Social Security payroll contribution not a problem
This item confirms that the Northwest Plan for Social Security would work rather well for Congress, Social Security, and beneficiaries. Beltway conventional wisdom thought otherwise. My own reaction was of puzzlement by the Beltway conventional wisdom.
Fiscal Times reports:
We’ve already seen evidence that consumers have largely shrugged off this year’s expiration of the payroll tax holiday. A new survey from Bankrate.com suggests one reason, beyond the housing rebound and stock market rally: many simply haven’t seen the hit to their paychecks. Tax hike? What tax hike?
The payroll tax rate reverted to 6.2 percent this year after two years at 4.2 percent. Yet nearly half of working Americans surveyed (48 percent) said they haven’t noticed the higher taxes. Another 7 percent said they haven’t been affected.
Dan
I am not aware that beltway wisdom has ever even heard of the Northwest plan… or any variation on raising the payroll tax a tiny amount to pay for the increased costs associated with living longer.
the “fact” appears to be that between the big liars… claiming social security represents a looming catastrophe that must be fixed now, now, now,.. and the pathetic left that thinks SS, while not broken, can be fixed by taxing the rich.. a substantial amount… so that workers can never again say “we paid for it ourselves.”
the point about the Fiscal Times article is that even a 2% increase in the tax (paid by the workers) all at once goes practically unnoticed. what effect would a one tenth of one percent increase per year have… ultimately up to 2% over twenty years?
Why? The number of employees working part-time has increased greatly since the Great Recession started. Their hours are different every week so their gross and net wages are never the same from week to week. If they were not looking for the FICA increase, they wouldn’t notice it. Nancy O
I think almost every working families income varies more than 2% year to year, so of course they don’t notice one particular 2% change on top of the other gyrations.
This isn’t the sixties when dad worked full time for one company for decades with a fairly stable salary.
My family income swings around by a good 25% depending on whether my wife or I worked the entire year, switched jobs, took some unpaid or partially paid time off, took a temporary part time position that paid something, got a raise or pay cut, etc.
Heck even unionized government employees are seeing swings bigger than that due to furlough days.
Costs also tend to swing much further than that. For most Americans a big car repair bill or moving is going to be bigger than 2% of income.
Jeffrey fisher
yes. even when i was very poor… working for near minimum wage, with a family… a five percent difference in wages did not make “a difference.”
as you note, variations in prices make a bigger difference, as do variations in the interest rate, or the employment rate.
we, all of us, lose more money to things like interest rates, unemployment, the draft, inflation, and random price changes.. than the 2% ultimately needed for Social Security (over twenty or forty or seventy years, depending how we go about it)… and with Social Security we get the money back when we most likely will need it much more than we do “now.”
but you never hear about “fixing” Social Security simply by paying for it. All we get is the “staggering deficit” that we would see after NOT paying for it for a hundred years more or less.
or the fact that in the normal course of things we will be making much more (extra) money than the tiny extra cost of Social Security.
I suppose if i told you that just living for the next sixty years represents an unfunded deficit of about 300 Trillion Dollars! we would just decide it wasn’t worth the cost. We could cut off our heads to save the cost of tomorrow’s dinner, or just sell ourselves into slavery and let Wall Street work it out for us.