Republicans warming to Social Security tax hikes: Sen. Bernie Moreno, Rep. Tom Cole, Rep. Lloyd K. Smucker, Sen. Mike Crapo

As Social Security fund runs dry, some Republicans say it’s time to raise taxes

... But Cole, at least, said he thinks the political blowback from Social Security benefit cuts would be far worse than a comprehensive solution that includes raising taxes. 

“I love Grover [Norquist]. But … you’ve got to deal with Social Security,” Cole said. “And believe me, you’ll have a lot bigger problem if it goes bankrupt than you’ll have keeping it whole, because people will feel cheated.” ...                                         

 

Tom Cole is right. Just fix the damn thing.

A person who has contributed the maximum every year since 1983 has accumulated about $475,000 including the employer match. At a current maximum monthly benefit draw of about $5.1k, that sum is exhausted in just under eight years, if he lives that long.

The wage cap for Social Security taxes paid by such a person has not been pegged to inflation. It's been higher than that. Had it been pegged only to inflation since 1983, Social Security taxes today would top out at $120k of wages instead of $184,500.

The wage cap tracks the national average wage index. And Medicare taxes are not capped at all and capture all income.

If it's true that the intent of indexing to the national average wage index was to capture 90% of all aggregated U.S. earnings, a future fix should include an increase to the wage cap to close the gap which has developed. Today's cap captures only 83% of aggregated income.

In other words, the wage cap, even though it rose much higher than the rate of inflation since 1983, still did not rise high enough.

We should fix that and move the wage cap higher as indicated, but we should not remove the wage cap entirely, which would sever the connection between contributions and benefits. That means raising the wage cap to $300,000 and creating a mechanism for automatic increases to maintain the 90% standard.  

That would be in addition to raising the retirement age gradually from 67 to 69, and immediately raising the payroll tax to 7.2% from 6.2%.

Just do it. 

Imagine sitting in the dark to save on electricity when you make $115k

 Reported here:

... The effort to keep up with higher prices feels relentless to Teri Kopp, who lives in Southbury, Conn., and works as an administrator at a synagogue. “I’m tired,” she said.

Kopp and her husband Bill, an HVAC technician, earn a combined $115,000 a year. They often sit in the dark with only strings of LED lights on to save on electric costs. She is considering painting rocks to send to friends as Christmas gifts. Their biggest vacation this year, a road trip to Maine, was mostly covered by cash back from a shopping-rewards program.

Kopp, 59 years old, doesn’t see any way to quickly pay off the $15,000 in credit-card debt the family took on largely to cover medical bills for knee surgeries. She also has $30,000 in debt from her daughter’s undergraduate degree in biology, which has yet to yield any job offers in a tough labor market for new graduates.

Kopp voted for Trump last November in part because she wasn’t happy with how Biden handled the economy. She approves of the job Trump is doing but is skeptical that it will lead to any relief on costs soon. “I think Trump has a hard nut to crack to bring all this stuff down,” she said. ...

Do the two Rachels at the Wall Street Journal who write this sob story about the middle class "buckling" realize that about half the country makes $45k or less? What about those people? Well, they don't read the Journal anyway, right?

You have to be in the 64th percentile to be like Teri and Bill, the high end of the middle 33-66%. 

 

Earning $100k ain't what it used to be: It used to be a more exclusive club

 In 2023 earning $100k made you top 15% of wage earners, but in 2018 it made you top 10%.

$125k is the new top 10%.

 

2018

2023

 

 

This negative jobs growth trend should have everyone up in arms, but instead we shrug, retreat, and self-medicate

 What has any politician done for you and your kids in 20 years?

Job creation under Trump in 2019 using W-2 payroll data actually looks pretty crappy based on the most recent figures out in October: The worst in eight years

 

Paid family leave for federal government's already Affluent White Female Liberals (AWFLs) likely to cost taxpayers $6 billion over ten years

Some Democratic aides think the proposed federal benefits package would cost about $3 billion, though there is disagreement about whether those costs would span five or 10 years. The expansion would give federal employees a rare victory after the Trump administration has sought to cut their benefits for three years. Many of them also endured the longest-ever government shutdown under the current administration roughly one year ago.

