Weird tax law
I was just reading about stock gains and losses. It says that if you lose 10k on stocks last year, you can only write off 3k, if you had a gain equal or more,leaving the remaining 7k to write off on future gains. What if there are no more future gains? You're out the 7k...that's it? My other question is what if you lose 300k ..it would take 100 years to write off, assuming you have any gains during those years. I don't get it.
sallysimpson I think it's just "net" loss... doesn't actually require an offsetting gain.
In other words.. Stock A makes $10K, Stock B loses $10K, net gain for the year is $0, no carryover needed.
Next situation - Stock A makes $10K, Stock B loses $20K. Net loss is $10K, but you can only claim $3K and carry the rest. The next year, even if you do nothing else, you'd take the next $3K loss, carrying the remaining $4K onwards, etc... It basically offsets ordinary income at that point.
If you had a $300K loss, and never invested again, yes it would take 100 years. But if you keep investing and one year you make $250K, you can apply $250K of the remaining loss to get you back to $0 with $50k carried over past that...
That's how I understand it anyway...
Mark Mc. Mark Mc. Thank you SO much! Out of all the things I read and all the people I asked, you were the only one that explained it in a way I could understand. Now I get it. Now if I could just win the lottery.... that would help get me started:)
It's people like Mark Mc. and all the other great people that take the time to help with advice and information that keeps me hooked on this forum.
No problem, but if you win the lottery I may have to start charging for financial advice ;)
This has been in place for a long time, used the max for a few years after the Dot Com Bubble busted...
iJay To bad we can't offset gambling wins with stock loses, as it is the same thing. Also can't offset lottery losses with slot winnings.
Old Gent "Flat Tax. No problems"
+1
agree with this, it's time to revamp the whole enchilada.
flat tax, or fair tax, it's time to streamline the whole bloody mess. everyone should pay 19%. that will actually increase the federal budget while decreasing the average tax burden.
here's another one that seems stupid. a person who works for themselves, makes about 3 thousand dollars during the year and then qualifies for an earned income tax credit of about 200 dollars because of the paltry income which is well below the poverty level; ends up owing the feds a tax payment to cover the 'self employment' tax of 15% (FICA)
really?
BrotherDog 
Heidi The only money not taxed would be welfare money. That would be the government taxing themselves.
+1 for flat tax. Everyone has skin in the game. When 50% of the income earners in America don't pay tax at all and the top %20 (those earning 134K and above) earn 50% of the income and pay 84% of federal income tax collected, something is wrong.
http://www.wsj.com/articles/top-20-of-earners-pay-84-of-income-tax-1428674384
MeisterNJ A flat tax would be great you make this much you pay this much. What I find funny is you have people like Ted Cruz running for president[thank God that will never happen] saying how he wants to abolish the IRS for taxing businesses and people way too much but he always forgets to tell people is that the IRS is only a collection agency they do not make tax law they only enforce the laws that the Congress and Senate have passed
oldredNone of them running are for a flat tax. That would make them work for a vote and not just serve the big money people. The only people that are for it, are those that are responsible people. Thats not a common trait of a national politician today.
"the IRS is only a collection agency they do not make tax law they only enforce the laws that the Congress and Senate have passed"
Just like the FCC doesn't make laws, they create their own "regulations" like the recent change to Net Neutrality without any input from Congress.
Just like the ATF doesn't make laws, they create their own "regulations" like the attempt to ban certain ammo without any input from Congress.
Just like NJ has "statutes" (i.e. the law) but also a vast NJ "Administrative Code" that defines how those laws are executed and can be changed on a whim by the attorney general.
So the fact that the IRS doesn't create "laws" doesn't mean they aren't a source of the problem with regards to thousands upon thousands of pages of tax code that something like a flat tax would solve.
What does charging a flat tax to the people who currently pay no tax (because they make less than the standard deduction) accomplish? They're likely on government assistance so you would have to increase their entitlements to offset the taxes just to keep them at subsistence levels anyway.
The fact that the top 20% pays 80% of the taxes doesn't seem to be hurting the Top 10% all that much. They control more of the nation's wealth (75%) than ever before. Globally, the richest 1% are projected to eclipse the 50% mark of the world's wealth next year. But, what we really need to do is go after the poor people and get them to pay their share, lol.
ianimal Better yet, convert some of it to a consumption tax or VAT like much of Europe.
