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Trump's 6 Words Have Social Security Beneficiaries Terrified

Discussion in 'The War Room' started by Deleted member 159002, Jan 31, 2020.

  1. panamaican Senior Moderator Staff Member Senior Moderator

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    There's always a bunch of talk about SS shortfalls and funding issues but there's never any talk about the type of things that would address it.

    1) As Sabre points out, raise the cap on income that gets taxed for SS. That's easy.
    2) Include non-monetary compensation as taxable for SS contributions. Also easy.
     
  2. Can you elaborate?
     
  3. Son of Ireland 34 Banned Banned

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    I agree with the first point. Explain the second.
     
  4. Seano Hands of bone

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    SS has been on the chopping block for years, or so I've been told.
     
  5. panamaican Senior Moderator Staff Member Senior Moderator

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    Sure, over the last 40+ years wage growth has not grown significantly. However, non-monetary compensation in the form of benefits, like health insurance premiums paid by your employer, has grown. This means that overall compensation has grown at a greater rate than wages. Since SS only taxes wages, a significant amount of the increased compensation is not being taxed and included in SS contributions. This contributes to the shortfall.

    The SSA has a write up on this that I thought was very educational:
    https://www.ssa.gov/policy/docs/ssb/v73n1/v73n1p83.html

    For illustration purposes - when your insurance premiums go up and your employer pays it, it's similar to getting a raise equal to the value of the premium increase. Except that you never see the money because the employer is spending it for you. However because it's being spent on a benefit, you never pay SS taxes on it and thus the SS fund get no SS contribution for your future needs.

    To overly simplify, you're basically giving up future SS benefits to pay for annual employee benefits packages in the now. This particularly hurts the middle class because they're not making enough in wages to adequately fund their retirements on their own and they're not funding their SS accounts to the highest possible level because their pay raises are spent on benefits. It's a healthcare argument that actually impacts far more than I'd previously realized.
     
  6. lifelessheap Gold Belt

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    Imagine how much more money I would have if I opted out of SS and used that money to invest. A man can dream.
     
  7. HunterSdVa29 Respect, tho

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    I've been saying this for years
    however too many people would opt out (oh well, should be their fault if it doesn't work out) and the system wouldn't survive on willing participants

    moochers generally aren't proper planners, hence why they are mooching.

    People that are capable of doing what you're implying are already doing it in a 401k/IRA w/ other funds
     
  8. all caps Gold Belt

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    You can do that.

    But you have to be really certain that's what you want to do.
     
  9. djacobox372 Steel Belt

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    Also what other government program is fully funded until 2035 with a 3 trillion dollar surplus? Yet all we ever hear about is how SS is broke.
     
  10. djacobox372 Steel Belt

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    It used to be like that, old people starved and froze in the streets.
     
  11. Good stuff, thanks. I'd like big changes to healthcare policy (including decoupling it from employment).
     
  12. Son of Ireland 34 Banned Banned

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    So what are we basing that on? Will I have to pay more taxes on my portion of my medical insurance or the overall amount that includes the amount my employer pays? My portion is something like 20 % of the overall amount.
     
  13. PainIsLIfe Steel Belt

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  14. tonni POTY 2020 Banned

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    huge, bigly, cofveve, billions, beautiful, nuclear?
     
  15. dezzy Black Belt

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    hamberders
     
  16. panamaican Senior Moderator Staff Member Senior Moderator

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    What are we basing what on? I'm not sure what you mean.

    As for what you'd pay taxes on, hard to guess. Some portion of it should be taxed but I wouldn't just throw out a number or percentage here, it takes more time to figure that out. Just like it would take more time to figure out how much more income should be subject to SS taxes. The point is that it's technically compensation yet it isn't subject to the SS tax and thus reduces your SS contributions over your lifetime.

    If people are going to talk about SS and funding, they should include that in their conversation.
     
  17. Son of Ireland 34 Banned Banned

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    What I mean is, the total amount of my premium is 9000. I only pay 1800 of that. What would you tax me on? The 1800 or the 9000? I think this is a lame idea, and would make insurance more expensive than it already is. I think doing away with the cap would go a long ways to bridging the cap.
     
  18. panamaican Senior Moderator Staff Member Senior Moderator

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    Probably a percentage of the full premium. And it will have no effect on the cost of your insurance, the premiums aren't set by your employer or the SSA.

    The rest of it is a distinction without a difference. Let's take your $9k in premiums. Let's say that instead of taxing the $9k in premiums, they just raise the cap by $k. The tax rate remains the same so you're now paying it on $9k more in income. But if the tax is on your premiums and your premiums go down to say $8500, you're paying less in total tax. So, you could have more control over your SS tax if the tax is on premiums because you can control what plan and premium you select.

    But ideally, both things would be implemented, not just one or the other.
     
  19. VivaRevolution Banned Banned

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    Well, in 2008 you would have lost your ass.
     

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