Story.

Your average US federal worker in 2017 already made $80,000 a year, 67% more than the raw average US wage of $48,000 in 2017.

But no, they need more money to stay home with baby.

The rising share of workers not making the average wage

Note that under Bill Clinton, many important things happened which were detrimental to the middle class:

Bill Clinton raised taxes shortly after taking office in 1993 even though he had run promising not to.

Part-time employment soared as a result. 

Borrowing from home equity lines also soared as the middle class struggled to maintain its lifestyle in the wake of the recent recession, reducing "owners' equity in real estate" dramatically.

And, of course, the percentage of Americans not making the raw average wage ballooned by 2.6 points under Clinton, and by 4.1 points total by 2018.  

The difference between a payroll population not making the raw average wage in 2018 at 63.3% vs. 67.4% is 6.87 million.

That's roughly equivalent to the number of homes lost to foreclosure in the housing debacle, which bottomed in the spring of 2012. The share not making the average wage first hit 67% that same year.

This history since 1990 is a picture of the middle class under pressure and actually shrinking.

The only good thing that can be said about it is that the trend is flat since 2015, not worsening.

MIT's living wage calculator is a joke

Living Wage Calculator

For my location and our family size we have been getting by on at least 1/3 less than the calculator says we need, and we have been doing it FOR YEARS on end.

The reality is about 65% of individual wage earners in this country make less than the calculator says our family must make in order to get by, which must mean a lot of people are in the same boat as we are.

W-2 payroll data for 2017 just out shows huge slowdown to monthly additions from 2016

Monthly additions dropped from 227,000 (revised up 4,000) in 2016 to 160,000 in 2017 (figures rounded to the nearest thousand).

There were a number of other revisions to the data in this series of more minor significance (incorporated).

Total nonfarm December 2017 on December 2016 was up 182,000 monthly. The civilian employment level was up 149,000 monthly.

How to tax the rich and only the rich as originally intended in 1913, and solve a lot of problems

In 1913 when the average Joe made about $800 a year, the first income tax under the 16th Amendment didn't worry him because he didn't pay it and probably thought he never would. The personal exemption for a married couple in the original tax code was $4,000.

Today that $4,000 personal exemption adjusted for inflation using the Consumer Price Index amounts to about $100,000.

Even in 2016 that kind of income is made by fewer than 10% of individual wage earners. Under the original income tax of 1913, 90% today wouldn't have to worry about paying the dreaded income tax either.

Is there a way to return to this golden age of taxation?

I'm here to tell you that I think so, and I say that as a conservative. We could easily simplify the tax code by returning to the status quo which prevailed before the First World War, pay all the bills, abolish Social Security and Medicare taxes, the corporate income tax and all the other little irritating taxes and reduce income inequality in the process. We'd also save a lot of time and money wasted in complying with the tax code's myriad baroque features.

Here's the math.

In 2016 according to the Bureau of Economic Analysis personal income in the United States was $15.9287 trillion.

Social Security's Office of the Chief Actuary tells us that in 2016 there were 163.5 million individual wage earners. If you exempt the first $100,000 of everybody's individual wage income in 2016, including from the rich, you're talking about $6.213 trillion of individual wage income which would be tax-free.

That leaves $9.7157 trillion of personal income left in 2016 to tax, to pay all the bills.

According to The Tax Policy Center, the bills were the total estimated federal outlays of $3.9513 trillion in 2016.

So, the tax is 40.67% (9.7157 X .4067 = 3.9513) on all personal income in excess of $100,000 a year, no itemized deductions, no credits of any kind (this is where they all came from in the first place, because the rich pissed, moaned and complained and bribed the politicians to carve out privileges for them to escape paying).

The rich, all 14.9 million of them, will still have $7.2544 trillion to play with ($1.49 trillion from their first $100K tax-free, just like everybody else, and $5.7644 trillion left over after taxes from the income in excess of $100K).

