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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: jttmab who wrote (4078)	8/22/1999 12:23:00 PM
From: Les H	Read Replies (1) \| Respond to of 769670

ntrs.com Adding capital gains to the FICA tax would not work well. The FICA tax on wage income is not collected on the net income, but on the gross wages, salaries, etc. Capital gains are net of gains and losses. There is also the inequity of taxing those who take gains versus those borrow against unrealized gains or just accumulate gains. The latter are usually the wealthy. One should run not walk away from any plan that seeks to increase the size of the government benefits plans, such as Social Security, Medicare, etc. before any attempts are made to rationalize these systems. As of yet, there has never been any real attempt to control costs in these systems, and any new money injected into these systems are malappropriated for other programs. As the above chart from NTRS indicates, putting money into Social Security doesn't increase national savings. Private savings went into the tank after the tax increases for so-called deficit reduction and for 'saving' SS. It also shows how much private savings was diverted to the government by Bush and Clinton.

To: jttmab who wrote (4078)	8/22/1999 9:01:00 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 769670

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. First of all, I don't think the wealthy are experiencing wage income in this decade or last. They are experiencing asset appreciation which is displacing wages. For example base salaries at Dell are low, capital gains are high. Some option exercises are finally taxed as income now... in the past none were, and thats a start, but it is nowhere near fair. Take a look at Andreesen's salary for example... what is it, 125K or something, and yet he just filed to sell 88mm worth of AOL stock - I realize I am using an extreme example here but we are at a point where Andreesen's structural pay package is the norm vs. the exception in high tech (low wage/high stock)... I think if you look at what Andreesen had to pay into Fica vs. what a grocery store checkout clerk paid it would shock you, and this does not include the opportunity costs that the grocery clerk loses where he/she could be investing that money instead of getting the 1% return of SS. 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... Yes this is the point, I agree with you here, I agree fica is higher for Gen-X workers than Federal taxes. I don't want more complexity... I mean who does... but again I come back to this nagging question - why force lower wage earners into an underperforming retirement plan with a disproportionate amt of their income? If we don't structurally change the contribution requirements, then the other option is to increase the returns for fairness.