Cong. Sanford's Response to Arsinow
- Date: Thu, 3 Jun 1999 16:47:51 -0400 (EDT)
- From: National Dialogue Moderator <moderator>
- Subject: Cong. Sanford's Response to Arsinow
- Contributor: PANELIST: Rep. Mark Sanford
Cong. Sanford's Responses to Richard Arsinow's 2nd Question(s)
Thank you for your responses, Rep. Sanford. I have just a
few followup questions, after reading your answers:
*The additional after-tax contributions and their earnings,
like Roth IRAs, are completely tax-free at withdrawal. But
aren't you adding a new income tax on lower-income recipients
and taxing the employee FICA portion twice? As under current
law, employee FICA is not deductible. Under current law,
Social Security benefits are 50% taxable when provisional
income rises above a certain threshold, and 85% taxable
once a second threshold is passed. For low-income recipients,
though, they are not taxable. Proceeds from the PRAs would
replace a portion of Social Security benefits. Shouldn't
they receive the same tax treatment as the Social Security
benefits they replace? At least, the principal amounts
obtained from after-tax FICA should not be taxed again.
CONG. SANFORD'S RESPONSE: Mr. Arsinow, as I said before, distributions from
the accounts of amounts attributable to the rebates would be treated as
Social Security income. This would create identical tax treatment for rebate
amounts and earnings on those rebates compared to Social Security benefits.
*My question about inheritability referred not to PRAs but
to Social Security benefits. I assume that the present
value of the future benefit stream could be calculated at
the time of death, in the same way that a value is calculated
at normal retirement under your plan.
CONG. SANFORD'S RESPONSE: The present value of expected Social Security
benefits is calculated at the time of retirement. If someone dies before
retirement, then the present value calculation (of survivors' benefits) is
done at that time.
*Are you saying that if your plan is adopted it will not
be necessary to dip into the trust fund in 2014 or 2015,
or ever, to help fund boomers' retirement benefits?
CONG. SANFORD'S RESPONSE: The cash surplus of Social Security will be
extended to around 2022, and the operating surplus (cash, plus interest owed
to Social Security) would be extended indefinitely.
Thanks for your interest and questions.
Congressman Mark Sanford