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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: neolib who wrote (159892)10/24/2008 4:52:33 PM
From: GraceZRead Replies (1) of 306849
 
Change the relationship of schedule SE relative to Form 1040. In particular, make the starting point for the SE computations be 1040 line 22. End of problem.


Well all I can say is that the original objections to a social insurance program like SS feared exactly this end result. They feared that people would forget why it was implemented in the first place, would see it as a general tax instead of a insurance premium paid to the government in order to cover the loss of income due to the inability to work either from old age or disability.

Passive income doesn't necessarily stop when the person retires or becomes disabled. Making passive income subject to the tax would have the effect that everyone who pays FICA on passive income would continue to receive the passive income as well as receive the SS benefit in retirement since your payout depends on what you pay in! This would happen unless they break the link between premiums paid in and benefits received which is where your plan would be headed.

I would support replacing FICA with mandatory retirement savings plans with an insurance element as long as the government no longer ran them. I think, if offered, millions of Americans would pay a large lump sum just to opt out of SS.
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