While I often disagree with the viewpoints of Bernie Sanders
– on socialism, on energy, on corporations, and on foreign policy – I do agree
with him on some issues like universal health care and taxing billionaires at a
higher rate. I agree very strongly with the social security tax bill he has put
forth. I think it is really about fairness. Another person I often disagree
with politically, musician Roger Waters, once wrote in lyrics about money, “share
it fairly but don’t take a slice of my pie.” There are tensions between
fairness and greed, between generosity and miserliness. Most people that don’t
have enough money tend to be very careful and frugal with it and protective of
it. People with more than plenty are more likely to give away a portion of
theirs simply because they can spare it. Maslow’s hierarchy comes to mind where
helping oneself is a need lower on the pyramid and helping others tends to become
a need only when one’s own needs are met. Even helping one’s own future, say in
saving for retirement, often gets cut if one is not making enough money.
The U.S. has a
great Social Security system which helps people who are disabled and seniors
after they retire. Every worker in the system pays into it. In most situations
employers pay half of one’s gross income at 12.4%, or 6.2%, and the employee
pays the other half, the other 6.2%. Those who are self- employed pay all of the
12.4%. Having been self-employed for almost 15 years I know this all too well.
The self-employed also pay the full amount of Medicare taxes which amounts to
2.9% of gross income, where employers usually pay half, or 1.45%. All in all, the self-employed are typically responsible for 7.65% more taxes than the regularly
employed. However, the self-employed get no advantage in receiving Social
Security after they retire. They are simply penalized compared the regularly
employed.
After earning
$160,000 in a year, one is no longer required to pay into Social Security. The
rationale for this is that one already paid one’s share so that they shouldn’t
have to pay in more than they will get out. I have had a few years in my self-employed
career where I exceeded the amount, which was lower at the time, since it
adjusts based on average wages. It was great! I was essentially rewarded for
making more money. However, most years I have been well below that, in recent
years very far below. The notion of rewarding the wealthy and punishing the
poor can be considered a perverse kind of logic. The more money you make in a
year the lower is the percentage of your SS tax. For an executive earning $16
million in a year in a company salary, their SS tax rate would be 0.062%, or 100
times less than mine (or 200 times less than mine as self-employed) The fact
that I have to pay a much higher SS tax rate that is 100 to 2000 times or more than the super-rich, does not seem very fair.
Looking just
at income inequality, one can see that some of the super-wealthy make 1000 to 10,000
times more money than those at the bottom. Does that mean that they are 1000
times or 10,000 times more valuable as an employee? C’mon. Now, I am a firm
believer in capitalism, but capitalism must be tweaked for fairness. One way to
do this is making taxation equitable and fair. The simple fact that I pay I vastly
higher percentage of my income for SS taxes than Elon ‘I shouldn’t have to pay
taxes because I’m good at allocating capital’ Musk, is rather annoying.
There has long
been talk of the insolvency of Social Security, which now is solvent to about
2035. After that, if no changes are made the incomes drawn by retirees may have
to be cut. There is a very easy solution to this that would prevent that entirely
and add more to the pool so that retirees would be able to draw even more. Sanders’
plan would fund SS for 75 years and add $2400 to retirees’ annual payments. It
does this without raising the basic rate for anyone, just changing the cutoff. Now,
most income tax rates rise as one makes more income. Social Security does the
opposite. The question might arise: Why not in addition to eliminating the
cutoff, also raise the SS rate on people who make even more money. Hey, I kinda
doubt I will ever make $160,000 per year until I retire (I hope to work till I’m
70 or more, or I may have to do so) so why the hell should I or any other
worker under that cap care about protecting the wealth of the wealthy? If you
would add another percent or two onto the super-wealthy to pay retirees, that
would benefit the poor the most, but also the Middle Class, but also the rich a
bit since they get Social Security too.
Regarding
Sanders’ proposal, Brian O’Conner at SmartAsset blog explains:
“Under the proposed Social Security Expansion Act,
investment income would be taxed at the self-employed payroll rate of 12.4%
starting at $200,000 for individuals and $250,000 for joint tax filers. In
addition, income of $250,000 or more would be subject to the payroll tax.
Income in the gap between the current wage cap and $250,000 wouldn't be taxed.
Instead, the proposed rules would wait until the wage cap rises to $250,000, at
which point the cap becomes moot.”
Thus, it does not increase taxes for anyone making less
than $200,000 or $250,000 for joint filers. I’m no finance or tax expert (who
really is?) but this sounds fair and reasonable to me. Sanders calls the
current system an absurdity. I agree. Really, it seems like a ‘no-brainer’ to
me and there could even be room for expansion. No, I’m not a socialist or one
who wants to manipulate the free market but the notion that Social Security
taxes should be levied in a different way than income taxes or sales taxes
simply seems unfair. We don’t waive sales taxes after a person buys something
for a higher cost so why should we waive SS taxes? Why do we deem the wealthy
to be entitled to these savings? Conservative politicians always talk about the
financial burden of entitlements that go to the poor but ignore entitlements
that go to the wealthy. America is a country with over 1000 billionaires and a
few million millionaires (Sanders is one). In this simple example we can see that the sheer
numbers in real dollars going to these folks who are already super well off is
an entitlement worth eliminating. It really should have been done long ago.
There are
places where inequality is truly obscene. One place is North Korea where there is
a brutal caste system. The 10% that are allowed to live in Pyongyang can use
cell phones. No one else can. Only 1% of the population has access to the
internet and those are only people who work for the government. The elite live
lavishly in the city while the poor in the countryside do not have cars and use
all their money for food and collect firewood to keep from freezing to death in
the winter. They don’t have electricity or running water and at night they are
lit by candlelight. They don’t have paved roads or cars, just bicycles and
carts pulled by animals. As food often becomes scarce, many starve to death. It
is estimated that over 70% of the population is malnourished. Meanwhile Kim Jong
Un is fond of delicacies and expensive liquor from around the world, has 17
lavish palaces, a giant yacht, a private island, and likely many other
amenities. The society is set up so that the people worship him like a god and
the party is basically a cult. The regime is a disgrace to the human race.
Cognitive
psychologist Stephen Pinker once noted about income inequality that the key
point is not to penalize the rich but to help the poor. Anyone can understand that
having spare money is one of the best possible ways to make more money since
that spare money can be invested. It’s nearly foolproof. If you have nothing to
invest you have no opportunity to grow your money. I believe that helping the
poor and Middle Class makes for a better overall society. It’s OK to be rich
but I really don’t think we should have billionaires at all.
References:
This
Bernie Sanders Bill Could Hike Your Social Security by $2,400 and Ensure
Solvency. Brian J. O’Conner. SmartAsset Blog. Yahoo News. This
Bernie Sanders Bill Could Hike Your Social Security by $2,400 and Ensure
Solvency (yahoo.com)
Inside Kim Jong-un's Lavish Life While North Koreans Starve. Lovemoney. March 1, 2023. Inside Kim Jong-un's Lavish Life While North Koreans Starve (msn.com)
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