>>>>I certainly do not imply that seniors would want to exchange the present oppressively high marginal rate for a tax on 85% of all SS benefits. Seniors want the tax on SS benefits repealed! That is why the paragraph you quoted was followed immediately by the mention of the two bills which would repeal the tax.
>Exactly. But your argument (high marginal rates) is not an argument against taxing SS benefits, only an argument against a 'means-tested' tax benefit, which produces those high marginal rates as it is phased out. And I also pointed out that those seniors in that high marginal rate bracket would probably be opposed to merely eliminating that 'means tested' break, which they partially benefit from.
>>>>Are you saying that the assumption was that every dollar of benefits at some point in the 80s was financed by 15 cents from current employer contributions, 35 cents from earnings on employer contributions, 15 cents from current employee contributions and 35 cents from earnings on employee contributions? In other words, the trust fund was paying out 70 cents for every 30 cents it was taking in? At that rate the system would have gone bankrupt long ago.
>>>>Or are you saying that, looking strictly on a return of employee contributions basis, that 15% represents a return of lifetime employee contributions and 85% represents employer contributions and earnings which ought to be taxed?
Obviously the latter. Have no idea why you would assume the first.
>>>>This board is full of postings lamenting how the earnings on employee contributions are plummeting as the years go on. By the time many of today's $72,600 earners retire, not in 100 years could they recoup their lifetime employee contributions. 100% of their benefits will be return of lifetime employee contributions, with no earnings or return of employer portion, and it will not be close to being enough to recoup all of their employee contributions. If this were the assumption, certainly the percentage representing return of employee contributions has increased significantly by now and a tax on 85% is surely not justified.
I am not 'justifying' the 85% figure, I was merely answering your question as to where it came from. Indeed, it would probably be possible to allow each person SS tax exemptions based on after tax 'contributions'. The SSA already keeps track of those FICA taxes paid, and could merely add another field to track deductions taken on income tax returns. Whether people would want another such complication to income taxes is another matter. And, obviously, it would greatly reduce the govt's take from the SS tax.
