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Old 08-07-2011, 01:34 PM   #61
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The rest of your post was OK but ignoring history here seems flat out wrong to me. If the payroll taxes had been just more Federal Income Tax those 50% of non-payers everybody is complaining about wouldn't have paid a dime of it. It would all have come out of the hides of the more well to do. Instead, those payroll taxes were regressive, hitting low income workers to a much greater relative degree than the upper crust.
Well, the only way to work out what's "fair" would be to look at each individual case, which is impractical. If we want to lump people in big groups and look at "big picture fairness" then:
1) Lower income folks are still getting a tremendous deal on the SS taxes they paid. And I'm fairly sure any cuts to SS checks will come (wait for it . . .) from the evilrichjetownerwinnersoflife'slottery folks.
2) A funny thing about those non-payers of FIT--folks with lower incomes started paying a lot less in FIT in the 80's (no time to provide sources--sorry). So, their SS taxes made up for some of that.
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A better approach would be to recapture the revenues lost thru the Bush cuts with a simplified tax code (both on rates and loopholes) and maybe a pay go SS system over the long term. I'm still not sure whether pay go is good. The trust fund concept seems sensible if we can learn to control our urge to blow it away on binges.
I agree on the simplified, broader tax code. The SS trust fund money--what would the government do with it? Make the government part owner of a bunch of companies through stock ownership? Buy bonds from other countries? It sure doesn't work to have the Trust Fund buy US bonds--no one would fall for that again. Anyway, it is academic--there's no excess SS tax money to be used to set up a trust fund (again).
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Old 08-07-2011, 02:06 PM   #62
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I agree om the simplified, broader tax code. The SS trust fund money--what would the government do with it? Make the government part owner of a bunch of companies through stock ownership? Buy bonds from other countries? It sure doesn't work to have the Trust Fund buy US bonds--no one would fall for that again. Anyway, it is academic--there's no excess SS tax money to be used to set up a trust fund (again).
I'm not far off from you on this question. I didn't have a problem with the trust fund going into general revenue (i.e. buying Treasury bonds/obligations with it) provided we were realistic with the deficit we allowed to build up. Our problem is we seem constitutionally incapable of maintaining a reasonable deficit. With the first sign of a surplus we cut taxes and frittered the advantage away. No reason to think we won't do it again. I guess the problem I have with a strict pay go concept is the problem I have with simplistic balanced budget amendment concepts. There are times we need the flexibility to run deficits (like the last few years). Any pay go or balanced budget schemes need to preserve that flexibility (I imagine there are any number of policies that could achieve that). Not fun going to hell in a hand-basket based on inflexible adherence to an ideology.

Edit: As always, I reserve the right to forget I posted this and say something completely the opposite at any time.
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Old 08-07-2011, 05:17 PM   #63
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On the medical care issue: 1 move to the hmo model for everyone where if your primary care person does not see a need for a specialist you pay for them yourself.
2 Change the sign on end of life treatment where aggressive care is only if requested at some point to be defined, and make absolutely clear that if a person has signed such an order it must be obeyed or you will face a wrongful life suit for the excess medical charges. Note that the request must be in writing, and will be honored even if the next of kin object.
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Old 08-07-2011, 05:20 PM   #64
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face a wrongful life suit
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Old 08-07-2011, 05:27 PM   #65
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Note that the Texas laws at least provide that if a physican does not honor an advance directive or a medical power they are subject to civil and criminal penalties. So at least in one state what would amount to a wrongful life suit would be possible. The act spells out a review process and also provides that if a physician does not agree he must work to transfer the patient to a provider that does.
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Old 08-07-2011, 06:33 PM   #66
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I wonder whether the lawmakers participate in or are exposed to intelligent discussions such as this.
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Old 08-07-2011, 07:34 PM   #67
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I guess the problem I have with a strict pay go concept is the problem I have with simplistic balanced budget amendment concepts. There are times we need the flexibility to run deficits (like the last few years).
Yes, I understand. But, unlike the general federal budget, I can't see that a SS standalone budget would have much need for extraordinary pop-up deficit spending (no wars to fund, etc). Sure, during economic downturns the SS taxes would decline somewhat, but then the checks of recipients would also decline by the same amount (fair enough--these retirees are only being asked to put up with the same uncertainties and temporary setbacks workers are experiencing). We might not need inflation-linked COLAS for retirees (per se), as their checks would automatically be linked to the wage growth of those paying the SS taxes (and, if US wage growth isn't keeping up with inflation, then we've got significant trouble and have no business providing checks to retirees which grow at a faster rate than wages--it's unsustainable). As an added benefit, putting everyone -- workers and retirees -- in the same boat might go a long way toward reducing some of this intergenerational friction we seem to be brewing lately.
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Old 08-07-2011, 08:59 PM   #68
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Reading these posts makes me muse that maybe Commissioner Ball was right. Money for the trust fund should come from diverting estate taxes on people who were advantaged by the regressive nature of the SS payroll tax.
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Old 08-08-2011, 07:23 AM   #69
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Yes, I understand. But, unlike the general federal budget, I can't see that a SS standalone budget would have much need for extraordinary pop-up deficit spending (no wars to fund, etc). Sure, during economic downturns the SS taxes would decline somewhat, but then the checks of recipients would also decline by the same amount (fair enough--these retirees are only being asked to put up with the same uncertainties and temporary setbacks workers are experiencing). We might not need inflation-linked COLAS for retirees (per se), as their checks would automatically be linked to the wage growth of those paying the SS taxes (and, if US wage growth isn't keeping up with inflation, then we've got significant trouble and have no business providing checks to retirees which grow at a faster rate than wages--it's unsustainable). As an added benefit, putting everyone -- workers and retirees -- in the same boat might go a long way toward reducing some of this intergenerational friction we seem to be brewing lately.
I hope, if we ever go to some sort of stand alone pay go system, that we will be more balanced on payments. There are just too many grannies living on SS alone. Better that they should get a steady check with COLAs (modified to the alternate scale under consideration). That is why I like some flexibility to run deficits for a while such as during downturns. The difference could be made up from the General fund via debt which would shift the temporary difference up the income scale a bit to the FIT brackets (unless, we go to a flat tax there ).
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Old 08-08-2011, 08:00 AM   #70
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IThat is why I like some flexibility to run deficits for a while such as during downturns.
Running deficits in and of itself is not a problem. It's the inability or unwillingness to run counterbalancing surpluses in good economic times that backs us into a corner.
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Old 08-08-2011, 12:41 PM   #71
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...surpluses...
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Old 08-08-2011, 07:43 PM   #72
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Assuming they have a portfolio.

Heck, I'm "only" 63 (along with DW), but I didn't have a "portfolio" till my/her company defined benefit (e.g. pension) plans were elimated in our mid '30s.

Don't assume that everybody - especially in those in the lower income catagories, have a portfolio to count on...
Exactly.
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