From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Subject: Re: Tax suggestion
Organization: Texas Instruments Inc
Distribution: tx
Date: Wed, 26 Aug 1992 16:03:42 GMT

In <PACO.92Aug25172650@legia.cs.rice.edu> paco@cs.rice.edu (Paul Havlak) writes:

>In article <1992Aug25.144328.4618@mksol.dseg.ti.com> mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
>>>	[Refers to plan for phasing out Social Security, continuing benefits 
>	for those who've already paid and providing for the feds buying out
>	people who want to stop SS withholding.]

>>>The net result will be that, in thirty years or so, the gov't will be out of 
>>>the retirement insurance/welfare business, which it shouldn't have gotten 
>>>into in the first place.

>>The biggest problem I see is where the money is supposed to come from.
>>Folks paying in now are not putting money aside for their own
>>retirements; they are funding the payment of benefits to those
>>receiving them now.  Where is the money to come from to do the
>>'payback', and at what market rates of interest would it be returned?
>>Where is the money going to come from to continue to pay benefits to
>>everyone currently drawing them (none of whom are going to quit --
>>that would be crazy)?

>    Well, where's the money coming from now?  From FICA taxes on the
>first $50k/year or so of earned income.  This is a regressive tax,
>hitting hardest on the young workers and poor workers.

Exactly right, but the proprosed plan ended that.  So, where would the
money for the 'payout' and to continue to pay benefits for current
recipients come from?  General revenues with no general tax increase?
Welcome to bankruptcy!

[Note that somewhere back there I proposed a plan that took this into
account.  However, those of us who have been paying in for the the
past 20 or so years simply lost the money (it was taxed away) and the
general tax rate (on ALL income, to deal with the regressive nature of
the current system) was raised and benefits for current recipients
paid out of the general revenues.

>    The 15 percent FICA tax (is it more?  half employer, half employee
>contributions) takes a big bite out of minimum wage salaries.  While a
>growing percentage of American workers are going without health
>insurance, the elderly (who are on the average better off) get
>non-needs tested Medicare and Social Security.

Yeah, so?  This still doesn't address where the money is supposed to
come from.  Have you perhaps assigned me some opinion that I don't
hold, and are now arguing with that?

>    We should let the poor and the young (well, everyone) off the FICA
>hook.  That will effectively raise the minimum wage *and* give
>employers a break, perhaps enough to justify requiring them to provide
>health insurance.

This isn't going to amount to much of an increase in the minimum wage.
7.5%.  Part of that 7.5% GOES to medical programs for various groups.
You would eliminate those, as well?

>    We should make up the federal revenue shortfall by an increase in
>the graduated income tax.  

You just took away that "break" you gave employers.  They're back to
paying in that 7.5% and then some, if you want a sharply progressive
income tax.  Still fair to require them to provide health insurance?

>Once we stop adding to future Social
>Security obligations, it's fairest to pay off the old ones (and that
>portion of the deficit being hidden by FICA taxes) through a
>progressive tax that hits everyone based on ability to pay, not just
>the wage-earners.

Well, eliminate this 'progressive' stuff, grandfather in people who
are so close to retirement that it's a bit late to expect them to
'fix' things when they were depending on SS, and add the availability
of a real govenrment annuity for those who choose to buy one, and you
have the plan I posted a little while ago.

>--paco

>P.S.  Despite not believing in Social Security, I remain a socialist
>at heart.  

I don't believe in SS *OR* socialism (at least not to the degree of
being "socialist at heart").  Your position seems to be that you want
the benefits but want someone else to pay.


-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
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Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.