The rest of us, 148.6 million, won't pay any federal income tax, Social Security or Medicare tax, gasoline tax, or any other kind of federal tax on our $4.723 trillion. The only taxes we'll have to pay will be State and Local Income Taxes, property taxes, sales taxes and the like. Of course rich people will have to pay those too, but that's a problem for all of us and for a different level of politics.

I summarize:

$15.9287 trillion personal income 2016 (BEA)

-  3.9513 trillion federal taxes, all from those making $100,000+ per year @40.67%

-  7.2544 trillion left over for the 14.9 million making $100,000+ per year (top 10%)

-  4.7230 trillion left over for the 148.6 million making less than $100,000 per year (bottom 90%)

___________________________________________________________________

0

And the budget balances.   

America's three middle classes accounted for 56.5% of total 2016 net compensation of $7.627 trillion

The lower classes accounted for only 13.6% of the total net compensation in 2016 and the upper classes for 29.9%.

The three middle classes are composed of almost 74 million individual wage earners in 2016, representing 45.1% of the total 163.5 million receiving W-2s in 2016. There are about 40 million individual wage earners in the lower middle class, about 22 million in the middle middle class, and about 11 million in the upper middle class.

Just over 80 million individual wage earners, about 49.3% of the total, made less than middle class incomes in 2016, that is, less than $30,000 annually.

Just over 9 million individuals made upper class incomes, that is, above $125,000 annually.

The upper class is just 5.6% of the total work force but makes almost $2.3 trillion of the net compensation.

The tax farmers eye the middle income classes because that's where the bulk of the money is to be harvested, about $4.3 trillion in 2016.

The lower classes, again almost half of the wage earners, account for only just over $1 trillion of the net compensation in 2016.

W-2 data isn't the whole story of income in the United States but is probably the most accurate snapshot indicating what's what and who's who for the "Why me, Lord?" question those who struggle for the legal tender ask themselves every April 15 or thereabouts.

Job creation in 2016 is the closest we've come to "robust" since the year 2000

The W-2 data clearly show that the vast majority of the job losses during the crisis occurred under Obama, not Bush

Krauthammer thinks Trump might go for single payer in the end, in which case Americans should get it, good and hard

Think of it as socialism with Republican characteristics.

Krauthammer, here:

Obamacare may turn out to be unworkable, indeed doomed, but it is having a profound effect on the zeitgeist: It is universalizing the idea of universal coverage.

Acceptance of its major premise — that no one be denied health care — is more widespread than ever. Even House Speaker Paul Ryan avers that “our goal is to give every American access to quality, affordable health care,” making universality an essential premise of his own reform. And look at how sensitive and defensive Republicans have been about the possibility of people losing coverage in any Obamacare repeal. ...

As Obamacare continues to unravel, it won’t take much for Democrats to abandon that Rube Goldberg wreckage and go for the simplicity and the universality of Medicare-for-all.

Simplicity? Draco's laws were simple. The penalty for every crime was death.

I wonder if Krauthammer has a clue what he's talking about.

Total Medicare outlays in 2015 came to $632 billion.

Total Medicaid outlays in 2015 came to $552 billion country wide (read the Notes).

Total Social Security and Disability outlays in 2015 came to $897.1 billion.

That is a total of $2.0811 trillion from 2015 total net compensation of $7.4158 trillion, or 28%, without even talking about "universal coverage" yet.

Yet all your typical American pays now for this is 10.63%:

6.2% in Social Security tax and 1.45% for Medicare, plus whatever taxes are paid at the state and local level toward Medicaid, which federal law mandates must account for at least 40% of program revenues. So $221 billion from 160.8 million wage earners across the country in 2015 represents another 2.98% paid by them at the state level.

The status quo therefore is funded only 38% by its beneficiaries, at best. I say "at best" because many beneficiaries pay NOTHING because they don't work and never have. But I digress.

So bring about Krauthammer's revolution, for that is what he's talking about, and reset the table as follows.

Total healthcare outlays in the United States in 2015 came to $3.2 trillion. Add in $897.1 billion for Social Security and Disability, and you now have a "universal" obligation bloated to $4.097 trillion, which represents 55% of net compensation that year.

That's your tax.

You've become France, Germany, Denmark or some other Western European paradise which depends on the United States for its defense.

