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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (142795)	10/23/2008 3:28:48 PM
From: Bill	1 Recommendation Respond to of 173976

WRONG. Are you stupid, or just stubborn?

To: Lizzie Tudor who wrote (142795)	10/24/2008 8:37:00 AM
From: tonto	1 Recommendation Respond to of 173976

Obama Wants Social Security to Be a Welfare Plan His tax credit amounts to a radical change in the system. By ANDREW G. BIGGS Imagine this: Barack Obama proposes a Social Security payroll tax cut for low earners. Workers earning up to $8,000 per year would receive back the full 6.2% employee share of the 12.4% total payroll tax, up to $500 per year. Workers earning over $8,000 would receive $500 each, with this credit phasing out for individuals earning between $75,000 and $85,000. [Commentary] AP This tax cut would make an already progressive Social Security program even more redistributive. Under current law, a very low earner receives an inflation-adjusted return on his Social Security taxes of around 4%. That's a good return, given that government bonds are projected to return less than 3% above inflation. A high-earning worker, on the other hand, receives only around a 1.5% rate of return. Under Sen. Obama's proposal, returns for very low earners would rise to around 6% above inflation -- about the same return as on stocks, except with none of the risk. Compounded over a lifetime's contributions, the difference in the "deal" offered to workers of different earnings levels would be extreme. While Social Security has always been progressive, many would say this plan goes too far and risks turning Social Security into a "welfare program." Low earners receive more in benefits than they pay in taxes -- meaning their "net tax" is already negative -- and Mr. Obama's plan would increase net subsidies from the program. Moreover, this payroll tax cut plan would reduce Social Security's tax revenues by around $710 billion over the next 10 years. If made permanent, the Obama tax cut would increase Social Security's long-term deficit by almost 60% and push the program into insolvency in 2034, versus 2041 under current projections. To fill the hole in Social Security's finances, Mr. Obama would increase income taxes on high earners and pour that money into Social Security. This would be the first time that income tax revenues have been used to finance Social Security, which has always relied on its own dedicated payroll tax to differentiate itself from other government programs. Filling the gap with higher taxes on high earners would further increase Social Security's progressivity, pushing it closer toward a welfare-program approach. Now, you haven't heard Mr. Obama describe anything like this plan. If you had, it's likely you wouldn't support it. But it's almost exactly what his headline "tax cut" would do. The Obama campaign took the idea described above and made it much more complicated. Under the plan, which he claims would cut taxes for 95% of Americans, provides an income tax credit worth 6.2% of earnings up to $8,000, for a maximum credit of $500 per worker or $1,000 per couple. The 6.2% figure is important, because it matches the employee share of the Social Security payroll tax. Because around a third of Americans currently pay no income taxes -- a fraction that would rise to almost half under Mr. Obama's plan, according to the Tax Policy Center -- Mr. Obama's tax credits would be refundable, meaning you could collect the credit even if you paid no income taxes. While Mr. Obama calls his plan "Making Work Pay," under standard economic assumptions his plan would actually discourage work for anyone earning over $8,000 per year. The tax credit itself would increase workers' take-home pay, an "income effect" that reduces incentives to work. Moreover, for workers in the $75,000 to $85,000 income range, where the tax credit is phased out at five cents for each dollar of additional income, this would add five percentage points to their marginal tax rate. So Mr. Obama has in essence proposed cutting Social Security taxes for low earners, which would shift the system toward a "welfare" approach and sharply increase its long-term deficit. To fill the funding gap, he will raise taxes on high earners and funnel the money into Social Security, making the system even more progressive and breaking a long tradition against funding Social Security with income taxes. The complex way in which Mr. Obama structures and describes his plan would make it harder to administer than a straight payroll tax cut. But it is also more difficult for the typical American to understand. This may explain why he chose complexity over clarity. Mr. Biggs is a resident scholar at the American Enterprise Institute in Washington, D.C. He blogs on Social Security policy at www.andrewgbiggs.blogspot.com.

To: Lizzie Tudor who wrote (142795)	11/3/2008 6:24:04 PM
From: TimF	1 Recommendation Respond to of 173976

The point is this regressive burden is placed on the lower wages with NO DEDUCTIONS! Meanwhile the federal tax has deductions galore and these people are still complaining! The point is that even with all those deductions the wealthy pay a larger percentage of their income in taxes to the Feds even when you include FICA. But I guess there is one point where we could agree. We'd both like to get rid of a lot of those deductions that some of the wealthy can take advantage of. But I suppose you would just get rid of them and keep the rates up, I'd get rid of them in exchange for a rate cut. That would reduce the dead weight loss from taxation, and enable a lower net burden on the wealthy without increasing the burden on the non wealthy or reducing federal revenue. (Or alternatively you could reduce federal revenue by less than you reduce the burden inflicted on people, that would be ideal IMO, but you would have to cut spending as well, and its hard to find politicians who take that cutting spending, or even restraining its growth, seriously.)