Re: On Government Trust Funds

On Mon, 29 Aug 2005 20:00:46 -0700, "The Trucker" wrote:

>"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote:

>> I proposed two things: (1) Get rid of the dedicated tax system which
>> implies "trust funds" which are that in name only, and (2) eliminate
>> the payroll tax altogether. The loss of revenues would be made up by
>> a fractional increase in the income tax rates across the board.
>>
>> Government trust funds are not what most of the public thinks them to
>> be, namely a "lock box" where their retirement contributions are
>> stored for their later benefit. They serve no real purpose, and have
>> only managed to confuse the public as well as the politicians in
>> Washington. How many people really understand the difference between
>> the official debt and the publicly held debt?
>>
>> The payroll tax is highly regressive because it takes a larger
>> fraction of the workers' income than it does of those in the high
>> income bracket. By eliminating the payroll tax and redistributing the
>> tax load as I proposed, we get rid of this regressive feature which
>> hurts aggregate demand and is a drag on the economy.
>>
>> SS is in reality a social safety net, and not a retirement savings
>> program. Few, if any, could live on SS benefits alone. The
>> government has implied as much by setting up many personal retirement
>> programs since SS was instigated, e.g. various IRAs, and 401Ks.
>>
>> The claim that political support for SS would evaporate is phony in my
>> opinion. It implies that the average worker would vote against
>> receiving some modest government-paid benefits at retirement age.
>
>Political support for the SS system would evaporate if
>the Repugnicans did the change because they would make
>dead certain that this would be the case. But if the system
>is left EXACTLY as it is in that people receive benefits
>based on wages earned during thier active anf contributiing
>years then it is certainly NOT your typical "welfare"
>program. Just do it EXACTLY as it is done now on the
>payout side and simply eliminate the actual payroll
>withholding. Account it all just as it is now.

That would be a definite improvement over the dedicated tax system.
However if Social Security were treated as a social safety net, as its
name implies, rather than a retirement savings program, there would be
no issue of public support. There is no serious political opposition
to the government spending billions out of the general fund to provide
for disaster relief, which is a form of social welfare.

The SS benefits should be means tested with the basic objective of
relieving pain and suffering for US citizens with disabilities or with
inadequate retirement income. For more than a generation now, the
government has had special programs such IRAs and 401Ks aimed at
retirement savings. That has changed the role of SS from what may
have been advertised at inception.
.

Relevant Pages

  • Re: On Government Trust Funds
    ... >>> a fractional increase in the income tax rates across the board. ... >>> The payroll tax is highly regressive because it takes a larger ... > name implies, rather than a retirement savings program, there would be ...
    (sci.econ)
  • Re: On Government Trust Funds
    ... >>>If there's no payroll tax, how do you propose to pay for SS? ... I would have SS from ordinary income tax receipts. ... SS is in reality a social safety net, and not a retirement savings ...
    (sci.econ)
  • Re: On Government Trust Funds
    ... I would have SS from ordinary income tax receipts. ... > The payroll tax is highly regressive because it takes a larger ... > SS is in reality a social safety net, and not a retirement savings ...
    (sci.econ)
  • Re: On Government Trust Funds
    ... Why not just cut the payroll tax down to ... >>tax dollars raised in excess of what's needed to pay current SS ... Again, if FICA tax dollars have no meaning separate from other taxes, why ...
    (sci.econ)
  • Re: On Government Trust Funds
    ... >>> We should not even have a payroll tax. ... >>If there's no payroll tax, how do you propose to pay for SS? ... >>> FICA tax dollars, whether in excess or not, are no different that any ... You're saying make the actual accounting reflect unified budget accounting. ...
    (sci.econ)