Thursday, February 17, 2005

SocSec 'n' Such

By: Michael Akerman

News for social security: Bush is thinking about raising the cap on Social Security Taxable income. The current cap limits taxable income to all income under $90,000. This means, of course, that the percentage of income taxed is literally higher for the poor (generally, when a Democrat says taxes are higher for the poor, they're lying or mistaken). This is a bad thing.

Consider the math. For someone who makes $90,000 a year (the cap), 100% of their income is being taxed. Let's say the tax rate is 4% (made up number for simplicity of calculation). They are, therefore, paying a net 4% tax (.04*1=.04). Someone making $180,000 is being taxed for 50% of their income. At a 4% rate for 50% of their income, they are paying only a 2% net tax (.04*.5=.02). Frankly, that isn't right.

As much as Democrats would like to believe that Republicans just want to cut taxes for the rich, most of us want everyone to be treated equally by the tax code: no tiers, no caps, no differential treatment (note that I'm not advocating a flat tax, but a flat tax rate. They're very different). The same way I don't want the rich to be taxed more, I don't want the poor to be taxed more. As it stands, the cap charges the poor more.

Indeed, I'd venture that the cap should be not only raised, but removed altogether. Not only would this guarantee solvency, it would pay the transition cost to private accounts (which are still a better system, overall), and it is morally right. Everyone should pay the same rate, on every tax. The only fair tax currently standing is sales tax (which is always the same rate for the state). Let's make more like that!

UPDATE: What's with these frickin' chalky Valentine's hearts? The conversation ones with words on them. They're fantastic, yet oddly disconcerting. And I think I'll eventually break a tooth on them. I always chew them instead of sucking on them... my brother says it sounds like I'm eating teeth.

They should put a surgeon general's warning on them.

This update brought to you by the "'n' Such" in the title, as there was very little "Such" prior to now.

By my hand,
~Michael Akerman