Wait... I thought Social Security was solvent until 2035?

[Thunder Good-Oil]

It’s not a Ponzi scheme. It is a government program that’s been promoted as not being funded by taxes which has lead some to believe that they should be able to manage their “contributions” and “benefits” themselves. The annual “benefits” have been slowly eroding from the beginning (however the “term” of “benefits” being paid has been greatly extended). What has happened is that the variables have not been adjusted very aggressively. Recently raising the FRA from 65 to 66 (and on its way to 67 for the tail end Boomers and younger demo) is way behind keeping pace with the increased life expectancy of the participants. Raising the FRA even another year or two, slightly bumping the 2x 6.2%, reducing the COLAs, or a combination of those things will easily extend the program in its current form… probably beyond the lives of everybody that is alive today.

Remember, half of the funding is from a matching TAX on employers. It shouldn’t be that difficult return at least 100% of what has been paid in by the participants. That 100% match is why only slight adjustments to the variables would reverse the diminishing surplus.

 

[Thunder Good-Oil]

It is not going to collapse. All of the year 2035 fail talk is just stirring up emotions for political capital. Right now it is funded 50% by employees (as a regressive tax) and 50% by a tax on employers. The argument shouldn’t be that it will fail. The argument should be where does the additional funding come from for future benefits. Since I consider it to already be mostly tax funded rather than funded by participant’s contributions then the logical thing to do is to use the discretionary budget. By NOT doing that the taxes are instead coming from the lowest paid workers and employers.

 

[LouderVol]

It is not going to collapse. All of the year 2035 fail talk is just stirring up emotions for political capital. Right now it is funded 50% by employees (as a regressive tax) and 50% by a tax on employers. The argument shouldn’t be that it will fail. The argument should be where does the additional funding come from for future benefits. Since I consider it to already be mostly tax funded rather than funded by participant’s contributions then the logical thing to do is to use the discretionary budget. By NOT doing that the taxes are instead coming from the lowest paid workers and employers.

How is it not a failure if it needs outside funding and constant adjustments?

How is it not a ponzi scheme? It takes new money to pay back old money with diminishing returns, so that the "investors" never get back what they "invested". Heck you even have people profiting from it who never invested at all.

Tax or not, it's still a scheme and only legal because of the circular argument that the government does it.

 

[Thunder Good-Oil]

How is it not a failure if it needs outside funding and constant adjustments?

How is it not a ponzi scheme? It takes new money to pay back old money with diminishing returns, so that the "investors" never get back what they "invested". Heck you even have people profiting from it who never invested at all.

Tax or not, it's still a scheme and only legal because of the circular argument that the government does it.

It has been using “outside funding” from day one. The 6.2% coming from employers has always been a tax. It would seem more fair if those businesses with the higher mix of payroll costs weren’t contributing more than corporations with few employees and/or only highly compensated employees.

 

[Thunder Good-Oil]

It is a government program to give money to the elderly, the disabled, and the survivors invluding dependents of working age citizens. We are only discussing the portion of the funding that comes from employees and comparing that portion to the “benefits” that they ultimately receive. It isn’t a Ponzi scheme because there are not individual accounts.

 

[LouderVol]

It has been using “outside funding” from day one. The 6.2% coming from employers has always been a tax. It would seem more fair if those businesses with the higher mix of payroll costs weren’t contributing more than corporations with few employees and/or only highly compensated employees.

But you are wanting to increase the sources of the outside funding.

 

[LouderVol]

It is a government program to give money to the elderly, the disabled, and the survivors invluding dependents of working age citizens. We are only discussing the portion of the funding that comes from employees and comparing that portion to the “benefits” that they ultimately receive. It isn’t a Ponzi scheme because there are not individual accounts.

We are taxed individually, and paid out individually. Just because the money in vs money out doesnt stay tracked in a single account seems like a very weak argument. That just makes the scheme easier to achieve as people arent aware of how much they lose or stand to gain. Get people to write the checks for SS all their life nd I bet even the socialists here would change their tune.

Does a Ponzi/Pyramid scheme require individual accounts tht differs greatly from SS?

Imo it's worse because it's not voluntary, and they can change the terms as they see fit. At least with a Ponzi scheme you can limit your losses. SS requires ever increasing contributions for ever decreasing returns. How is that not a scam?

 

[Thunder Good-Oil]

But you are wanting to increase the sources of the outside funding.

I don’t know about “wanting”. I do think that it would be more fair to “tax” every taxpayer more equitably. Doesn’t seem right to single out those businesses that provide jobs for this program. Why should a law firm filled with highly compensated attorneys be paying at a substantially lower effective rate than a sandwich shop staffed with hourly workers does?

 

[Thunder Good-Oil]

We are taxed individually, and paid out individually. Just because the money in vs money out doesnt stay tracked in a single account seems like a very weak argument. That just makes the scheme easier to achieve as people arent aware of how much they lose or stand to gain. Get people to write the checks for SS all their life nd I bet even the socialists here would change their tune.

Does a Ponzi/Pyramid scheme require individual accounts tht differs greatly from SS?

