From: todd.paulus%theweb@meaddata.com (Todd Paulus) 
Newsgroups: alt.fan.rush-limbaugh
Subject: Re: Tax Fairness
Date: 19 Aug 92 20:08:00 GMT
Distribution: world
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Reply-To: todd.paulus%theweb@meaddata.com (Todd Paulus) 

TO: alt.fan.rush-limbaugh,davoli@natinst.com


   .Subject: Re: Tax Fairness
   .Message-ID: <1992Aug18.182421.22114@natinst.com>
   .Date: Tue, 18 Aug 1992 18:24:21 GMT

RJD.In article <mykes.0c8l@amiga0.SF-Bay.ORG>, mykes@amiga0.SF-Bay.ORG (Mike Sch
   .z) writes:
   .>
   .> In article <1992Aug11.181719.24810@natinst.com> davoli@natinst.com (Russel
   . Davoli) writes:
   .> > It's also unclear to me if they are counting the Social Security withhol
   .> > as a tax.  It might as well be, and I think we ought to be trying to fin
   .> > way to phase it out.  Now that 401K and IRA plans are widely available,
   .> > needs the government to "save" our money for us?

The FICA and Medicare taxes are not part of the calculation that
determines the top rate of tax you must pay.  If the maximum tax rate is
33%, FICA and Medicare are in addition to that.

   .> I am not an accountant or legally trained, but I do believe that 401K plan
   .e
   .> limited to 10% of your income (a benefit to the rich, but less than FICA t
   .> the poor) and would hurt the less well off in the long run.  And I believe
   .t
   .> IRAs are no longer tax deductions (I may be wrong about this...).

401K's are limited to approx $7000 per year, as long as (complicated
formula, here) the compensation for the higher paid people in the
corporation does not exceed the total contributions for the 'lower' paid
in the company.  IRA's are still very much tax deductions.  There is a
bill before Congress to allow BOTH IRA's and 401K's.  The idea is to
make you and I more self sufficient when we retire, of course, so
Congress needs to encourage savings, investments, etc. that don't result
in burdens to the tax payer.

RJD.[and from earlier in the post...]
   .> In some respects, the FICA "tax" isn't a real tax - since people paying th
   .> tax get their money back with interest...  However, some of us won't be
   .> getting any Social Security because the fund will go broke (due to aging
   .> baby boomers making a run on the bank) in the first few decades of the
   .> 21st century.  FWIW, I KNOW I won't be getting any :)

I am not sure I agree with the 'money back with interest'.  It really is
an annuity type of investment that results in a theoretical net zero
benefit in future dollars.  That is, if you invest (through FICA) $10
today, when you retire and inflation has pushed the cost of goods and
services to an equivalent, say, $20, that you will get back from FICA
$20.  Not more (interest).


RJD.This is why I support substituting market alternative for the Social Securit
   .system.  For many of us young folks here on the net, SS is not going to be
   .there for us, so we need to start planning and saving now.  The 401K plans
   .and IRAs are not perfect, but I believe they are a step in the right directi

I agree, if for no other reason than 401K plans allow for investments
that can make more than the inflationary rates, and create real
benefits, as you say, better than with the FICA programs.  Typical gov't
"opportunities"!

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