The Atlantic’s Steven Hill: Time to make Big Government your only retirement option [Darleen Click]
You can easily skip the first part of Hill’s epic; it covers ground we know only too well on how people have been acting more like Grasshoppers than Ants in regards to their retirement plans (and the economic beatings many have received due to Government shennigans).
But Mr. Hill’s solutions is to, literally, double-down
The gritty reality that the Obama administration and House Republicans must face is that the vast majority of America’s retirees cannot afford to watch them hack off part of the only leg that remains of the three-legged stool. Quite the contrary, we should make that leg more robust by doubling the current Social Security payout, and turning it into a true national retirement system called “Social Security Plus.” Doing so not only would be good for American retirees, but also would be good for the greater macro economy.
Now you may be wondering if Mr. Hill had partaken of just too much liquid Christmas cheer as he scribbled; certainly he must be aware that even as today’s retirees will not receive back from Social Security what they put in, there still is no there there when it come to a “trust fund” or “lockbox.” All Social Security surpluses from 1983 to present have, by law, gone into the general fund and “IOU”s — in the form of non-marketable Treasury “obligations” — have been issued. How do we know that the Social Security monies have been squandered? Obama himself confirmed it in 2011 when he said SocSec checks might not go out without a raise in the debt ceiling.
Yet Mr. Hill laughably posits that Social Security is the best place, and should be the only place, for retiree monies. Here’s how he wants to “fund” the “doubling of benefits.”
Step 1. Lift Social Security’s payroll cap that favors the wealthy.
Currently Social Security only taxes wages up to $106,800 a year, and any income earned above that is not taxed. The net result is that poor, middle class, and even moderately upper middle class Americans are taxed 12.4 percent (split between employee and employer) on 100 percent of their income, but the wealthy pay a much lower percentage. Millionaire bankers effectively pay a paltry 1.2 percent.
Since benefits are paid out based on what one contributed, Hill never addresses whether such a radical increase of contributions from “millionaires” would mean they would get increased benefits. I will make a rash assumption that he doesn’t want to increase benefits; he wants to use SocSec as another redistribute-the-wealth scheme For The Fairness.
Step 2. Cut out the business deduction for employees’ retirement plans.
With all Americans receiving Social Security Plus, employer-based pensions would be redundant
Hells Bells, we can’t let people have their own private pensions now! That would just break Big Nannystate’s heart.
Step 3. Cut or reduce other deductions that disproportionately benefit top income earners.
Other possible revenue streams should include ones that would reduce or eliminate unfair deductions in the tax code which currently allow the top 20 percent of income earners to reap generous deductions that barely help most low and moderate income Americans. These include deductions for private retirement savings, health care, homeownership and education.
Only higher income individuals have enough earnings to divert for savings or investments that allow them the luxury of enjoying considerable tax deductions for their 401(k)s, IRAs and pensions. The poor and middle class rarely can take advantage of these sorts of deductions because they don’t make enough income to benefit from itemizing deductions on their tax returns.
So you’re frugal, you tuck away money in 401(k) or IRA … time to punish you for trying to be independent of Big Nanny.
Just who do you think you are, a responsible adult or citizen or something?
Winston, get with the program. FORWARD!