FICA’s our most regressive tax

[Supposn]

Employees’ direct and indirect contributions to FICA payroll taxes are without doubt the most regressive federal taxes.
Employers and employees each directly contribute 7.65% of payrolls for FICA taxes.

Employers portion of FICA, (similar to all enterprises’ expenditures) are paid by the eventual purchasers or users of the enterprises’ products. Employers’ contributions behave similar to a sales tax that additionally hinders job creation and thus is additionally detrimental to our median wage.

Thus employees are eventually the only direct FICA contributors, they and their families indirectly pay a very significant portion of employers’ FICA contributions and their incomes suffer the greatest financial harm due to FICA payroll taxes.

There’s no logical relationship between income and medical need. I unequivocally advocate that no portion of the FICA payroll tax should be used fund Medicare. Medicare should be entirely funded by a tax with a greater (than a payroll taxes) base such as a general sales tax.

Although it’s preferable that wage earners fund their entire Social Security retirement annuities, it’s both financially and politically unfeasible to require they do so. Social Security has demonstrated to be a significant contributor to USA’s economy and its elimination would similarly be economically detrimental.

The rate of employers’ FICA contributions acting as a sales tax is dependent upon the proportion of labor imbedded within the sales' prices.

Specific sales taxes’ regulations unequally affect population segments. To the extent that labor is less than half the portion of aggregate prices paid for by wage earners, (particularly lower earning wage earners), within any proposed sales tax, and to the extent that an acceptable sales tax rate would produce sufficient revenue, I advocate that such a sales tax and FICA should equally fund Social Security retirement annuities.

If sales tax cannot be devised to satisfy these requirements, then some general tax based upon other than only payrolls should equally with FICA share the funding of Social Security retirement annuities.

Respectfully, Supposn

[fj1200]

Yes it's regressive but you propose to replace a regressive tax with another regressive tax?

But the real problem IMO is the separation of cost and responsibility. Medicare recipients do not pay for Medicare. SS recipients have been insulated from the responsibility of their own retirement and it's costs have been adding up. Until those types of issues are addressed pensioner costs are going to balloon up faster than the base of taxation. Take a look at the unfunded liabilities that are on the horizon.

[Supposn]

FJ1200, yes; I propose that good portion of an extremely regressive tax upon wages salaries and eventually upon ALL purchases should be replaced with a sales tax that’s significantly less regressive.
. . I’m advocating that both current employees plus employers 7.65% FICA contributions be reduced to 3.1% for each of them. Employers’ FICA contributions currently behave as a sales tax. That effective sales tax rate is dependent upon the portion of sale prices that are due to labor expenses.

[If labor is 1/3 of sales prices, employers’ reduced 4.55% of payroll now behaves as sales tax that exceeds 1.5% of sales; (it’s actually 1.513%). If labor is 45% of sales prices, that 4.55% of payroll now behaves as sales tax that exceeds 2% of sales. Additionally employers’ FICA contribution based upon payroll amounts directly inhibit job creation and hiring. They are detrimental to the median wage.

Specific sales taxes’ regulations unequally affect population segments. To the extent that labor is less than half the portion of aggregate prices paid for by wage earners, (particularly lower earning wage earners), within any proposed sales tax, and to the extent that an acceptable sales tax rate would produce sufficient revenue, I advocate that such a sales tax and FICA should equally fund Social Security retirement annuities].

Let us suppose that we enacted a 4.55% sales tax, and 45% of prices due to labor that are paid by wage earners. In such a case, it might seem that the sales tax completely wiped out wage earners’ 4.55% reduction of FICA but they had been paying an equivalent of more than 2% sales tax prior to the transfer of tax sources. In this case, because lower income wage earners must spend their entire incomes, they are actually reducing their taxes by more than 2.55% of their wages.

Additionally the decreased tax upon employer’s payrolls decreases the detriment to job creation and median wages. I suspect that labor represents a lesser portion of lower income earners expenditures. A general sales tax rather than a tax based upon payrolls yields greater revenue for the same tax rate. This transfer of revenue sources would yield significantly greater revenue for Medicare and Social Security annuities.

Respectfully, Supposn

[Supposn]

...................But the real problem IMO is the separation of cost and responsibility. Medicare recipients do not pay for Medicare. SS recipients have been insulated from the responsibility of their own retirement and it's costs have been adding up. Until those types of issues are addressed pensioner costs are going to balloon up faster than the base of taxation. Take a look at the unfunded liabilities that are on the horizon.

