The Democrat Thread

[StrangeSox]

So, your suggestion to solve this is what? To complain?

Double SS benefits by some combo of raising the payroll tax cap and maybe reducing 401k/IRA tax subsidies, ensuring every American who puts in a lifetime of work (since your SS benefits are calculated off of that) receives a modest retirement.

[Y2HH]

In your 8:38 post you literally said "5x what they paid for it," I think that's what ss2k5 is reacting to so strongly.

 

Went back and saw that, I did say that, I did NOT mean to type that. That's incredibly dumb. I apologize for that. Sorry, SS, I see what you were replying too, and I didn't quite understand until it was pointed out to me. I said that in error. While 500% returns would be nice, they're not really a reality in the investing world.

Edited April 25, 2013 by Y2HH

[Y2HH]

Double SS benefits by some combo of raising the payroll tax cap and maybe reducing 401k/IRA tax subsidies, ensuring every American who puts in a lifetime of work (since your SS benefits are calculated off of that) receives a modest retirement.

 

...and who is paying for this?

 

You'd have to increase income tax huge to pay for this, leaving people less money now for more money then. I'm not sure that solved the problem.

[StrangeSox]

...and who is paying for this?

 

You'd have to increase income tax huge to pay for this, leaving people less money now for more money then. I'm not sure that solved the problem.

 

Double SS benefits by some combo of raising the payroll tax cap and maybe reducing 401k/IRA tax subsidies, ensuring every American who puts in a lifetime of work (since your SS benefits are calculated off of that) receives a modest retirement.

 

The payroll tax cap is somewhere around $115k for an individual. Eliminating the tax subsidies for 401k's and IRA's (which weren't originally created to be the main vehicle for a majority of American's retirement income) wouldn't effect current income much now, and would do so very little or not at all for the many households under $50k who don't have 401k's as an option and don't have IRA's on their own. 401k and IRA subsidies primarily benefit higher-income earners anyway, not those who are going to depending primarily on SS benefits in retirement.

 

edit: this is not my own, original thought

 

http://www.theatlantic.com/politics/archiv...uble-it/266095/

Edited April 25, 2013 by StrangeSox

[Y2HH]

The payroll tax cap is somewhere around $115k for an individual. Eliminating the tax subsidies for 401k's and IRA's (which weren't originally created to be the main vehicle for a majority of American's retirement income) wouldn't effect current income much now, and would do so very little or not at all for the many households under $50k who don't have 401k's as an option and don't have IRA's on their own.

 

That still wouldn't come near to covering 2X current SS benefits for people. Keep in mind the investment rules for SS are locked into government backed securities, which are low yield, but very very very safe investments. The returns needed to increase benefits by 2X would require much more than a simple tax cap change.

[StrangeSox]

The linked article I edited in gives an estimate of $650b/year in increased costs and three steps to get there: raising the cap ($377b), eliminating business deductions for 401k's ($126b), and eliminating the mortgage deduction ($100b). That gets us to $603b.

 

edit: also Defense could get by with less than $682b

Edited April 25, 2013 by StrangeSox

[Y2HH]

The linked article I edited in gives an estimate of $650b/year in increased costs and three steps to get there: raising the cap ($377b), eliminating business deductions for 401k's ($126b), and eliminating the mortgage deduction ($100b). That gets us to $603b.

 

It takes a lot of fuzzy math and shifting of deductions to do something that it would never actually do.

 

Also, eliminating the mortgage deduction is economic suicide.

 

That article basically fixes social security by ignoring the economic impacts of the changes it's proposing. Such as removing the business deductions for 401k's, or IRA's, and eliminating mortgage deductions. Right, because none of that would impact the economy whatsoever.

Edited April 25, 2013 by Y2HH

[StrangeSox]

It takes a lot of fuzzy math and shifting of deductions to do something that it would never actually do.

 

Eliminating the payroll cap gets you half-way there. Even a 50% increase in benefits would make a huge different to the quality of life of millions of seniors to rely primarily on SS income in retirement.

 

tangent Instead, we're talking about cutting the program because deficits, even though it doesn't affect the deficit at all /tangent

 

Also, eliminating the mortgage deduction is economic suicide.

It primarily benefits six-figure households and inflates home prices since many filers don't have enough deductions to itemize.

[Jenksismyhero]

It takes a lot of fuzzy math and shifting of deductions to do something that it would never actually do.

 

Also, eliminating the mortgage deduction is economic suicide.

