It seems as though the predominance of younger, angry, and downright hostile posters are the ones who want to "take it away" from current retirees, not the Government. I wonder what the impact would be on SS solvency if ALL IRA's, 401k's, and Roth IRS's were to be immediately discontinued as tax advantaged vehicles, taxes on all accumulations were to become due immediately, and the resultant revenues used to bolster SS.
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The impact on solvency would be negligible even if a 100% tax were applied. The unfunded liabilit of those age 65 and over is over $3 Trillion. Add in those age 62 and over and it climbs to $3.9 Trillion. Add those over 55 and it climbes to $5.7 Trillion. Keep in mind the unfunded liability based on earned benefits (OASI benefit formula) is over $10 Trillion!
Yes, people might get mad if you taxed all IRA,'s Roth IRA's and 401-k's. However, Keep in mind that not only do current workers pay a much higher FICA rate, they pay it on a higher base and also pay Federal Income Taxes.
It would have been far better to pay a 2% FICA tax on my income and never have initiated IRA's, 401-K's or the like. Why do I say this? First for many, they would pay no federal tax at all on their income, but do pay FICA. They would be winners. Second, I would much rather pay a capital gains tax than a combined FICA (wages) and Federal Income tax on tax deferred income at retirement.
Your analogy just does not hold water. The simple fact is current and previous retirees never paid enough FICA tax. They paid a low 3-4% FICA rate, got the benefit of reporting 40% of capital gains as income and paying a tax rate of 8 to 15% on this reported amount, resulted in an overall tax of 3 to 6%!!! this is far lower than the 10% and 20% on longer term gains now and the employee 7.65% payroll tax! Do not forget that this was a great way to save, far better than today's IRA and 401-K.
When the FICA tax was finally raised, retirees got a huge windfall (they got their benefits while paying little for them) and we the workers were screwed and continue to be screwed. Not only are the current retirees leaving us with a $10 Trillion unfunded OASI program, but a bankrupt Medicare as well as Disability program. On top of this they are handing us a $5.4 Trillin national Debt!! Maybe now you can understand our anger at the current retirees way they have handled the finances of the United States.
Diverting 2% to private accounts sound great. I am all for it since I will never see a penny of OASI when I retire. Since they can only pay 50 to 60% of projected benefits, it means most likely those with any amount of savings will be means tested out of their OASI projected benefits. Therefore, any amount I can keep out of the OASI's coffin is gravy.
