Michelle,
It assumes that the elderly - well those over 65 which is a fairly young cutoff these days - are somehow more likely to need financial assisstance and I think that assumption is flawed from the start.
That is certainly contrary to conventional wisdom, though conventional wisdom has been known to be wrong from time to time. But I'll go out on a limb here and say that if you were correct on this point it isn't that significant. Means testing is built into the SS system by a reduction of SS benefits for all income in excess of certain limits. The very wealthy will not likely ever receive any SS benefits regardless of what they point into the system. From what I recall of the numbers the limits were not extravagant at all. Medicare benefits, of course are not means tested.
One way to correct this is, 1) Lower the fica rate - 12% now, way too high, and 2) Tax all income, no limits, including capital gains with this fica tax.
One of the points of those graphs that I mentioned in a previous post was that they hinted that, for a large majority of Americans, the lifetime FICA tax would exceed the lifetime Federal Tax burden and that doesn't include the employer contributions. I think that actual number is something like 75% of Americans will pay more on FICA than Federal taxes within theire lifetime...as heard on C-SPAN so unfortunately I can't provide a supporting reference. On the face of it than I would agree that the FICA tax is too high.
However, given that there is means testing built into the system, I have difficulty in agreeing to the notion of unlimited caps on all forms of income. In part, adding capital gains would add some complexity to the system, that I wouldn't want to initiate...i.e, we would have to start filing SS tax forms for the computation. Also, I would think that odds of such a change being legislated is zero. On the other hand, I could see agreeing to an increase in the high end limits for SS contributions. If we had a source which showed wage income across the spectrum, we could come up with an estimate of the impact of raising the limit and whether we could lower the overall rate. Just another piece of information to look for...sigh. <g>
The wealthy and fairness...where there is wage income, the wealthy are putting into SS and will receive no benefits. There seems to be some unfairness in that. We've decided, consciously or not, that they can "afford to". But it is to some extent a forced contribution of charity. How high should it be? I'd like to see those numbers I referred to aobe and see if we could come to a consensus.
Best Regards,
Jim |