And that's before even talking about funding the $1.2 trillion part of the federal budget which is discretionary, like defending ourselves against that little fat kid playing with hydrogen bombs in North Korea.

Of course there's another chunk of money out there being made in the United States apart from net compensation, about $8 trillion in 2015. The recipients of this income typically pay the lower capital gains tax rates, not the payroll and income tax rates which are for the chumps.

It's a nice little system which isn't paying its fair share for socialism in the United States, even though it is rich guys who typically shout the loudest on behalf of it. They do this because they know it will keep the little guy down, from whom they don't want the competition some day. But tax that system equally to net compensation and you cut that 55% tax in half, to say 27.5%. That, however, means a big fat tax increase on the rich, and on everybody else. I doubt they'll stand for that any more than they open their checkbooks now to make patriotic voluntary donations to the US Treasury.

We live in a fantasy land where no one wants to pay what it costs for anything.

We think we can have our cake and eat it too.

We want infrastructure spending, and a tax cut dammit.

Bush W-2 employment 2004-07 narrowly beats Obama's 2011-14

Bush gains in W-2 employment:

2004 1.7 million

2005 2.2 million

2006 2.3 million

2007 1.7 million

total  7.9 million

Obama gains in W-2 employment:

2011 1.0 million

2012 2.2 million

2013 2.2 million

2014 2.4 million

total  7.8 million

The first six years of Bush:    5.8 million

The first six years of Obama: 2.8 million

The rising share of US workers not making the average wage 1990-2013

The raw average of net compensation for Social Security purposes has risen 113% since 1990, from $20,172 in 1990 to $43,041 in 2013.

The share of workers not earning as much as the raw average of net compensation has risen 6% over the period, from 63% of workers in 1990 to 66.9% in 2013.

In 1990 there were 127.5 million wage earners, 63% of whom made less than $20,172. If 63% of workers in 2013 didn't make as much as the average wage of $43,041 instead of the actual 66.9%, they would have numbered 98.1 million in 2013. Instead they numbered 104.2 million. 

The workforce recession is "over": Social Security wage earners finally surpass the 2007 peak in 2013

The wage statistics report for 2013 from Social Security came out today and shows that the number of workers for Social Security purposes has finally in 2013 exceeded the level first reached in 2007, after bottoming out in 2010. The level in 2013 is not up by much since 2007, but 200,000 workers is 200,000 workers. Unfortunately, however, the population level is up far more than that over the period . . . by 15 million net. And more people regrettably are also making less than the raw average shown. Between 2007 and 2013 these have increased from 66.6% of workers to 66.9%.

2007: 155.57 million workers/net compensation $6.03 trillion = $38,760 per worker

2008: 155.43 million workers/net compensation $6.16 trillion = $39,631 per worker

2009: 150.91 million workers/net compensation $5.89 trillion = $39,029 per worker

2010: 150.39 million workers/net compensation $6.00 trillion = $39,896 per worker

2011: 151.38 million workers/net compensation $6.23 trillion = $41,154 per worker

2012: 153.63 million workers/net compensation $6.52 trillion = $42,439 per worker

2013: 155.77 million workers/net compensation $6.70 trillion = $43,012 per worker

The Number Of Wage Earners Is In The 5th Year Of Depression, Still 1.95 Million Fewer In 2012 Than In 2007

The jobs depression is now 5.67 years in length.

The number of wage earners counted by the Social Security Administration reached a peak in 2007 at 155.57 million, and the long-awaited number for 2012 is just out here in the last couple of days: 153.63 million.

2012 marks the fifth consecutive year we have fallen under the 2007 record high for the number of employees earning income subject to Social Security taxation.

The 2012 figure is just under the 2006 figure of 153.85 million wage earners, so you might say things were closer to 2005 levels in 2012 than to 2006.

The Workforce Depression Of 2007 Remains 4.19 Million In The Hole According To Social Security

The size of the workforce earning wages for Social Security purposes went into multi-year depressions since 1990 three times: 1990, 2001 and 2007.

The 1990 depression saw the workforce shrink by 1% and not recover in size until the third following year.

