A reader asks: You recommend raising the taxable wage cap. What would be the effect on the maximum benefit? Could the benefit be frozen?
The taxable earnings base is a cap on both taxes and benefits. Therefore, if we remove the the cap, both taxes and benefits would increase (but only for people earning more than $106,800). According to the Congressional Research Service, this change would eliminate 95 percent of the projected 75-year shortfall in the Social Security Trust Fund.
Yes, we can “freeze” the benefit. We can keep the cap on benefits but eliminate it on taxes, resulting in a tax increase for people earning more than $106,800 with no compensating increase in their benefits. According to the CRS, this change would eliminate 115 percent of the projected 75-year shortfall. Continue reading “Reader Requests: How Does This Taxable Wage Cap Work, Exactly?”
In 1935, when Congress created Social Security, over half of American senior citizens lived in poverty. Today, less than 10 percent of the elderly live in poverty. According to economists Gary Engelhardt and Jonathan Gruber, a $1,000 increase in Social Security benefits reduces elderly poverty by 2 to 3 percentage points.
Americans need those checks now more than ever. Since the end of World War II, it’s never been harder to save for retirement. Jobs are disappearing. Wages are barely keeping up with inflation. Education and health care costs are soaring. Pension plans are becoming a thing of the past.
So it’s not hard to understand why 34 percent of Americans have nothing saved for retirement. Nor is it surprising that 54 percent of retirees say Social Security is a major source of their income — especially because 401(k) accounts only average $98,000, which amounts to $600 per month in retirement, well below the poverty line.
But Social Security is hardly a windfall.
The average retiree will earn $14,124 from the government this year. The poverty line is $10,830. Of the 30 industrialized nations, 24 are more generous to their retirees than the U.S.
And your leaders want to reduce Social Security benefits. Continue reading “Social Security Isn’t Lying to You. But Rick Perry Is.”
When Professor Mishra and I debated the Bush tax cuts a few weeks ago, we agreed to limit the debate to income taxes, but the Professor went a bit off-topic. He spent half his op-ed talking about corporate taxes, and I didn’t get a chance to respond.
First, let’s see what I’m responding to:
A high corporate tax rate moves jobs overseas. Currently American companies are sitting on more than $2 trillion of cash overseas, which is used for hiring and investments in foreign operations.
The United States has the second highest corporate tax rate in the world. Two things we must do to spur job growth and expand the taxpayer base in the America: Cut the corporate tax rate from 35 percent to 20 percent, the median tax rate for the developed countries, and eliminate the taxes on repatriation of foreign earnings.
Wow. Every sentence there is either wrong or very misleading. Continue reading “Chandra Mishra Rides Astride a Trojan Horse”