FJ1200, I’ve read that were it not for Social Security, an additional 40% of USA’s elderly would fall below the poverty level. This would have grave national consequences for our nation. Despite the our improved medical technology, shorter life spans for some, years of additionally poor physical existences for some others would result from the termination of Medicare. Such termination would also have severe economic consequences to our nation.

Obama’s administration continued the economic stimulus programs begun in the Bush administrations because almost all credible financial and economic opinion concurred that our nation must save our financial institutions. Should is concern for existence of my generation be of lesser than our concern for financial institutions? What about the lives of our current working generation and their children when they grow older? It seems that each one of our succeeding generations have been less altruistic than their parents.

I’m not as honorable and caring as some others but my generation is willing to sacrifice ourselves for our children’s and grandchildren’s generations. We are not so altruistic as to willingly sacrifice ourselves for the sake of others great wealth and lives and privilege. For specific examples of sacrifices we are unwilling to make, refer to the discussion of “Capital gains income’s tax discount is unjustified”.

Respectfully, Supposn

[fj1200]

FJ1200, I’ve read that were it not for Social Security, an additional 40% of USA’s elderly would fall below the poverty level. This would have grave national consequences for our nation. Despite the our improved medical technology, shorter life spans for some, years of additionally poor physical existences for some others would result from the termination of Medicare. Such termination would also have severe economic consequences to our nation.

You've read that huh? Have you also read that people have been conditioned to rely on SS for 70 years now and that they have not taken the necessary steps to secure their own financial future? Have you also read that the intervention into the private health care market, including but not limited to Medicare's massive influence, has led to an inefficient delivery method and instances where people have no connection to what it costs to deliver health care vs. the choices that they make?


Obama’s administration continued the economic stimulus programs begun in the Bush administrations because almost all credible financial and economic opinion concurred that our nation must save our financial institutions. Should is concern for existence of my generation be of lesser than our concern for financial institutions? What about the lives of our current working generation and their children when they grow older? It seems that each one of our succeeding generations have been less altruistic than their parents.

Wow, you've got the class warfare arguments down cold, good on 'ya. Financial institutions have been insulated from risk by the Fed going at least back to the '87 "crash" so they have not had to develop the proper risk control techniques that might have enabled them to weather the '08 crisis. I'm pretty sure no one was suggesting that we NOT "save" financial institutions but there was huge debate in how to do it; Have government "save" us from the next Great Depression just like it needs to "save" us all from old age destitution? Are you sensing a pattern yet?


I’m not as honorable and caring as some others but my generation is willing to sacrifice ourselves for our children’s and grandchildren’s generations. We are not so altruistic as to willingly sacrifice ourselves for the sake of others great wealth and lives and privilege. For specific examples of sacrifices we are unwilling to make, refer to the discussion of “Capital gains income’s tax discount is unjustified”.

Respectfully, Supposn

I'm not sure what your generation is but you seem to be very content that we all make "sacrifices" for the older generation at the expense of their children and grandchildren. As such you go out of your way to seem reasonable while at the same time making arguments that increase the entitlement power of Washington which of course is the root of the problems we see today and the bigger problems coming in the future.

Oh, and your CG thread is filled with the same sort of misguided logic that you espouse here.

Good talk though, this is fun.

[Supposn]

FJ1200, employees’ directly pay 6.2% of their gross wages and salaries for Social Security. The proportion of prices due to 6.2% 0f payrolls passed on by employers is dependent upon the portion of labor imbedded within those prices.

[If prices due to labor are 1/3 of wage earners’ purchases, than wage earning families are paying 8.26% of their earnings for social security; if f the portion of prices is 45%, than wage earning families are paying 8.99% of their earnings for social security].

Wage earning families are among the lowest income earning segments of our populations. That same rate is applicable to families that cannot afford medical insurance. Although it’s preferable that wage earners fund their entire Social Security retirement annuities, it’s both financially and politically unfeasible to require they do so. Social Security retirement annuities are of significant benefit to our entire economy, only wage and salary incomes are taxed and the amounts of those taxes are capped. Certainly wage earners are not as you describe “insulated from the responsibility of their own retirement”.

Historically lacking a federal retirement program, (despite historically shorter life spans) were severe hardships. If Social Security, (SS) is terminated, the additional extent of USA’s population segments driven into poverty would be economically and socially disastrous. Many SS retirees had physically demanding jobs and/or are unable to earn a living. State and county public assistance programs couldn’t replace SS. Those who contend that Social Security is detrimental to our economy do not appreciate the alternative economic devastation if it were terminated.

Respectfully, Supposn

[Supposn]

FJ1200, I have not read “that intervention into the private health care market, including but not limited to Medicare's massive influence, has led to an inefficient delivery method and instances where people have no connection to what it costs to deliver health care vs. the choices that they make”; thank you asking.

