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But I can see no justification for making SS payments to the truly rich.
The justification is that if we don't pay them, it becomes welfare. People paid FICA for most of their lives, for the privilege of getting welfare? But other people get welfare too, such as SSI, even if they never paid FICA? In that case, is FICA basically a crime? That actually makes sense, if crime is the main purpose of government. When cops can murder innocent people with impunity, and presidents can start wars for personal reasons, it does indeed look like crime is the main purpose of government. But does our government do a good job of it? Wouldn't the mafia be more efficient and productive?
When it comes to means testing, most of us believe we should not be affected and it should only apply to people with a lot more money. This is a highly political issue and the outcome of the next election could make some serious changes. The give away politicians always promise to tax the extremely wealthy. The tax base at the top is never big enough and the middle class ends up paying.
As someone pointed out, means testing if implemented is likely to be based on income and not on net worth. So those with significant income from pensions and traditional IRAs (that were tax deferred) are most vulnerable. The only mention of a threshold that I've heard came from Christie early in his presidential campaign and it was the same threshold as for the extra Medicare Part B premiums ($85K Adjusted Gross Income or AGI for singles). The threshold for joint returns is $170K AGI. Those thresholds might be a good ballpark estimate as when to be concerned as the government tends to not be too creative and likes to use existing guidelines as much as possible. Although I agree that who knows what and when this might all happen, I note in other posts that you are retiring early but your spouse will continue to work for a few years. If this will put you in a lower income bracket, it would be a good time to consider Roth IRAs and Roth conversions for your retirement savings as that income is exempt from the AGI.
The justification is that if we don't pay them, it becomes welfare. People paid FICA for most of their lives, for the privilege of getting welfare? But other people get welfare too, such as SSI, even if they never paid FICA? In that case, is FICA basically a crime? That actually makes sense, if crime is the main purpose of government. When cops can murder innocent people with impunity, and presidents can start wars for personal reasons, it does indeed look like crime is the main purpose of government. But does our government do a good job of it? Wouldn't the mafia be more efficient and productive?
But I can see no justification for making SS payments to the truly rich.
There are not enough "truly rich" in this country that cutting off their Social Security would make any sort of difference. It would be like trying to cause a flood by peeing in the ocean. The effect would be almost entirely symbolic - politicians could grandstand "Oh look how we're helping the poor and the middle class". And everyone who is comfortable would read the symbolism from the other direction, namely as a sign of imminent danger of further monetary transfers on top of those which already exist.
It would be a move "full of sound and fury, but signifying nothing."
Location: Was Midvalley Oregon; Now Eastside Seattle area
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we are being taxed on SS benefit income with AGI exceeding NNN but less than MMM.
I am pleased to be able to afford and pay this tax.
You should be too.
YSSMMV
Great find NBP. The article is great. I can remember that time well and this name, House Ways and Means Committee, Representative Dan Rostenkowski, Democrat of Illinois, was all over the news the following years. I wonder where he is now.
Anyway to the subsequent points made about cutting off the truly wealthy ER has the right of it. Peeing in the ocean to try to cause a flood. I think the only real solution is twofold. Increase the FICA tax and disconnect SSDI and Medicaid from the nipple of the revenue stream that is SS. Notice I didn't say it was a fund. It is actually lumped into the general fund where it should not be. The government like to play that shell game with us.
It would be a move "full of sound and fury, but signifying nothing."
That's from Shakespeare's Macbeth: "Life's but a walking shadow, a poor player, that struts and frets his hour upon the stage, and then is heard no more. It is a tale told by an idiot, full of sound and fury, signifying nothing."
But notice it's about life. Life itself is a tale told by an idiot. Therefore it's natural that laws should be that way too, because laws are part of life. And Trump's words, if you will notice, are mostly hot air too, with no real meaning other than how hot the air is.
The real issue is not whether cracking down on wealth would help SS, but whether cracking down on wealth would provide better hot air.
I agree with ER and golf; just not paying out to the wealthy won't fix it. There has to be more money coming in; removing the cap on the tax is a much better solution than means testing on the payments. By better I mean that it mathematically works, ignoring whether it is fair and whether or not it can actually happen in today's political climate. I go over cap and I would support this (but I will only go over cap 5 or 6 more times if I am lucky).
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