Funny how everyone promotes/wants the American Dream......until you achieve it, then you're evil and not paying your fair share.
It makes them have some skin in the game of governance. They cant just wait to see who gives them the most and having their vote bought. It's called responsibility for all citizens. The vote totals would go up to 90% Thats power of the people as I believe the founders hoped would happen. I know, every man has a price. Some more than others.
How do you think a military draft would go over today with no skin in the game?
No, it doesn't. Instead of giving them 1,000, you will have to give them 1,200 and then take 200 back. Nothing will change and they will still vote for those who offer to give them the most. Why wouldn't they?
They will scream if the have to give anything back. We need the draft back or some kind of mandatory public service. Like Kennedy said, ask what you can give back to your country. Better leave the boarders open so they can rush out.
MNJ, I'm all for a consumption-based tax system.... it's probably the most equitable.
Your solution is to start a war so that we can institute the draft, Old Gent? If nothing else, it's certainly original (-;
http://www.usatoday.com/story/news/politics/2014/05/22/congress-irs-tax-delinquencies/9442749/
Dear Friend,
It’s April 15th, Tax Day, and you’re probably giving a sigh of relief knowing that tax season is finally over. And who could blame you? This year alone, American taxpayers and businesses will spend about 7.6 billion hours complying with the 75,000 page U.S. tax code. With those numbers, it’s no surprise that three-quarters of respondents to a survey I conducted said they needed to hire a professional tax-preparing service just to file.
The overly complex tax code is eating up our resources, our money, and our precious time.
A simpler, fairer and flatter tax structure is the solution to this problem. That means more money in your pockets, less time spent filing taxes, and putting an end to the special interest loopholes that unfairly create winners and losers. It also means freeing up American businesses to spend more time innovating, saving, and investing—and less time trying to get special tax preferences.
This week, the House voted to permanently repeal the Death Tax, a law that unfairly taxes the fruits of a lifetime of hard work and takes a heavy toll on families, small businesses, and farms. The Death Tax was originally intended to be a temporary source of defense funds during World War I and it is long overdue for repeal. We also passed a number of bills to make the IRS more transparent and accountable, and to ensure those who have delinquent tax debt cannot get jobs or contracts with the federal government.
I’ve spoken to countless New Jersey families who are desperate for tax relief. They have seen the middle class overlooked too many times, and I remain committed to fighting for their future. It’s time to fix our broken tax code and replace the outdated rules with a pro-growth tax system, built upon the tenets of simplicity, fairness, and efficiency.
Sincerely,
(signed) Scott Garett
I didn't mean start a war. I meant instead of the volunteer army to defend this country. We have a very large border to defend. It's just doing your part.
Whenever a politician like Scott Garett above promises you more money in your pocket, just look to see where his hand is.
Notice the carefully chosen weasel words: "A simpler, fairer and flatter tax structure." That code for: it won't be quite flat Oblio, it will be more flat and less un-flat. Just like partly sunny is partly cloudy too.
"That means more money in your pockets." Uh, since when does simpler, fairer, and flatter mean less tax? I guess we are to trust Scott and ASSuME it will be less.....for someone. Based on Scott's track record, I would say that's not me.
The concepts may be good, the actions vague, and the weasel words tug at your heart-strings while promising nothing. Simpler, fairer, less.....ahhhhhh.
How long has this guy been in office?
mistergoogle I've been screaming flat tax for years, and the tax cap on society security? Get rid of it! Why does a little guy..actually gal, like me have to fill out a 40 page document with an earned income of $19,00 and a couple grand in stock trades? Whoa! Big money, here.
Ms Fishy I would even like to see just a consumption tax and get rid of all others and by the way MeisterNJ everybody pays some kind of tax I don't care how poor you are you are paying some kind even if it's only sales tax I know of one organization that if the government started taxing the country would be in a wash of cash the church hundreds of billions of dollars a year goes in to the church every year and not one penny paid in taxes and that is just money not counting land and buildings they own so before MeisterNJ
starts railing against the poor how about we tax the wealthiest corporation in America and the world and that is what the church is a Corporation lets get them to pay their fair share
Did you read the link I posted. They just voted to get 3.3 billion dollars back or created
318,462 job openings. Thats the kind of people we have leading this country.