 

Yeah really. Great, I get an extra 800 bucks a month in retirement but my house is now worth nothing because the housing market completely dropped.

 

Also, i'm 100% positive that even if SS doubles, or hell, triples, we'll still be arguing that for some people it's simply not enough to live on. I gotta buy my flat screen and smartphone. That data plan is a b**** to afford!

[Y2HH]

Eliminating the payroll cap gets you half-way there. Even a 50% increase in benefits would make a huge different to the quality of life of millions of seniors to rely primarily on SS income in retirement.

 

tangent Instead, we're talking about cutting the program because deficits, even though it doesn't affect the deficit at all /tangent

 

 

It primarily benefits six-figure households and inflates home prices since many filers don't have enough deductions to itemize.

 

I made an edit, but basically:

 

That article basically fixes social security by ignoring the economic impacts of the changes it's proposing. Such as removing the business deductions for 401k's, or IRA's, and eliminating mortgage deductions. Right, because none of that would impact the economy whatsoever.

[StrangeSox]

Yeah really. Great, I get an extra 800 bucks a month in retirement but my house is now worth nothing because the housing market completely dropped.

 

Also, i'm 100% positive that even if SS doubles, or hell, triples, we'll still be arguing that for some people it's simply not enough to live on. I gotta buy my flat screen and smartphone. That data plan is a b**** to afford!

It's great that you assume future bad-faith arguments as a way to dismiss current arguments that maybe $15k/year isn't really enough to get by on.

 

So should we keep the mortgage interest deduction around because it artificially inflates home prices and does so in a non-linear fashion i.e. more expensive homes get larger deductions and more inflated prices?

Edited April 25, 2013 by StrangeSox

[StrangeSox]

I made an edit, but basically:

 

That article basically fixes social security by ignoring the economic impacts of the changes it's proposing. Such as removing the business deductions for 401k's, or IRA's, and eliminating mortgage deductions. Right, because none of that would impact the economy whatsoever.

Well, yeah, it's an article in a magazine, not a 500 report from Brookings Tax Policy Center or something.

 

401k's and IRA's are one way we subsidize retirement right now, but it primarily benefits the upper-end.

[Y2HH]

Well, yeah, it's an article in a magazine, not a 500 report from Brookings Tax Policy Center or something.

 

401k's and IRA's are one way we subsidize retirement right now, but it primarily benefits the upper-end.

 

Of course it does...this is what happens when every elected official in congress is rich. And they all are.

[StrangeSox]

Of course it does...this is what happens when every elected official in congress is rich. And they all are.

I don't see what economic impact would come from eliminating tax subsidies for businesses for 401k's. If they lost that subsidy, they'd most likely just stop offering 401k contributions. Which would be ok from the employee's perspective because they're getting increased benefits elsewhere.

[StrangeSox]

Here's a paper that's actually looked into the effects of eliminating the MID all on its own:

 

http://news.rice.edu/2013/01/16/eliminatin...ce-study-finds/

 

The most dramatic reform the authors analyze is complete elimination of the MID. In this case, they find that GDP decreases slightly in the short run, due to the adjustment costs incurred in reallocating the capital stock, and increases slightly by 0.1 percent in the long run.

 

Asset values increase in the nonhousing sectors by less than 2 percent and by 3.5 percent in the rental housing sector and are coupled with a decline in the value of owner-occupied housing of roughly 4 percent.

[Y2HH]

I don't see what economic impact would come from eliminating tax subsidies for businesses for 401k's. If they lost that subsidy, they'd most likely just stop offering 401k contributions. Which would be ok from the employee's perspective because they're getting increased benefits elsewhere.

 

Because it would take FAR more than simply eliminating 401k subsidies to do what you're suggesting with SS. I'm betting it wouldn't do much of anything for the people, regardless of it's intention. They'd most likely benefit more off getting a paltry sum from a failed 401k strategy than they would if it was eliminated completely. I'm pretty positive our government wouldn't take that saved subsidy and give it back to the people.

[Jenksismyhero]

It's great that you assume future bad-faith arguments as a way to dismiss current arguments that maybe $15k/year isn't really enough to get by on.

 

So should we keep the mortgage interest deduction around because it artificially inflates home prices and does so in a non-linear fashion i.e. more expensive homes get larger deductions and more inflated prices?

 

Is 30k a year enough for retirement? If you answer anything but yes, my point is proven.

