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SDY888 12-08-2004 05:59 PM

No Taxes or No SS - Which Would You Choose??
 
No Taxes or No SS - Which Would You Choose?

A couple of these points/issues have been touched upon other posts/threads, but I thought them worthy of their own thread to receive the combined and focussed wisdom of the Board.

A common theme amongst most here is the continuous tax consideration of earnings, income and investments - i.e. the balancing of pre-tax and post tax savings amongst different accounts, the tax free limits on certain savings/investment vehicles, juggling portfolios to maximise tax losses towards the end of the tax year etc. etc. along with the regular income taxes payable on salaries etc. Nothing wrong at all with minimising ones tax liability, but with the best will in the world, income taxes, capital gains taxes, taxes on pre-tax investment withdrawals etc. etc. have to be paid sooner or later.

As a ''reward'' for taxes paid to ones government, citizens generally receive in return a Social Security system, pension benefits, some greater or lesser provision of health care and so on.

So here is the hypothetical question:

Let's assume that the individuals contribution attributable to the above mentioned ''personal'' services (SS, health etc) could be stripped out of the various taxes one pays; given the choice, would you elect not to pay those taxes and forfeit the right to receive the future government benefits, choosing instead to take the tax money surplus and provide entirely for your own future?

For those already drawing upon and/or dependent upon those services, the answer is obvious, but if you could go back in time, what would you do?

One for the investment gurus, macro-economists and social engineers to get their teeth into.

Interested in your views as some of you may have noticed form previous posts that this is particularly relevant to my own situation (through circumstance rather than an overtly positive choice).

Simon888

johnblake 12-08-2004 07:03 PM

Re: No Taxes or No SS - Which Would You Choose??
 
Of course I'd rather not pay into the 'system' and handle the my retirement planning myself. However, doesn't SS/Medicare also serve as a safety net in case of death and disability?

Looks like the government is going to push for more borrowing in order to fund their SS changes. The changes sound good, but in reality they seem to be digging us into deeper hole.

Michael 12-08-2004 08:07 PM

Re: No Taxes or No SS - Which Would You Choose??
 
Social Security and Medicare/Medicaid were just about the only programs that I ever felt good about paying taxes for. I realized that my payroll taxes were feeding my grandmother, and keeping her in good health. There are many other programs that I would have eliminated if I could have, but I probably would have kept that one. Helping those who are too old or disabled to work seems reasonable to me.

Keep Social Security, and get rid of the regular income tax. Make the government run lean like they did before 1913.

Hyperborea 12-08-2004 08:48 PM

Re: No Taxes or No SS - Which Would You Choose??
 
The problem with the question is that the target group is skewed. Most of the folks posting here have won the lottery of life. They've got the right genes, or family support, or skills or whatever to succeed in the current society. It's kind of like asking people who paid fire insurance on their house whether they would like to be able to go back and get all the premium money back. Of course they'll say yes if their house hasn't burned down.

wabmester 12-08-2004 10:15 PM

Re: No Taxes or No SS - Which Would You Choose??
 
As Michael has already pointed out, your payroll taxes are not funding *your* retirement. * They're going to some poor schlep who probably failed to adequately plan for theirs. * I'm perfectly happy with the fact that I funded both my own retirement (outside of SSI) and somebody elses. * I'd be ashamed to live in a country that left the old and poor to their Darwinian fate.

Nords 12-08-2004 10:29 PM

No taxes!
 
If SS was an optional program, I'd immediately pull out.

I'd be concerned that my taxes would be raised to pay the living expenses of the people who DIDN'T plan ahead. Because of that fear, I'd want to have as much of the money as possible in my hands.

As for SS's future, I think that every day inches closer to (1) no wage indexing before the benefits start, and (2) means testing. As far as Congress is concerned it isn't "if" but merely "how", "when" and "who touches the third rail first".

John Galt 12-09-2004 02:00 AM

Re: No Taxes or No SS - Which Would You Choose??
 
Social Security and Medicare/Medicaid were just about the only programs that I ever felt good about paying taxes for. *I realized that my payroll taxes were feeding my grandmother, and keeping her in good health. *There are many other programs that I would have eliminated if I could have, but I probably would have kept that one. *Helping those who are too old or disabled to work seems reasonable to me.

Keep Social Security, and get rid of the regular income tax. *Make the government run lean like they did before 1913.[/quote]

Michael's last quote. I agree with this 100%. It was
not all that long ago that our federal government
routinely ran a surplus. Well, it has been 100 years, but in the sweep of history........................ Anyway, it won't happen. What I see is continued wild spending
(both parties) and nonsensical intrusive programs/laws.
Man, just look at the INTEL bill just passed. Total insanity, and just "feel good legislation". (Look folks, we did something). Also, it makes me ill that the
9/11 survivors group pushed so hard for this.
Another layer of expensive fed. bureaucracy with
perhaps even reduced safety as a result. Nuttiness.
They should just move on with their lives. End of rant..............

Now, "means testing" for SS benefits is one thing I won't have to worry about. Doubtful they would ever get down low enough to effect me :)

JG



ESRBob 12-09-2004 02:45 AM

Re: No Taxes or No SS - Which Would You Choose??
 
Simon,
Interestingly perhaps, even though I have been an American, had jobs here etc all my short working career, I barely qualify for SS, so not everybody living in a country like the US will get anything more than a token amount from this system. (in my case, I think it is slated to be about 800/month in today's dollars). As an "ESR", anything I pay into the system now is likely to be a token amount.

I, too, think SS is a valid social service for us to be paying into for the sake of elderly.