The 2001 depression saw the workforce shrink by 0.4% and not recover in size until the third following year.

The 2007 depression saw the workforce shrink by 3.3% and as of 2011 still has not recovered, four years later. The depression in workers through 2011 is 4.19 million, and since the bottom in 2010 982,000 workers have been added through 2011. 2012 figures will be available in mid-October 2013.

The depression in jobs designated "usually full-time" is 5.35 million, 4.3% below its 2007 peak. 

TNR Notices Obama's Recovery Benefitted Only Elites

Well, what else would you expect from a national socialist? (Obama silly, not TNR).

Tim Noah, here:

"The biggest gainers in 2011 were the bottom half of the top one percent, i.e., those making between $358,000 and $545,000. They saw their incomes increase, on average, by 1.70 percent (not much to write home about, but you've got to put a weak recovery somewhere)."

Fewer than 1 million Americans earned net compensation for Social Security purposes in that range in 2011.

Rush Limbaugh Adopts The Class Warfare Of Obama/The Wall Street Journal

Today, here:

The middle class still is, in an aggregate sense, where all the money in the country is. That's where all the money is in the economy. The rich do not hold all the money.

This is the voice of a very rich man who is under attack by a leftist president and a leftist consensus which says that the rich do not pay their fair share, the voice of a man who is not reasoning as a conservative but emoting as a rich man. If he reasoned as a conservative, if The Wall Street Journal reasoned as conservatives, we would be seeing something other than the suggestion that the leftists go victimize the middle class. Like the bank robber, this thinking, if it can be called thinking at all, maintains that you should tax the middle class because that's where the money is.

As such what Rush says is not conservative, but purely reactionary in the worst sense of the term: it responds to an historical development in which it finds itself the victim and seeks escape instead of statesmanship. This is what you get from a Rush Limbaugh, who abhors learning. You wouldn't get that from a William F. Buckley, Jr.

It goes without saying that it is absurd to suggest that all the money is in the middle, but apparently we must insist that it is not so.

The middle quintile of households made a median income of almost $50,000 in 2011. Generously speaking, this approximates to every single income in the country in 2011 making between $35,000 and $65,000 annually, 35 million workers, accounting for $1.7 trillion out of $6.2 trillion in net compensation, just 27% of the total pie. The bottom end of the richest quintile, on the other hand, begins somewhere just north of $100,000 annually, 10 million workers, accounting for $2.1 trillion out of $6.2 trillion in net compensation in 2011, significantly more at almost 34% of the total pie.

But this is no way for a conservative to look at it.

The founders of the country envisioned equality of contribution from taxation, which the original constitution required to be direct, apportioned according to population. This is why taxation was always very low, because the poor could not afford it. This is also why we have a census in the constitution, not so that we may learn how many Americans are of Italian descent, but simply how many there are, for tax purposes. If it is pleaded that the constitution has been changed to permit indirect taxation, it is still more originally American to insist on equality of treatment under the tax code. The real problem with America is that originalist principles were thrown under the bus in the early 20th century by progressives like Teddy Roosevelt, and enshrined in constitutional amendments under people like Woodrow Wilson.

Equality of treatment under the law is the principle conservatives should be trumpeting. But you will listen for that in vain from Rush Limbaugh.

The progressives like Wilson, a Presbyterian whose grandiose ideas bordered on the fanatical and are reminiscent of no one so much as George W. Bush, misused Christianity by insisting that "to whom much is given, much is required" in arguing for progressive taxation, and forgot that "no one can be my disciple who does not say goodbye to everything that he has". The actual price of Christian discipleship was everything you had, whether you were rich or poor. But in the secularized, immanentized bastard version of this under progressivism, the price became distorted so that the richer you were the more you owed, the poorer the less. It is little wonder that for that the rich demanded more, and eventually got it, in special rules in the tax code designed especially for them, which since that time have evolved into the elaborate distortions and complexities of the tax code we face with trepidation and consternation today.

In a very real sense when it comes to the tax code, The American Century has been the most un-American one of all, and the crying need of the time is to reverse it and refound the country anew on the original American principle of equality of treatment.