Imo it's worse because it's not voluntary, and they can change the terms as they see fit. At least with a Ponzi scheme you can limit your losses. SS requires ever increasing contributions for ever decreasing returns. How is that not a scam?

So it’s not a Ponzi scheme?

Did you just suggest that I am a socialist?

It is a government program that is funded by taxing payrolls. It is not a savings program. Many seem to be confused that there should be some sort of reconciliation of what they were taxed with what they receive. Half of the program revenues (not including the interest) don’t come from the employees.

 

[LouderVol]

I don’t know about “wanting”. I do think that it would be more fair to “tax” every taxpayer more equitably. Doesn’t seem right to single out those businesses that provide jobs for this program. Why should a law firm filled with highly compensated attorneys be paying at a substantially lower effective rate than a sandwich shop staffed with hourly workers does?

effective rate is your key term.

Why do those sandwich shop workers receive a much higher effective rate of return than those lawyers?

 

[Thunder Good-Oil]

effective rate is your key term.

Why do those sandwich shop workers receive a much higher effective rate of return than those lawyers?

What is your data? Payouts do increase for those putting more dollars into the system. I’m not going to decipher the formula.

In my comment I was referring to the effective “tax” rate. The marginal tax rate is 6.2% from $1 in pay to $140,000 something in pay. Then the marginal tax rate drops to zero beyond that. The guy making a million dollars a year pays something like $10,000. So does the guy making $150,000. It’s is a regressive tax disguised as a retirement savings program.

 

[LouderVol]

So it’s not a Ponzi scheme?

Did you just suggest that I am a socialist?

It is a government program that is funded by taxing payrolls. It is not a savings program. Many seem to be confused that there should be some sort of reconciliation of what they were taxed with what they receive. Half of the program revenues (not including the interest) don’t come from the employees.

Which all sounds like a government run Ponzi scheme.

 

[SpaceCoastVol]

What is your data? Payouts do increase for those putting more dollars into the system. I’m not going to decipher the formula.

In my comment I was referring to the effective “tax” rate. The marginal tax rate is 6.2% from $1 in pay to $140,000 something in pay. Then the marginal tax rate drops to zero beyond that. The guy making a million dollars a year pays something like $10,000. So does the guy making $150,000. It’s is a regressive tax disguised as a retirement savings program.

Naaaaaah That's a stretch. You can't count the money above the $140 something because there is no return on that money. The payout is based on how much you pay in. I have maxed it out for years. What I have made beyond the threshold is irrelevant because I am paying nothing into the system based on that, nor am I receiving any benefit based on that. Now that being said, If I could get a tax free lump sum of all the monies I paid in in lieu of any benefit going forward, I would take it in a NY second. Even with only 4 years to go before the government makes me quit my job, I could do better with those monies than I will ever receive form the .gov.

 

[LouderVol]

What is your data? Payouts do increase for those putting more dollars into the system. I’m not going to decipher the formula.

In my comment I was referring to the effective “tax” rate. The marginal tax rate is 6.2% from $1 in pay to $140,000 something in pay. Then the marginal tax rate drops to zero beyond that. The guy making a million dollars a year pays something like $10,000. So does the guy making $150,000. It’s is a regressive tax disguised as a retirement savings program.

Someone taxed 6.2 for 140k is far more than someone taxed 6.2 for 35k. The difference in payout doesnt change that same amount. The 140k may get more, but not 4x more. Unless something has changed.

 

[Thunder Good-Oil]

Which all sounds like a government run Ponzi scheme.

Maybe the entirety of government is a Ponzi scheme. With an extended bad economy many other government programs can collapse as well. The SSI trust funds will flourish with a robust economy.

 

[Thunder Good-Oil]

Naaaaaah That's a stretch. You can't count the money above the $140 something because there is no return on that money. The payout is based on how much you pay in. I have maxed it out for years. What I have made beyond the threshold is irrelevant because I am paying nothing into the system based on that, nor am I receiving any benefit based on that. Now that being said, If I could get a tax free lump sum of all the monies I paid in in lieu of any benefit going forward, I would take it in a NY second. Even with only 4 years to go before the government makes me quit my job, I could do better with those monies than I will ever receive form the .gov.

It is not your own personal savings account. If you die before payouts begin you will get zero. Lump sum payouts are a fantasy.

The effective TAX rate for somebody earning $1,000,000/year is about 1%. For dishwashers it is 6.2%. Effective rate of return is not relevant as it is a tax, not a savings program.

 

[Thunder Good-Oil]

Someone taxed 6.2 for 140k is far more than someone taxed 6.2 for 35k. The difference in payout doesnt change that same amount. The 140k may get more, but not 4x more. Unless something has changed.

Returns on tax dollars are never equitable. The direct return on those without children but who own real estate is zero percent. The indirect returns are subjective. Keeping the lower end of the economic spectrum further away from being destitute lifts up society as a whole and makes it less likely that the desperate fellers will victimize the rich feller.

SSI is not a savings plan. It is a government run social program that is funded by taxes disguised as contributions. The heavier tax burden is on the lower end of the wage earners and on businesses that have the highest mix of lower paid staff in their Payroll Expense line.