I may be one of the few people on the board to have had my SS benefits cut: I was a student in London in 1978-79 receiving a few hundred a month under my Dad's SS (he was drawing SS, I was still a student) when that particular program got cut off. I remember how dependent I was on it at the time.

ESRBob

retire@40 12-09-2004 07:12 AM

Re: No Taxes or No SS - Which Would You Choose??
 
Quote:

They're going to some poor schlep who probably failed to adequately plan for theirs. * I'm perfectly happy with the fact that I funded both my own retirement (outside of SSI) and somebody elses.
You're happy that people like Bill Gates someday will be getting social security money from somebody earning minimum wages?

I would rather put all social security taxes in my own account. *That would give the average person about $1mil after a 40 year career. *Also, with social security, if I die right before my first benefit payment, the government keeps it. *If I have my own account and I'm not married, I can give the $1mil to my kids. *The SS tax is a horrible tax, especially for the self-employed.

However, I would keep the medicare tax and even allow people who retire at 62 to receive medicare benefits.

Cut-Throat 12-09-2004 08:14 AM

Re: No Taxes or No SS - Which Would You Choose??
 
Quote:

Keep Social Security, and get rid of the regular income tax. *Make the government run lean like they did before 1913.
Yup, for every Complicated Problem, there is a simple solution that won't work. :)

Hyperborea 12-09-2004 08:23 AM

Re: No Taxes or No SS - Which Would You Choose??
 
Quote:

Keep Social Security, and get rid of the regular income tax. *Make the government run lean like they did before 1913.
Are you getting soft in your old age or are you just modifying your belief in the Randian dogma based on the fact that you are benefitting from SS? Isn't 1913 a bit "modern" and "civilized" for you? Wouldn't you prefer something more "manly" and "Randian" like the Mongol horde of Ghengis Khan or a band of south seas pirates?

Austin_Explorer 12-09-2004 12:59 PM

Re: No Taxes or No SS - Which Would You Choose??
 
Quote:


Are you getting soft in your old age or are you just modifying your belief in the Randian dogma based on the fact that you are benefitting from SS? *Isn't 1913 a bit "modern" and "civilized" for you? *Wouldn't you prefer something more "manly" and "Randian" like the Mongol horde of Ghengis Khan or a band of south seas pirates?
I'm sure John hated Social Security every day he was working. *Like most people I'm sure he likes it pretty good when it's paying him.

I'm pretty sure that Ayn Rand would abolish SS on the spot if she were in power - and that would just be the start. *Ghengis Khan is an apt reference here. * :D

Zipper 12-09-2004 01:34 PM

Re: No Taxes or No SS - Which Would You Choose??
 
John is salivating at SS. :D
He reminds us every week that he can't wait for the first payout.

rockpile 12-09-2004 04:15 PM

Re: No Taxes or No SS - Which Would You Choose??
 
Any devotee of Ayn Rand who accepts social security from the federal government is a hypocrite and a sell out.

If you're gonna talk the talk, dude, you've got to walk the walk.

haha 12-09-2004 06:57 PM

Re: No Taxes or No SS - Which Would You Choose??
 
One thing about SS taxes and medicare taxes is that are the only federal taxes that the average middle class person pays that he/she has been able to expect some benefit from. The rest goes to defense, interest on the national debt, programs like medicaid and afdc, farm program boondoogles and various corporate subsidies.

It is possible that all our defense spending makes us individually safer, but it is also possible that is doesn't. And much of the "western world" can and does free ride on our sacrifice in money and blood. For example, if it were not for us, Canada would have been walked over by Russia by now.

Most middle class citizens in other western countries get health care, generous unemployment support, free or cheap higher education, etc., etc. We get close to zippo.

Drasically cut SS, and I believe there may well be a tax revolt. The feds can only put so many people in jail.

Come to think of it, maybe this is why Der Bushel is so interested in the National Sales Tax.

Mikey


Nords 12-09-2004 10:08 PM

Can you get it all back?
 
Quote:

Any devotee of Ayn Rand who accepts social security from the federal government is a hypocrite and a sell out.
It's not accepting a handout, it's recovering confiscated property...

BUM 12-10-2004 04:47 AM

Re: No Taxes or No SS - Which Would You Choose??
 
Didn't Ayn Rand die at 70something in NYC trying to get her wedged SS check out of that tiny apartment mailbox?

BUM ::)

Austin_Explorer 12-10-2004 05:48 AM

Re: Can you get it all back?
 
Quote:

It's not accepting a handout, it's recovering confiscated property...
Since studies show that most people get more in SS benefits than they paid in, does it stand to reason then that John, or others so inclined, will take less than what is offered?

Thought not.

Of course I'm not saying I wouldn't take it either. ;D

Nords 12-10-2004 01:02 PM

Re: Can you get it all back?
 
Quote:

Since studies show that most people get more in SS benefits than they paid in, does it stand to reason then that John, or others so inclined, will take less than what is offered?
At $8-9K/year I'm gonna have to draw SS for a really long time.

Hmmmm... I'll have to add this one to the "spreadsheet to-do" list.

Ayn Rond 12-10-2004 01:44 PM

No Taxes or No SS - Which Would You Choose??
 
Quote:

Nords wrote:
It's not accepting a handout, it's recovering confiscated property...
No, it's not. It's just one of the little nuisence fees you pay in order to live very well and retire early in the wealthiest, freest, most-brimming-with-opportunity Land in history.

Unless you expect a fee lunch? (Nodding your head "yes" no doubt)


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