Medicare is government administered medical insurance. It is single (government) payer basic medical insurance and I do not object to it being described as socialized insurance but it is certainly not socialized medicine. Medicare was enacted because commercial insurers could not or would not provide affordable medical insurance for the elderly; (that was when medical procedures were much less expensive).

Health providers choose to accept, they are not required to accept Medicare patients. I and all of my elderly aquaintences have not experienced Medicare rationing or otherwise intervention within our medical treatment.

On the other hand I, my wife some of my aquaintences have had problems with non-government insurers. Almost all of us have had problems with our prescription drug insures. In order to get drug coverage passed through the U.S. Senate, Democrats yielded to Republicans insistence that government not be the insurer. Republicans’ also insisted government not negotiate for lesser priced prescription drugs.

Due to privatized prescription drug coverage:
* Government’s Medicare expenditures for drugs are greater than other wise.
* Patient’s insurance coverage and quality of service are of lesser benefit to Medicare clients.
* Doctors and the federal government’s Center for Medical Services have additional expense for overturning private insurer’s denial of a particular prescription; insures too often believe they save themselves money by substituting their judgment for that of our doctors.
* Insurer’s have a vested interest to deny us our medicine. Doctors have professional interest to properly prescribe but gain nothing from prescribing more expensive drugs. It’s more detrimental when insurers’ interventions are detrimental to patients’ health.

Respectfully, Supposn

[fj1200]

FJ1200, employees’ directly pay 6.2% of their gross wages and salaries for Social Security. The proportion of prices due to 6.2% 0f payrolls passed on by employers is dependent upon the portion of labor imbedded within those prices.

[If prices due to labor are 1/3 of wage earners’ purchases, than wage earning families are paying 8.26% of their earnings for social security; if f the portion of prices is 45%, than wage earning families are paying 8.99% of their earnings for social security].

Congratulations on doing math.


Wage earning families are among the lowest income earning segments of our populations. That same rate is applicable to families that cannot afford medical insurance. Although it’s preferable that wage earners fund their entire Social Security retirement annuities, it’s both financially and politically unfeasible to require they do so. Social Security retirement annuities are of significant benefit to our entire economy, only wage and salary incomes are taxed and the amounts of those taxes are capped. Certainly wage earners are not as you describe “insulated from the responsibility of their own retirement”.

Of course they're insulated, why do you think there's a distinct and separate "employer portion"? So you don't know that it's being paid into SS and kept from you which is evident because you left it out of your "math" above. And by insulated I mean that you are no longer responsible for your own retirement savings, the government is.

It seems to me your exercise in this thread is either pointless because it just represents a tax shifting or it's a backdoor method of eliminating the cap on SS contributions.


Historically lacking a federal retirement program, (despite historically shorter life spans) were severe hardships. If Social Security, (SS) is terminated, the additional extent of USA’s population segments driven into poverty would be economically and socially disastrous. Many SS retirees had physically demanding jobs and/or are unable to earn a living. State and county public assistance programs couldn’t replace SS. Those who contend that Social Security is detrimental to our economy do not appreciate the alternative economic devastation if it were terminated.

Respectfully, Supposn

It is detrimental because of removing responsibility from individuals, creating regressive taxation, and removing dollars from the private sector and shifting it to an inefficient government sector. This last point was part of the failure of the New Deal to actually end the Great Depression and only served to extend it.

Besides there is no movement to end SS in any meaningful way but there are ideas that would begin to mend its shortcomings but they are fought tooth and nail. Anything that would inject responsibility, or reality for that matter, into its recipients is anathema to the left.

[fj1200]

FJ1200, I have not read “that intervention into the private health care market, including but not limited to Medicare's massive influence, has led to an inefficient delivery method and instances where people have no connection to what it costs to deliver health care vs. the choices that they make”; thank you asking.

You should do some research.


...

Due to privatized prescription drug coverage:
* Government’s Medicare expenditures for drugs are greater than other wise.
* Patient’s insurance coverage and quality of service are of lesser benefit to Medicare clients.
* Doctors and the federal government’s Center for Medical Services have additional expense for overturning private insurer’s denial of a particular prescription; insures too often believe they save themselves money by substituting their judgment for that of our doctors.
* Insurer’s have a vested interest to deny us our medicine. Doctors have professional interest to properly prescribe but gain nothing from prescribing more expensive drugs. It’s more detrimental when insurers’ interventions are detrimental to patients’ health.

Respectfully, Supposn

Congratulations on accepting the government teat.