010, 08:00 AM   #136
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Certainly some people pay more, and some people get more. But regardless of whether any individual is getting a raw deal, we as a group spent more money than we paid in taxes. That is undeniable.
And in my example, it is undeniable that a large group of taxpayers did not "benefit" from the deficit spending, and that was your attempted point, that we all "benefited" from this. And it is very likely that we will be the ones paying taxes to pay down that debt and/or the interest on that debt. Interest on that debt is currently ~ 9.5% of govt spending.

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Old 10-22-2010, 09:06 AM   #137
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Totally inapplicable. Our progressive tax system and deductions shifts averages and means.

In this case, those who paid more into SS over their careers on average paid much more than average in Fed taxes. The top half of taxpayers paid almost all the Federal Income tax. So if we are lumping all this money together, half of the taxpayers are getting close to a free ride off the other half. And since that 50% split point is just $33,000 I think it's fair to say that most FIRE people were in the group that paid the vast majority of FIT.

Couple that with the fact that SS payments are very progressive, capped for the higher wage earners, I don't see where averages play into it at all. You could try to make that case if SS and FIT was a "head tax", but not under the current system.

-ERD50
Are you talking about taxes on EARNED income or overall income? Because of the high concentration of unearned income among the wealthy in the USA you get very different results. Because of the cap on SS. the top half of taxpayers (not population) don't pay that much more into SS than the bottom half.
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Old 10-22-2010, 09:09 AM   #138
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And in my example, it is undeniable that a large group of taxpayers did not "benefit" from the deficit spending, and that was your attempted point, that we all "benefited" from this. And it is very likely that we will be the ones paying taxes to pay down that debt and/or the interest on that debt. Interest on that debt is currently ~ 9.5% of govt spending.

-ERD50
I don't think anyone can easily characterize who "benefits" from deficit spending. E.G Does a person who owns a lot of property "benefit" more from a huge military? How much benefit arises from social peace?
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Old 10-22-2010, 09:09 AM   #139
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Are you talking about taxes on EARNED income or overall income? Because of the high concentration of unearned income among the wealthy in the USA you get very different results. Because of the cap on SS. the top half of taxpayers (not population) don't pay that much more into SS than the bottom half.
Maybe that was because SS was designed to replace EARNED income so people wouldn't have to work any more once they reached a certain age?

Non-earned income receives no benefits, either.
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Old 10-22-2010, 09:29 AM   #140
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You already spent it. But I suspect you'll never understand that because it isn't in your interest to.
Someone may have spent it but it was not Pie Floater who benefited. He was overseas working, and using English and French roads, and schools and healthcare and social goodness.

If anything, I'd like a refund on my income taxes so I can give it to the UK to help bail them out.

If you use of "sense of entitlement" is intended to mean "greedy old bastard" then I am one. I want my Social Security.

I did not "already spent it".
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