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Old 02-28-2013, 09:49 PM   #61
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I think it is very different. IMO SS "taxes" are more premiums to a government mandated life insurance/disability insurance/retirement pension program than a tax. If you die, your dependents get benefit payments; if you become disabled, you get benefit payments; if you live to retirement age, you and your spouse get pension benefits. One way or another you get something for what you contributed (and it may be much more or much less than what you contributed, depending on your circumstances, so it has an insurance angle to it in that risks are pooled).

With income taxes the "benefits" are much less direct and much more shared (national defense, infrastructure, etc).
I view compulsory payments to the government as a tax (isn't that the definition of tax?). But there's definitely an insurance aspect to SS as you state. However I believe it's more accurate to view it as a social welfare program. Your payments under SS are only loosely tied to the benefits and folks with lower income have much higher payouts.
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Old 02-28-2013, 09:52 PM   #62
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That's all fine-and-good, photoguy, but in the end, it is quite difficult to see happen in reality. The pursuit of FI can be undertaken devoid of morality, aiming for whatever is best for one's self and one's own - period. That's a valid perspective which people are entitled to hold to. On the other hand, many folks temper the pursuit of FI by discounting the value of actions that might serve them well, personally, but only at the expense of something vital - in effect, their humanity. Given that, the only way to achieve the manner of interchange you described is to establish a general consensus that the practices of Scrooge and Gandhi, and of everyone in between, are equal in regard.
I'm not sure I'm following you here, can you rephrase?

Also, I'm not trying to reach a consensus on anything but merely have an interesting discussion with alternate points of view.
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Old 02-28-2013, 11:08 PM   #63
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I view compulsory payments to the government as a tax (isn't that the definition of tax?). But there's definitely an insurance aspect to SS as you state. However I believe it's more accurate to view it as a social welfare program. Your payments under SS are only loosely tied to the benefits and folks with lower income have much higher payouts.
While there certainly is a social welfare aspect to SS, we'll have to agree to disagree on whether it is predominately an insurance/pension program or a social welfare program.

I would definitely not agree with the last part - folks with lower income have lower payouts and folks with higher income have higher payouts. It is true that lower income folks get higher payouts relative to their contributions, but their absolute payouts are definitely lower than higher wage earners.
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Old 03-01-2013, 07:05 AM   #64
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That's all fine-and-good, photoguy, but in the end, it is quite difficult to see happen in reality. ...
I'm not sure I'm following you here, can you rephrase?
I'm not sure how to phrase it differently. It's about the feasibility of what you suggested... about what stands in the way of it.
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Old 03-01-2013, 08:23 AM   #65
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I think we are in the early stages of the government raising money right now they are looking at income. One day they will also look at assets too. Something like you have $xxxxxxx at your brokerage you don't need your full social security.
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Old 03-01-2013, 08:50 AM   #66
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I think we are in the early stages of the government raising money right now they are looking at income. One day they will also look at assets too. Something like you have $xxxxxxx at your brokerage you don't need your full social security.
Very unlikely to happen, but I can see the Government scaling back on tax-deferred and tax-free oriented accounts for high-income folks. Likewise, the Government may raise the cap gains tax from the now-20% to 22% or even 25%. It will still be significantly lower than the income tax rate, so the argument will be that those receiving cap gains won't really feel it.
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Old 03-01-2013, 11:39 AM   #67
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I think we are in the early stages of the government raising money right now they are looking at income. One day they will also look at assets too. Something like you have $xxxxxxx at your brokerage you don't need your full social security.
I wonder if they ever look at functioning arms, legs, and a decent IQ as assets.
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Old 03-01-2013, 12:53 PM   #68
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I wonder if they ever look at functioning arms, legs, and a decent IQ as assets.
+1
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Old 03-01-2013, 12:57 PM   #69
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I wonder if they ever look at functioning arms, legs, and a decent IQ as assets.
Let me expand on that. Rather than only looking at what those who have worked and earned and saved, do we ever consider earning potential? If there any 20 year olds out there who want to trade their youth for my money, I would strongly consider it. But why would they do that when they can keep their youth and have my money to boot? I want to help those less fortunate, but I don't consider someone with a strong back and brains less fortunate.
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Old 03-01-2013, 01:55 PM   #70
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But there's definitely an insurance aspect to SS as you state. However I believe it's more accurate to view it as a social welfare program. Your payments under SS are only loosely tied to the benefits and folks with lower income have much higher payouts.
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While there certainly is a social welfare aspect to SS, we'll have to agree to disagree on whether it is predominately an insurance/pension program or a social welfare program.

I would definitely not agree with the last part - folks with lower income have lower payouts and folks with higher income have higher payouts. It is true that lower income folks get higher payouts relative to their contributions, but their absolute payouts are definitely lower than higher wage earners.
I think I have a different view than either of these.

The old age portion of Social Security is an income transfer program. The gov't takes money from current workers and gives it to retired workers.

The benefit to current workers is that they know their parents and grandparents and other old people have some amount of basic income. Moynihan said that the benefit of SS is that your mother-in-law doesn't live with you. That's my view.

37 year-old workers may hope that 30 years from now their kids and grandkids will do the same for them. But there is no guarantee, especially no guarantee regarding a particular formula. The only thing they know for sure is that they are paying taxes today and some older people are getting benefits today.
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Old 03-01-2013, 02:08 PM   #71
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I think I have a different view than either of these.

The old age portion of Social Security is an income transfer program. The gov't takes money from current workers and gives it to retired workers.

The benefit to current workers is that they know their parents and grandparents and other old people have some amount of basic income. Moynihan said that the benefit of SS is that your mother-in-law doesn't live with you. That's my view.

37 year-old workers may hope that 30 years from now their kids and grandkids will do the same for them. But there is no guarantee, especially no guarantee regarding a particular formula. The only thing they know for sure is that they are paying taxes today and some older people are getting benefits today.
But wasn't that the social contract made 75 years ago? "you pay for grandma and the grand-kids'll pay for you"? Suddenly this has become some horrific socialist plot redistribution scheme!

I personally agree with the position that it is/was a bad idea from the beginning, but we all signed up for it, deliberately or otherwise, AND we were told to do our retirement planning around it!

I also remember being told 45 years ago: "don't worry about it kid, when it's time for you to collect, it'll be long, long gone...it won't last another 15 years from now (1968)", but here I am one year away from SS!
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Old 03-01-2013, 02:19 PM   #72
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If the purpose of SS is to provide for basic necessities, then the pay outs should be equal for all and thus the contributions should be equal for all. A higher wage earner would then meet his obligation sooner than the lower wage earner. The higher wage earner will then have more for consumption or investing or charity or to spend on his family. All of which benefit society by providing employment for others. Looking at it this way, it is easy to see that his excess contributions are a tax, collected by the federal government to spend inefficiently, robbing the local community of local dollars.
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