Social Security: Is It Really A 'Surplus' ?

[scrabbler1]

SS benefits already aren't linked to what one contributes to them. Spouses whose earnings entitle them to less than half the benefits received by the higher-earning spouse receive exactly the same benefits if they contribute $0 as if they contribute a lot.

SSDI benefits aren't tied into contributions. Welfare?

Is Medicare welfare? There is no limit on the amount of wages subject to Medicare tax.

Most of us pay taxes and don't receive all of the wide range of possible benefits. Those of us without children still pay into the school system. It's hard to conclude that it's a welfare program.

SS benefits are capped based on your annual earnings and SS taxes are capped based on your annual earnings. There is a link, albeit not a very strong one.

I'm not claiming Medicare is determined the same way. That's why there is no earnings cap on Medicare taxes, and that's fine.

SS Disability is set up as an insurance program so one can collect only if something unforeseen and tragic happens. It's already like a welfare program because something unforeseen and tragic has to happen (i.e. become poor) in order to collect.

Being childfree, I object to having to pay local school taxes which are not based at least in part on one's income or how many children, if any, one sends to the local public schools. But that's a topic for another thread.

 

[athena53]

To tax those wages without increasing the benefit cap is simply theft, or the beginning of turning SS into a welfare program whose benefits are no longer linked to what one contributes to the system.

"Theft" is a pretty strong word. Welfare? Subsidy? Heck, yes, and it's been going on for years. The formula has always been weighted in favor of low-income earners.

But, as I just posted on FaceBook in response to a "scrap the cap" clamor (i.e., apply the SS contribution % to 100% of wages), if you want to give the high earners a less-than-fair return on those extra contributions so there's more money to pay out to other beneficiaries, you've also got to stop posting those "SS is not welfare. It's all paid for out of MY contributions, etc." memes.

 

[scrabbler1]

"Theft" is a pretty strong word. Welfare? Subsidy? Heck, yes, and it's been going on for years. The formula has always been weighted in favor of low-income earners.

But, as I just posted on FaceBook in response to a "scrap the cap" clamor (i.e., apply the SS contribution % to 100% of wages), if you want to give the high earners a less-than-fair return on those extra contributions so there's more money to pay out to other beneficiaries, you've also got to stop posting those "SS is not welfare. It's all paid for out of MY contributions, etc." memes.

I wrote "theft" because in a program (the retirement part, at least) where additional dollars of earnings and taxes paid do result in an increase, albeit a small one sometimes, in benefits earned, increasing the cap on wages without increasing the cap on benefits is like telling those wage earners, "Even though your extra taxes paid due to those earnings should result in extra benefits, you won't receive a dime in added benefits for them with this change; but thanks for letting us steal those extra tax dollars anyway!"

I understand how the SS benefits are tilted toward the lower-income earners through its bend points. But the bend point at the upper end, before you reach the wage/benefits cap, is 15%, so those higher income earners still get something back for their higher-end wages, not zero back (which is the equivalent of what you end up with if you raise the wage cap without raising the benefits cap). Giving them zero back is like how welfare programs are set up.

 

[Alan]

Thanks for the interesting discussion.