There are a tad few points worth discussing here.
"There is a theoretical limit as to how much the rate could be raised from here without putting people out of work."
I suppose there might be in any tax increase,but we are not close to this. Theoretical limits are in and of itself an empty box. Theories need to be proven and then practiced. This has not been the case as of yet as we still face this Social Security debate.
This raise in rate needs to be done. The quicker the better and the more equitable for all concerned. Another alternative approach would be to limit payouts,as in a reduction of benefits and maybe a combination thereof. To do nothing only makes matters worse for the inevitable time line for inevitable action draws ever nearer.
"15.3% is a pretty steep percentage considering the regressive nature of employment taxes."
Yes,it is. The Social Security tax rate for 2006 is 15.3 percent on self-employment income up to $94,200,or roughtly half for those who are not self-employed but still employed. If your net earnings exceed $94,200, you continue to pay only the Medicare portion of the Social Security tax, which is 2.9 percent, on the rest of your earnings. That's the way it is.
"For some lower income workers it is the only Federal tax they will ever pay over their lifetimes, although with the earned income credit they do get some of it back, as the earned income credit acts like a negative income tax. Raising the rate further would have the same result that raising the minimum wage would, it would result in pushing the marginally employable out of the workforce."
Lower income workers are adjusted for their lower income rate via the earned income credit yet still are equitably compensated at retirement regardless of the deductible earned income credit taken prior. Society can not be responsible for those whose incomes are near poverty level. Society can be compassionate. Responsibility needs to be shoulder by the individual,as hard as that may sound. It is equitable and just.
Raising the rate further would not have the same result that raising the minimum wage would by pushing the marginally employable out of the workforce. Where you ever got that idea from astounds me. Those who can not compete in the workforce will be left behind. This is the way it has always been. This is not a new phenomenem or a cause an effect reaction from an increase in the wage component.
"Their production wouldn't be able to pay for the increase needed in their salaries to make up the difference in what goes to them and what goes to taxes"
You have got to be kidding,right? The increase needed in their salary to replace the increased adjustment on SS would come,granted maybe not at first. Inflation adjustments for the cost of living have always been a backward looking adoption and an inexact science onto itself. That never stopped the Federal government before from rising the SS rates. |