I think he would have been chairmen of the finance committee but he was one of the few to bucked Bonner for speaker.
Not sure what 3.3B in back taxes owed by Federal employees as of May, 2014 has much to do with anything. Not to mention it's a lower percentage of back taxes than that owed by non Federal employees (you know, us guys). Plus, they are not the people leading the country, they are just Federal employees. But hey, April 15th might be red herring day too.
As Justy says, all taxation is theft. That said, it must stand to reason that all taxation is unfair. And most certainly, all taxation favors somebody. Progressive taxes favor the poor (yeah, right, but OK), flat taxes favor the rich (and they are not really flat), consumption or sales taxes favor non-consumers, payroll taxes favor the unemployed, VAT taxes favor the simple folk, sin taxes favor the righteous, etc. etc. etc.
The point made that 20% of the population pays 80% of the tax is just bogus. Somehow the word Federal Income tax got dropped and all the other taxes we pay just were not included nor mentioned. Payroll tax alone would drop the 80% to 50%; I would say that's a pretty good hit for just one other tax not included in the reference.
Fact is we need a balanced fair system where you pay what you can afford. Even with your so called flat tax, the poor pay less than the rich. Perhaps they pay the same percentage, but they pay less. By definition, our tax code will never be super simple if you want a higher level of fairness, but it can be much simpler that today. There will never be a true flat tax, at best we could get a marginal flat tax, but probably we can only compromise to a marginal flat tax with a number of deductions and exclusions which ------ is a progressive tax. At least not if you want to be fair.
So when politicians say they are for a flat tax, and then like the old politico Garett they weasel word it to a "flatter tax," the best you can hope for is simpler, not simple, and not flat.
I found a man Old Red should support. Mike Huckabee He said Church's should give up there tax exempt status. I have thought about this myself. The Church has gone from saving souls, to being influenced by society, to the changing Gods words, for hundreds of years, in the name of enlightenment.
Mr. G., the article did mention payroll taxes and the numbers after taking it into account if your read it:
'People receiving such payments do pay other federal taxes, of course, such as those for Social Security and Medicare. If these taxes are included, the share of federal taxes paid by the lowest two quintiles turns positive.
The share of tax paid by the top 20% of Americans also changes when such social-insurance levies are included: It drops from more than 80% of income taxes to about 67% of all federal taxes,'
Not quite 50%, but less, yes. Payroll taxes are paid by everyone at equal pct, so it's kind of a baseline and the point of the article as I read it is to point out the inequity of the progressive part. I don't understand when people say 'pay your share' when %50 don't pay any share.
Sally, a flat tax would actually hurt you. If your income that you posted is correct, that puts you at the 15% tax bracket. So would you really want to pay more taxes just so you would have few pages to fill out once a year come tax time???
darwin Meister: You nailed it: the WSJ took out social insurance levies; my source used payroll taxes. Two different things.
No taxes are paid at a equal percentage by everyone. SS, Unemployment have caps. The top 20% pay a lower percentage income. There are regressive like almost all taxes except the Federal Income tax which is marginally progressive but effectively regressive and the rich pay a lower percentage.
So the top 20% pay 80% of the Federal Income tax. However, when "workers taxes" or payroll taxes are rolled in ; that number drops to 50%. One reason for this is much of the upper bracket's income is investment with no payroll and a lower income tax rate.
Some other fun facts. The top 400 taxpayers have an average effective tax rate about 18%. About half of those have rates less than 10%. Their starting point was a marginal tax rate of 35%.
So when old pols like Garett say "simpler and flatter," they really mean less tax brackets ---- but still tax brackets. They mean less deductions and credits but still will have deductions and credits. And you can bet the upper brackets will still be regressive in Garett's simpler flatter model.
For fun HLers ---- Turbo Tax and I am sure other programs provide an effective tax rate percentage. So what's in your wallet for a tax rate?
Also, income tax makes up about 40% of the Federal Revenue. Remember, while the top 20% pay 80% of that, they probably pay at a lower percentage rate than you. The next 40% comes from social insurance taxes and that most certainly is regressive: the upper brackets pay a lower rate than you. Corporation's good for another 10% and the last 10% is excise and other taxes (just not enough sinners in this world today).
And yes, payroll taxes bring the upper 20% from 80% to 50% ownership of the total tax burden.
As the WSJ says, the US is unique in using income tax to derive it's revenue. Most other developed nations use VAT or sin taxes to lower their reliance on income tax but then they spend their time deciding what's of value (or of sin) and how much is each sin worth. Not sure that is cleaner or more fair.
We could also go to a consumption tax but that also favors the rich and the old. Rich people consume a far smaller portion of their income than poor people and old people consume less than young people. Therefore, they would pay a lower tax rate.
Back to the flat tax. Don't be fooled, a US flat tax will never be truly flat. Of the 30 or so nations that do it, most are in Russia or Northern Asia ---- not exactly role models. And then there's Canada at a 30% rate. And none of these are truly flat, they all are "marginal flat taxes" including brackets, caps, deductions, and the other tax modifications we know and love.
I do agree our tax system is onerous and burdensome. When a Tim Geithner makes Turbo Tax filing mistakes, the code is certainly too complex. It can be simpler. But I do not believe a flat tax will ever be flat or that a flat tax is somehow more fair; flat taxes are not MORE fair mathematically or morally. IMHO, what is needed is to wipe the slate clean and start over. Yes, we need progressive brackets; yes we need a system of deductions and credits, but we can simplify all. We can add some sin taxes, sorry, I mean VAT taxes; I don't have a problem with target taxing on consumption. Let's start with the Big Gulps...... :>)
Frankly, we're all hopping mad about Federal taxes which is funny since they have never been lower. It ain't the rate, it's the complexity. And trust me, like your property tax, once the reassess, flat, progressive, VAT, whatever, one thing is certain: you won't pay less.
So, homework assignment HLers: what's your effective tax rate: Turbo Tax lists in right on your cover page. Are you a top 20%-er?
We can agree there. Total overhaul.
As for the very rich, I'm assuming the percent is small because it's mostly investment dividend and interest income and that dwarfs their actual wages. This interest/dividend income is derived from principle that was already taxed. And then when they die it gets taxed again at a very high percentage (anything over 5 million I believe), something the rest of us don't have to worry about. But there isn't enough room in a headline to include the total picture.
Your homework first, Mr. G.
11%; not my best year.
The myth that investment income has already been taxed is just that in my ledger book. Profit is profit, income is income, whether I make it from the sweat of my brow or whether I make it by making my money sweat. Work is work IMHO whether I am doing it personally or whether my money is doing it for me. Frankly, the latter is easier and far less risky in my book. I enjoy the fact that investment dollars are taxed less, sometimes far less, but that does not make it fair to me. One would think a flat tax advocate would be 100% for repeal of the investment tax break.
Death tax is another story and a new topic and one where once again, NJ stinks. Often called the last twist of the tax man's rusty knife, NJ likes to rotate it as well. Death tax is comprised of estate and inheritance taxes, who the hell can say what that means. Estate tax is charged to the estate, the entire estate. Inheritance tax is charged against what each individual gets. All I know is they can steal twice on something they already taxed and you get what's left. Sounds like triple booking to me.
Most state don't have a death tax. A handful have inheritance OR estate tax but not both but......wait for it: NJ and MD have both. Of course who cares whether you have one or two --- it's the value that counts and NJ stinks here too.
The Fed has no inheritance tax and 44 states have abolished all inheritance tax. In NJ basically family is exempt from inheritance tax; not so close relatives pay 11% or higher past the first 25K and everyone else pays 15 or 16% so who the heck cares about them family foreigners.
Fed estate tax is 40% over 5.43M; that's a killer but won't be my problem. NJ estate tax is a throwback and again, makes NJ no country for old men rich or middle class. The exclusion is $675K, the lowest exclusion in the nation, it's based on an archaic Fed exclusion factor that NJ legislators are too stupid to change. The estate tax rates above the exclusion are progressive up to 16% and man, there must be a dozen brackets. First rule of thumb --- spouses are exempt, now breathe a sigh of relief as you realize one of you can plow daisies before you have to move :>) Second rule of thumb --- OMG what arse developed this worksheet. I'll let you look but the juicy stuff is on the tax table which says at $1M, the estate tax is 4.8% of the amount over the $675K. And then progresses up to 16%. So probably around 5% - 6% for those of over $675K but under $2M.
Just click on the State of New Jersey's Website for the tax table: http://patch.com/new-jersey/morris/ask-the-attorney--how-do-i-calculate-the-estate-tax-in-new-jersey
I always are perplexed about inheritance and estate taxes. From one vantage point, you are correct the money has already been taxed. But that guy is dead and he don't care anymore. From another vantage point, it's free money, a gift, like winning on Wheel of Fortune. In America ----- we tax Wheel of Fortune but the winners are still happy.
Yet, if we care about finance, many of us should worry about dying in NJ since it is much more profitable to die in almost any other state in the Union.
Want to map your funeral location?
http://taxfoundation.org/blog/state-estate-and-inheritance-taxes-2014
Of the additional 40% in tax revenues that come from social insurance taxes what hppercentage of that is social security? I thought that those funds were put in a lockbox and not available to be used for general funding purposes.
kb2755 kb2755, the SS fund buys government bonds with excess funds that aren't needed to make immediate payments. When SS receipts lag payments SS must then "sell" those bonds to come up with the funds needed to make the actual payments.
IOW, a good percentage of the SS fund (other funds as well) has already been spent for other purposes and exists now only as Federal Debt to be paid for by future generations. SS by itself is owed about $4T. In the bigger picture, it's estimated that about 1/2 of our current $18T+ is owed to various entitlement programs due to this lending/spending/debt creation mechanism.
http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-National-Debt.htm
justintime "11%; not my best year."
Total or just Federal?
My 2014 summed up as follows:
Federal: 11.1%
State: 2.9%
Payroll: 7.6%
So, my total tax burden in 2014 was 21.6% of my gross income. Add in property taxes and it was 29%.
Anyone know how real estate loses are handled. Meaning if you buy a house for 250k ten years ago and sell it for 200k this year. Can you claim a 50k loss?
CraftBeerBob "Anyone know how real estate loses are handled. "
Real estate losses only apply to rental/investment properties. Not a primary residence.
So they tax a gain on real estate unless you reinvest in real estate. But if you take a bath on real estate there is no help. That is F'ed up.
Darwin..I was thinking more like a %5 tax instead of %15. The taxes taken out for social security "freezes " at around 130k income. Why does someone who makes 100 million dollars pay the same ss tax as someone who makes 130k?
My oh my we be jumping around the world of taxes.
Mark: Federal. Usually I do 10 or less. And doesn't the fact that your NJ = your FED upset you? Personally, I think I get more for my Fed dollar than my Jersey dollar. And note how much in property tax. That means when you retire, your Fed will go down but your NJ will not. Yipppeeee!!!! Both the amount we pay and the proportion coming from property tax in NJ just frosts my cake.
SS is capped but so are the payments back so the high earners get back what anyone who meets the cap gets. If they put in more, they would expect to get more back.
SS is indeed invested in US bonds; but they have special terms and conditions. JIT's lament about spent for other purposes and now a debt for the future is a bit of a misnomer. It's an investment in the future. It's a retirement fund. Who amongst us has not invested their retirement funds? If we privatize SS, what do you think the reason is? It's so we, the individual can invest rather than letting the Fed invest. So the fact that SS is invested for future gains is typical and expected.
Investing your future in yourself is also pretty typical but a bit more problematic and investing 100% is a single fund is just bad investing. Many of us take our retirement funds and invest in ourselves: how many take retirement funds and buy their company's stock? But hardly any of us take our retirement funds and invest in one source; we all usually diversify our investments to maximize gain and minimize risk. So the 100% non diversified is a bit weird, but the US has been a pretty safe investment over the years.
SS = about 16% of the national debt. Clearly the 50% estimate is a tad high.
Ponzi scheme? Only as much as your pension or 401K is a Ponzi scheme.
probably because they are going to get the same amount of SS when they retire. So why if there is a cap on the amount you can collect on SS when you retire would you expect people not to be capped on the amount they have to pay?
Also the person making $100million is not making all of that from W2 Income. they are most likely making the bulk of that from investments
Darwin: SS is envisioned as a safety net. As such, how big a safety net should we provide is the question.
Once people expect to live off SS, "Houston, we have a problem here." I would recommend some retirement planning to those folks.
On real estate; most of us won't owe a dime in tax when we sell our PRIMARY home; the exclusion is $250K in PROFIT for single and double that for married (keep that spouse happy, it pays). That law changed in 1997.
Secondary homes are a different story and good chance you will owe capital gains. This can get especially tricky for inheritance homes and you might seriously consider whether you want to live in the inherited home, making it a second home, or not, making it an investment property. Especially if you plan to sell at a loss or quickly (less than one year). Plus on inheritance, the basis is calculated based on the assessment of the house for estate purposes. That means Grandma's house she bought in 1810 for $100 that you inherited this year worth $100,000 is worth the later. As you sell, how you account for the profit OR loss depends on whether it's a secondary home or investment. Just an FYI.
This conversation is out of my league. If there was no SS I would buy more insurance. You cant depend on the Government. They change to rules all the time. Until Reagan I was entitled to top money. It went down ever since starting with the changes he made. My company pensions are through Insurance company's. They did not change. I am just grateful to have survived this long with all I have been through,and not being a risk taker. My brothers investments over the years were in savings bonds when they were paying 5% for years. He about cashed out by the time that changed. We don't have to worry about Inheritance Tax. I had a house and he has a house still, but he is 6 years younger than me'
You know the story about the eye of the needle? Not our problem.
Too bad the proposal to make a small portion of SS contributions private didn't come to fruition. Believe it was 2% or so. I've seen math that says that 2% if invested in a plain old growth stock mutual fund would out gain the other 13% that the government handles (well, mismanages). And whatever was left of that private portion when you pass could go to your heirs in a lump sum as opposed to ss, which vanishes.
Up until Reagan all the SS changes were positive and no one cried. With Reagan SS became taxable at 50% of the payout and an AGI over $25K. Full benefits age increased and the value of early retirement went down.
It's going to happen again.
SS is a paid-for retirement fund with a low risk investment plan. As we live longer, the amount we paid in does not cover what we take out. So re-engineering must take place. Choices include what happened in the Reagan era and investment in higher risk, higher gain investments. Personally I rule that out in that SS is a safety net, not a pension. But SS has been a solid performer with low expenditures and a very safe investment.
Your pension probably is not a solid performer but is paying things it can not ultimately support. Or maybe it's one of the few that are rock solid. Many pensions are underfunded, overpaid, have high loads and virtually no insurance for insolvency. Over 40 years, there have been thousands of pension failures. Here's the top ten list of people who like SS more than a pension: http://money.usnews.com/money/blogs/planning-to-retire/2010/08/23/the-10-biggest-failed-pension-plans
Point is pensions and SS are both what they are. SS is a very safe safety net that sure, may not pay out exactly what you expect. But that's your fault ---- you are living too long. Pensions are great, but they are not as safe, and they do fail ----- more than we would like to admit.
Not to worry kids, the chance of you getting a pension are slim. Better check your profit-sharing plan returns against current pension lump sums as you do your retirement planning. Hint: pension lump sums may be 500K to 1M for a 100K 25-year worker. What's in your 401K?
I agree Meister. I would like to self managed it like I do my 401k plan.
Steve
But what would you be managing, exactly? It's not like the money you pay in is being deposited into your personal account. Rather, it's being used to pay current recipients... with the assumption that there will be future payees that will be able to pay you what you're owed in the future.
We would take some of the bond funds and allow individual investment. But here's why that is not a great idea, IMHO. SS is a safety net. It is not a 401K; it is not a retirement plan, it is not a pension. It is a safety net that hopefully will be PART of your retirement plan. If not, good luck on getting by on a safety net, but at least it keeps you from crashing into the earth.
Now, to say, well let me invest it, I can do better sounds nice. But it leaves out the I can do worse part. Now you don't even have a safety net so what do we do with you now? Call the Church? Welfare? Hell, if you try living off SS, you probably need welfare and if you try living on less than SS, God help you.
I say leave it alone, re-engineer the program for our longer life expectancies, and continue to use the funds to fund the nation. Safest bet for our safety net is betting on US, and not betting on your investment or mine.
Mistergoogle....I understand that the ultra wealthy get a cap on what they collect from social security, so their ss taxes are the same as someone who makes 130k. Well if they don't like paying the same percentage like the rest of us because they would never get back what they contribute, then too bad! Let them move out of the country. I pay taxes for school football fields that my child with a mild handicap could never use. Most of us are taxed on things that do not apply to our own life. People who have no children pay taxes for the families with six children. Why should social security taxes be any different? And if they have millions of dollars..... do they really need 2k a month? I still say dump the cap on ss taxes. That would help replenish all the ss IOU'S Dubya left behind for his little war project.
"... with the assumption that there will be future payees that will be able to pay you what you're owed in the future."
Actually, the current assumption is that the Federal Government will be able to buy back the Treasury bonds from SS to provide the actual cash to the "trust" fund so that it can make payments to SS recipients.
Given that the government already operates from a deficit while holding debt more than our annual GDP, and knowing that SS receipts have already lagged outlays, it would be wise to ask where the government will get the money to replenish the SS fund from which is has borrowed for so many years?
Of course, you might think looking at the historical debt/deficit trend would answer the question. However, since that trend points to an ending most don't want to know about we'll continue to be told that everything is just peachy.
everything IS just peachy . . . . . nothing to see here . . . . . .stop harshing my mellow . . . . .
just look around, avg yearly income declining year over year, what's to worry?
big companies laying off college educated professionals so they can bring in more h1b visa holders at half the salary . . . . . . why be concerned about that?
the fed pumping billions of dollars into the economy every month with nothing to back it up, what's the problem?
you should go watch a sports event and drink some craft beer after a full day of golf, stop worrying all the time, no one else is . . . . .
Good point Sally. I can not deny your opinion, however I have a different take. To me, Social Security is a pay-in, get back insurance fund focusing on providing a safety net to our older citizens. It is not a pension plan, it is not meant to provide your total retirement; it is a safety net. It is not a profit center, we don't take risk in fund investments. Whatever someone puts in, they expect to get back and if they live long, they expect to prosper, and they will ---- today, big time potentially.
Therefore, having no caps would mean the rich put more in, but would expect to get more back, it's a zero sum game, so I don't really see the value. And to expect the rich to fund those not so rich I think demeans the concept of the fund. Sure, we could do that but then in my book, the rich would be 100% justified in trying to end the program since it would be unfair to them.
I could see raising the cap, but only to the level that we consider to be a maximum safety net; the focus being the magic number considered to be a top end safety net.
The fact that Social Security, Medicare, and ObamaCare are taxes is a artifact of our political system and our Constitution. It's the only way we can implement them without having them instantly legally repealed. Really, Social Security is not a tax but like ObamaCare, a mandate. We are taxed, but unlike taxes going to a general fund, we expect to get these mandates back when we need them for old age or sickness.
To me, the fact that many Americans expect to live only off Social Security proves the need to mandate Social Security since, if we didn't, these same Americans would probably not have any safety net. Fun fact: In 2005, over 10 million Americans live solely on Social Security; that's 22% of the folks who receive checks. Or another way, if there was no Social Security that's over 10 million with nothing to live on.
We are living longer so these funds don't work anymore. And for the medical funds, add in the rampant inflation rate on medical and those funds are really broken and in emergency mode.
So to cover that both Medicare and Social Security need to be re-engineered and no doubts about it; younger people will pay more and richer people who might not need a safety net will get less. But I hope double gigging the rich by charging them more will not be necessary to make Social Security solvent.
mistergoogle-
" It's the only way we can implement them without having them instantly legally repealed."
Actually, they way they should have been implemented was as an amendment to the constitution. Amendments are hard though, since they require such overwhelming support, but then that's kind of the point, isn't it?
Brendan You really think Social Security is founding father stuff? Don't need it to be in the Constitution for me, IMHO.
Meanwhile......Oh JIT, if you wanted to preach gloom n doom, you should of picked on Medicare….
Social Security ran in the black from 1985 to 2009, only the past 5 years have been in the red. But wait, there's more..... The headline is true; just not the full story. What has been in deficit is SS payouts versus non-interest income payroll taxes. When you add interest, there is no deficit. I am a bottom line sort of guy. The trustees should have included that footnote.
I appreciate that the trustees are throwing a warning flag and perhaps our do-nothing Republican Congress needs to be whooped upside the head with scare tactics but there is no deficit penalty on the field at this point, just a HUGE warning flag.
Depletion date is estimated to be 2033; that’s total receipts against expenditures. There is time to re-engineer back to a pay-as-you-grow-old scenario. Just get er done boys and girls of the do-less-than-do-nothing Republican Congress.
Yes JIT, the SS trust fund is in bonds, but again, these are special low risk versions. And it is law to invest only in ourselves. To turn bonds into cash today would require taking on debt, something the US can still easily do. Matter of fact, when it comes to Government investments, we be numero uno in the world. Perhaps the Chinese may be better someday, but they will have to learn not to cook the books first. So yes, SS is broken but it is far from busted and is easily fixable if our do-less-than-do-nothings do something. The answers have all been provided, it’s a matter of taking action and choosing some options.
https://www.justfacts.com/socialsecurity.asp
By the by, it’s not like SS has never run deficits; using TOTAL receipts, it ran in the red in 59, 61, 62, 65, 75 through 81 and has not run a deficit since. We made changes for the late seventies, early 80’s run up, we can do it again.
Now if you want to talk bleeding red, hemorrhaging without blood donors, and adding to the deficit big time, you need to shift to Medicare. That dog still hunts as a RED flag, warning, warning, warning Mister Robinson.
No, it's not founding father stuff, that's why it would need to be an amendment. Most of what the Feds do now is outside the scope of the constitution, but that is no excuse to continue down that path. they should have left health care and insurance up to the states, and used the interstate commerce clause for its intended purpose and allowed people to purchase insurance across state lines... But whatever, it's in now and it'll never go away... Too bad for our children...
Oh Brendan...... Everyone's entitled to an opinion but, for me, to be Constitutional is to be "founding fathers stuff" and guaranteed health care and old age safety nets are not IMO. Neither is balanced budget in my book. You can be sure we would have none of them if they were.
We did leave universal health care and old age safety nets up to the Church first; they failed, and then up to the States, they failed too.
The funny thing about the myth of buying insurance across state lines is that it's the very "health care insurance left up to the states" you want that defeats the ability to sell across state lines. First, insurers can and do sell across state lines already; they just have to be approved for the multiple states they wish to sell in which puts such policies in a highest common denominator mode re state regulations. The difficulty with allowing sale without approval is that since each state has different health insurance regulations, freely being able to buy across state lines means being able to buy insurance at the lowest common denominator. So, sure, you would reduce cost to be able to buy insurance in NJ from another state that does not conform to NJ regulations. In other words, to really be able to do this, you would need national insurance regulations OR no regulations whatsoever. Without regulations, I am sure the price would go down but so would your ability to actually collect on the lowest priced insurance. That would be very bad for the children...
the state shouldnt be involved in the insurance market, they just screw it up,
we have too much government, much more than is truly needed,
the fed reserve pumping new money into the economy without anything to back it up erodes the social security safety net
fed policy weakens us over time, it keeps us down by consuming our wealth. this affects everyone but hits seniors on fixed incomes esp hard
this needs to be addressed
Can't disagree with you re: NJ regulations but overall I think insurance regulations have saved more than they have harmed.
It's so easy to scream too much regulation but zero regulation is far worse IMHO.
Likewise screaming about the Fed's money creation flies in the face of a strong greenback, high prices and interest in US bonds, and low inflation. Seems that there is indeed a lot to back it up. Not that there aren't issues, but unless you have a better idea.... Not to mention that QE is ending and that the Fed has recently signaled that it will reduce the money supply by raising rates.
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