Issues you and I should argue about . . .

I’ll never get anyone to bother with this site if I spend all my time agreeing with people, so here’s a list of topics that you and I probably disagree about, if you’re a conservative or libertarian:

  • the US military
  • religion
  • taxes
  • free enterprise
  • global warming/climate change
  • resource use
  • the end of civilization/end of the world
  • Sarah Palin

We should hash out our differences. Wanna start?

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9 Responses to Issues you and I should argue about . . .

  1. Old School Grump says:

    Check out the article in the August 16-23 New Yorker by (regular columnist) James Surowiecki: “Soak the very, very rich.” It makes a lot of sense. (I’d make a link, but I’m too inept.) As it stands now, someone who makes $200,000 per year pays income taxes at pretty much the same rate as someone making $200 million a year! However, I’ve often heard that even if the top one percent had confiscatory tax rates, it wouldn’t be anywhere near enough; the deficit beast needs tribute from many, many, many middle class members to be sated. True or false, do you know? Also, I keep hearing that about 50% of Americans pay zero income tax! True or false? If true, why do they deserve this?

    [LLS note: Here’s the New Yorker article.]

    • I think the very rich should pay their share, and more than their share (for reasons I can explain), but I don’t think that soaking them would “be anywhere near enough,” as you say, to make up the deficit. So everybody has to chip in. Yes, tax increases for all but the poorest people.

      And . . . we’ve got to give up some of our “entitlements.” This is definitely NOT liberal dogma, but I’m trying to be a reasonable liberal (oxymoron?) here, as elsewhere. We’ve got to work a few years longer, and maybe work part-time or almost-free after we retire. We’ve got to cut back on our medical “needs.” We’ve got to live more simply and frugally.

      Who the heck wants to hear such things? Tough! It’s way past time to face reality.

    • Ray Harris says:

      It is true that most of the lower 50% of Americans pay zero income tax. In fact many of our working poor receive a refundable credit called EIC (earned income credit) that can amount to several thousand dollars. Only those between age 25 and 65 are eligible unless they have children, in which case under 25 no longer matters. One child rates additional credit, and two children qualify them for maximum benefits. The 3rd child is a waste of support, so some fertile and creative types loan additional kids out to other working poor family members who have none.

      Please note that paying no income taxes does not mean paying no social security, Medicare taxes, or self-employment taxes.

  2. Old School Grump says:

    Speaking of entitlements, as you were in your second paragraph, I was watching something on CNBC late in the morning today — hey, heat index of 108 degrees outside, I ain’t goin’ nowhere — and someone from Treasury (I think) was advocating for “the wealthy” to be subject to Social Security payout means testing, and have their benefits reduced (or eliminated?) accordingly. What say you, LLS?

    Myself, the tepid liberal, I am horrified at the possibility. I can support raising the amount of income that is subject to SS taxes (actually, for years I have been amazed at how low it is), and delaying the age of eligibility (remember, when the age was set at 65, the average American life expectancy was 63), but subjecting the benefits payout to means testing is an entirely different proposition. Social Security, as worrisome as it may be, is part of The Fabric of American Life As We Know It. It is something we all have in common. Subject it to means testing, and –voilĂ – you have transformed invaluable social glue into a contentious tax-payment-and-welfare-payout proposition. Not a good idea!

    • In your second paragraph, you say you “can support raising the amount of income that is subject to SS taxes.” But if the income limit is to be raised, doesn’t that mean that higher-income folks would have the right to demand more than the standard level of benefits? The reason there’s a cutoff point–at what? approximately $110K per year?–is that money held out from the additional income would never be recouped by the earner. In other words, without a limit, a high-income person would pay lots more into the system without a chance to get more back later. Pure donation after a point. The question then is whether Social Security should be yet another way of “gouging the rich.”

      As far as means testing is concerned, isn’t that the same thing? The rich pay in but don’t get anything back? Why would you support one of these ideas and not the other, if you see Social Security as “part of The Fabric of American Life As We Know It” that mustn’t be tampered with?

      I think the answer is that we all have to expect less from SS. I should add that the prospect of tampering with the details, of gouging the rich to some extent, does not horrify me the way it does you.

    • Ray Harris says:

      To a degree we already have means testing. If your taxable income in addition to Social Security is above a certain level ($30,000 or so…it keeps changing) then up to 85% of your Social Security income can be taxable. It does not necessarily mean you will actually pay any income tax since your adjusted gross income (AGI) is reduced by schedule A, or the standard deduction and by personal exemptions and other credits. Personally I favor gradually raising the amount of earned income subjects to the Social Security tax. I would suggest it should increase incrementally until it reaches $250,000. Persons earning more than that amount most likely have investments and other earnings that render any Social Security check less important than those earning substantially less.

  3. Ray said: “Personally I favor gradually raising the amount of earned income subjects to the Social Security tax. I would suggest it should increase incrementally until it reaches $250,000.”

    My question: What do you then do about paying benefits? Do the people who then would have more money withheld be able to receive higher benefits? If not, they’d be “donating” to the others. That’d be okay with bleeding-heart me, but you’d hear a great fuss from the donors. . . . And if the higher-income donors WERE to receive larger benefits, how would that help the basic problem?

    This isn’t my area of expertise, obviously. I’m just asking for clarification.

    • Ray Harris says:

      Yes, the more one pays into Soc Sec the more one gets once he begins receiving benefits. The max should and will the adjusted upward as the taxable amount increases. And unless the rules are changed, no more than 85% of total Soc Sec benefits are added into his AGI. This is more than fair, since once you retire and receive most other annuity or pension, generally the whole amount is added into your AGI (exception: if you paid into the retirement fund, generally the amount you paid in will be subtracted from taxable income on an amortized scale until your contributions are expended and then the whole amount is added to the AGI…hey, it’s complicated. That’s why you pay guys like me to do your taxes.)

      Critics argue that Soc Sec is a ponzi scheme. Wrong. It can be better described as reversed term life insurance. If you die before you are eligible, the money remains in the pool. Except if you live, you get the payout, not a beneficiary. Personally I think it’s pretty neat. Incidentally, if you buy a private annuity, it works very much the same way. (Caution: Soc Sec good, private annuity bad.)

  4. Old School Grump says:

    As feeble as my understanding of the math of SS is, I know it has never been a direct put-a-dollar-in, get-a-dollar-plus-interest-out proposition. In fact, now that the average life expectancy is far beyond 63 (I wasn’t making it up when I noted that that was the average life expectancy when the start date was set at age 65), many people get FAR more than what they and their employers put in, even when a suitable rate of interest is imputed and the amount is scaled up for inflation. To those who righteously lay claim to “what I put in and am therefore rightfully entitled to get back,” I would like to say “fair enough, you got it, don’t come crying to me when your money runs out at age 72.”

    Naah, I don’t really want that to happen. A society that yanks the rug out from under retired people of moderate means that way is not my goal. Still, I don’t think it’s right to call it “Social Security” if the payout depends on means testing. Better to increase the amount of income that is subject to SS without raising the payout exactly accordingly. This is a very vaguely-formed suggested remedy, I know. But I do think it matters psychologically–a lot–to adjust the pay-in side instead of the pay-out side, even if the $ actually is the same in the end. When I talked about SS being part of the fabric of American life, I wasn’t being cute. Collectively we (in the broadest sense of we) have nothing to gain and a lot to lose by putting SS into political play.

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