SS Sustainability without reduction now at 2029

[MRG]

I was very busy at my company handling Y2K issues. I oversaw my division's end-user programs and had to make a lot of small changes to them. With the programs I wrote in the mid-1990s, I kept in mind Y2K so the changes were small, too. Some programs were tougher to fix. And our systems analysts were creating new systems to replace the ones written in the 1970s and 1980s. I was the point person in my division in the testing of them. Kept me busy for a good year.

We were a service provider. In those days the project management hours were not perfect. They estimated we spent 100 person years in development and testing. I believe the estimate was light.

Only time in my career I was compensated to develop code on the weekends. I was one of a few assembler developers who was provided the opportunity. It was piece work, upgrade this program for $1000 kind of thing.

Oddly after working 60 hours during the week and another 20 on the weekend; it was not much fun the following Monday. After three months I told them no more; sometimes there's not enough money in the world for more time!

 

[Sunset]

Our whole tax system is designed so that the higher income folks pay more taxes to support the country including social welfare systems. When taxes get to be too much for the "rich", the economy as a whole goes down. The problem is we don't exactly know where that point is.

If I am not mistaken, there really is no money set aside for SS payments. The SS taxes collected has long since been spent and the SS taxes collected today are supplemented by the general taxes and deficit spending. The time when SS runs out of money is the time that the "IOUs" are depleted. There won't really be a major difference in costs to the Government at that point. This, in my opinion, is just a good political reason to implement the hair cut which can help balance the expenses and income, but as currently written will be as hard on the poorer folks as on the better off. The costs of SS will continue to increase. More will need to be done through the political process to correct that. Whether the politicians will do something more than letting the currently defined hair cut happen as a politically expedient approach is anybody's guess. This thread is about making those guesses. I don't think I would base my retirement security on those guesses, including my own.

The highest tax rate ever was:
"In 1944, the top rate peaked at 94 percent on taxable income"
History of Federal Income Tax Rates: 1913 – 2014

The economy didn't go down then, so the breaking point must be higher...

 

[growing_older]

Originally Posted by youbet
I know the concept isn't popular here where we have a large number of relatively high income retirees. But really, why should we further tax folks earning a bit over the current cap in order to protect wealthy retirees who describe their SS as "gravy" or "the cherry on top?" I vote for doing both: unlimited cap on FICA taxes + means testing SS payouts.

SS is a hybrid system, part social welfare, and part (though they like to deny it when convenient) retirement program. If it were purely a social welfare program it's unlikely it would have as much popular support as it does. If you take away the retirement aspect and means test or otherwise disqualify the largest contributors from getting even the little return they currently get, then it will become a real target. As it is, I will work my next year or two of OMY and likely pay enough FICA tax to replace one of my earlier years with a slightly higher year. This means I will be paying a full year of FICA contributions for a benefit increase of about $2/month. If this were an investment, the payback period is much longer than my lifespan. If I don't work a full year or my wage goes down just a bit, I will pay FICA all year for zero change in my own benefit.

I've planned my investments and lifestyle around the assumption that SS will honor the social contract of the program. I contribute during my working life, with the assumption that they will pay me the benefits that were promised. Breaking that promise would surely cause a huge backlash against the politicians who change these agreements, not to mention derail my own retirement that I spent a lifetime preparing for, in part based on the SS program that I was required to enroll in.

 

[Hermit]

The highest tax rate ever was:
"In 1944, the top rate peaked at 94 percent on taxable income"
History of Federal Income Tax Rates: 1913 – 2014

The economy didn't go down then, so the breaking point must be higher...

Exploring the impacts of U.S. tax levels, tax raises, and tax cuts over the past 100 years would be interesting, but probably a little too political for this forum.

 

[exnavynuke]

The highest tax rate ever was:
"In 1944, the top rate peaked at 94 percent on taxable income"
History of Federal Income Tax Rates: 1913 – 2014

The economy didn't go down then, so the breaking point must be higher...

Of note: there was a significant difference between "marginal rate" and "effective rate" at that rate from what I've read. The average family today is in the 15 or 25% tax "bracket" but their effective rate is much lower than that (with many having a negative effective rate).

 

[Chuckanut]

After three months I told them no more; sometimes there's not enough money in the world for more time!

Your comment reminds me of one of the more famous cartoons seen on this site: