The fact that contributions are capped each year does NOT make SS a regressive tax - it is simply the result of the fact that the benefits are capped.
Keeping up? OK, take your time.
Keeping up? You bet. I read what you wrote and Lewis Carroll never came up with better dialogue for the Red Queen.
To turn around your convoluted sentence, what you attempt to say, if I understand your words is this: "The fact that benefits are capped makes Social Security a regressive tax."
Now that is literally what you wrote if one is to rationalize your very convoluted sentence construction.
Are we agreed on that point? Good.
Now, let it be stated categorically that whether or not a tax is regressive has absolutely nothing whatsoever to do with the appropriation of the tax revenue. In this case, in particular, benefits have nothing to do with regression.
OK, still following me?
So the next thing that you clearly do not want to accept, but which is abundantly clear to every appropriator and tax legislator is that, without question, Social Security and Medicare (FICA) contribution are by design, by law, and by logic regressive. The only ways the would not be regressive would be if they were flat taxes or progressive taxes.
If they were flat taxes, there would be no upper bound to the income upon which tax would be collected.
If they were progressive taxes, as income rose, so would the rate of taxation.
In the present case, neither of these is true. FICA taxes are, by design, regressive taxes that are intended to transfer the cost of the Social Security and Medicare system onto the working classes and away from the wealthy.
Further proof that the system is biased to punish workers and reward the leisure class is the fact that all employee and self-employment wages are taxable, while all so-called un-earned income from investments, swindles, speculation and sweetheart deals is specifically excluded from the calculation of FICA taxes.
The income tax is about the only progressive tax in our system. Other than that, the burden of taxation is overwhelmingly regressive, falling hardest on the poor, working poor and middle class; and as a percentage of income collected for overall taxation of all sorts, the rich get (by far) the best break out of our rotten system***.
The rich are mollycoddled, pampered and spoiled. And still these greedy bastards want more.
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***Just how regressive is Social Security? Here's an example.
Say that I'm an excellent and skillful professional who is earning at the cap for FICA taxes, for convenience sake, I'm earning $87,000 and I'm paying 15.3% FICA tax. Thus, I'm paying $13,331 in FICA tax.
But what if I were a professional such as a specialist doctor or corporate lawyer. My income would be perhaps $250,000. Then, my FICA tax would be $13,331 or a rate of ~5.3%.
And what if I were an investment banker and having a good year, more or less. Say my income was $10,000,000. I would, of course, be paying $13,331 into Social Security/Medicare and my tax rate would be 0.133%.
To review:
Income Tax: Tax Rate:
$87,000 $13,331 15.3%
$250,000 $13,331 5.3%
$10,000,000 $13,331 0.133%
You state categorically: The fact that contributions are capped each year does NOT make SS a regressive tax
The facts disprove you. If that isn't a classic regressive tax based on contributions, I'll eat my hat and the entire State of New York! |