 

And yes, we should keep the mortgage interest deduction. That's a pretty significant chunk for middle class Americans that would suddenly evaporate. Put a lower cap on it if you'd like, though I don't think a million is all that unreasonable. I guess you could lower it to $750 or so if you really wanted to and I wouldn't have much of a problem with it.

[Jenksismyhero]

I don't see what economic impact would come from eliminating tax subsidies for businesses for 401k's. If they lost that subsidy, they'd most likely just stop offering 401k contributions. Which would be ok from the employee's perspective because they're getting increased benefits elsewhere.

 

Because we all know employers are so generous with their money that if they get nothing in return they'll still give more to their employees.

[StrangeSox]

Because it would take FAR more than simply eliminating 401k subsidies to do what you're suggesting with SS. I'm betting it wouldn't do much of anything for the people, regardless of it's intention. They'd most likely benefit more off getting a paltry sum from a failed 401k strategy than they would if it was eliminated completely. I'm pretty positive our government wouldn't take that saved subsidy and give it back to the people.

 

Right, the article estimated that the 401k subsidies account for about $126b in tax expenditures each year. That's about 20%, the payroll cap would be another 50%, and the mortgage deduction about 15%.

 

The law changing the 401k subsidies would have to do something with the payroll taxes directly because that's how SS is funded, but it could be done to guarantee that it's going straight to SS. SS taxes are just a revolving door right now anyway.

[StrangeSox]

Because we all know employers are so generous with their money that if they get nothing in return they'll still give more to their employees.

 

No, employers would drop 401k matching, but employees would be getting increased SS benefits. The impact on the employers should net out to zero or maybe even positive if they're not administering employee retirement plans in the long run (same is true but even more so for health care!)

[Y2HH]

No, employers would drop 401k matching, but employees would be getting increased SS benefits. The impact on the employers should net out to zero or maybe even positive if they're not administering employee retirement plans in the long run (same is true but even more so for health care!)

 

Wait, wait, wait.

 

Are you suggesting the burden be placed on employers? And you think they'd actually just accept/swallow these losses and be ok with it? Because...well...I don't think they'd be ok with it, and they'd pass the costs onto their employees, or the consumers.

[StrangeSox]

Is 30k a year enough for retirement? If you answer anything but yes, my point is proven.

 

Yes, I think that would provide a modest, comfortable base retirement income.

 

And yes, we should keep the mortgage interest deduction. That's a pretty significant chunk for middle class Americans that would suddenly evaporate. Put a lower cap on it if you'd like, though I don't think a million is all that unreasonable. I guess you could lower it to $750 or so if you really wanted to and I wouldn't have much of a problem with it.

 

Middle class americans aren't buying $1M or $750k homes. They also aren't claiming on two homes, like you can now. Why should we be subsidizing a $1M home at all?

 

The benefit goes overwhelmingly to the upper income earners.

 

 

http://www.cbpp.org/cms/?fa=view&id=3948

[StrangeSox]

Wait, wait, wait.

 

Are you suggesting the burden be placed on employers? And you think they'd actually just accept/swallow these losses and be ok with it? Because...well...I don't think they'd be ok with it, and they'd pass the costs onto their employees, or the consumers.

Employers get deductions for running employee 401k plans. Eliminate those deductions and those plans (and their associated administrative costs) will largely be eliminated. That's a reduced burden on employers, much in the same way that a Medicare-for-everyone healthcare system would substantially reduce the administrative burden on employers who provide health insurance benefits.

 

Employees would be losing retirement benefits from their employer, but would be receiving more retirement benefits via SS. The burden gets shifted from thousands of individual employers' plans to SS.

[Jenksismyhero]

Yes, I think that would provide a modest, comfortable base retirement income.

 

 

 

Middle class americans aren't buying $1M or $750k homes. They also aren't claiming on two homes, like you can now. Why should we be subsidizing a $1M home at all?

 

The benefit goes overwhelmingly to the upper income earners.

 

 

http://www.cbpp.org/cms/?fa=view&id=3948

 

How many people under 10-20k/year own a home?

[Jenksismyhero]

Yes, I think that would provide a modest, comfortable base retirement income.

 

 

 

Middle class americans aren't buying $1M or $750k homes. They also aren't claiming on two homes, like you can now. Why should we be subsidizing a $1M home at all?

 

The benefit goes overwhelmingly to the upper income earners.

 

 

http://www.cbpp.org/cms/?fa=view&id=3948

 

And what does that mean? Are you expecting people to save their own money or "invest" it at a risk to fund their retirement!?