Comment on It's rigged

certified_expert@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

• VinegarChunks@lemmus.org ⁨5⁩ ⁨weeks⁩ ago

  Social Securiry benefits are paid out based in how much you earned during your working years.

  These benefits cap out at a certain limit. Accordingly, the social security taxes also cap out at a certain limit. Beyond that income you do ‘t get any higher Social Security benefits and you don’t pay any higher Social Security taxes.

  This is because Social Security is not designed to be a progressive tax like the income tax is.

  Our tax system overall should be more progressive. Maybe social security should be part of that. But it was never designed to do this.

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  • AA5B@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

    Our tax system overall should be more progressive

    Tax brackets are the fundamental way that income tax is used regressive: the higher your income, the higher percentage you pay on that (marginal) income

    In addition to “income” shenanigans available to the wealthy, the highest tax bracket is at $750,000 (couples filing jointly). While that’s certainly a lot of income, the percentage never goes higher. Someone earning that pays the same percentage on marginal income as a ten millionaire or a hundred millionaire or a billionaire. It stops progressing

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    • bss03@infosec.pub ⁨5⁩ ⁨weeks⁩ ago

      We need to bring back the 92% (marginal) tax bracket.

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• Sludgeyy@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

  Social Security is capped at $184,500

  SS tax is 6.2% for individual and 6.2% for employer.

  Employee A makes $184,500. $11,439 paid by individual and $11,439 paid by employer. $22,878 total.

  22,878/184500=.124 or 12.4% tax.

  Employee B makes $1,000,000. SS is capped at $184,500. $11,439 paid by individual and $11,439 paid by employer. $22,878 total.

  22,878/1,000,000=.022 or 2.2% tax.

  So someone making a million dollars would only have to give up 1.1% to SS tax and their employer 1.1% SS tax.

  They will both pay the exact same amount into SS but the percentage isn’t as high because $815,500 of the million is not getting taxed.

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  • Ajen@sh.itjust.works ⁨5⁩ ⁨weeks⁩ ago

    IIRC both employee A and B will also get the same payout from Social Security, assuming both of their salaries were at that level (at the cap or higher) for most of their careers.

    Just looking at social security tax will never give you the full picture though, it’s just a small fraction of overall income taxes. And it misses the fact that wealthy people increase their wealth through other means, like long term capital gains. Someone making $100M per year through investments probably won’t work a day job and will therefore pay $0 social security tax.

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    • zarathustrad@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

      Fun fact.

      Some one retiring today at 67 after paying the full cap for the last 35 years (1992–2026) would be getting ~4k/month SS, after paying ~479K (half from employer if not self employed) in SS only over 35 years.

      The same amount invested would likely result in slightly lower payments at 4% return, but higher with actual market return at higher risk. Plus, allow for wealth transfer to dependents.

      So, take that how you will.

      (Numbers are rough since the cap is a moving target and 35 years is a long time).

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    • chiliedogg@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

      But social security isn’t supposed to be a retirement plan. There’snot supposed to be a “return” on individualinvestment. It’s meant to be a social safety net. Therefore it’s fine for rich people to get less out of it.

      It’s also why the retirement age when it was instituted was 2 years above the average American lifespan. It was only meant to cover retirees who had lived longer than expected that they didn’t want dying in the street.

      But our lifespans got longer, so the number of people collecting social security as a retirement plan skyrocketed.

      And the solution for the time being is simple: remove the $184,000 cap.

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      • Sludgeyy@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

        A unskilled laborer makes about $18 or $36k a year.

        They have to pay 12.4% to social security.

        36k×.124=4,464

        $4,464

        Income Tax

        $36k-12,400=23,600

        12,400×.1=$1,240

        23,600×.12=$2,832

        $1,240+$2,832=$4072

        $4072

        $4,464+$4072=$8,536

        These unskilled laborers have to pay nearly a quarter of their pay in SS tax and Income Tax.

        $8,536/$1,000,000=.0085

        That’s less than 1% to them.

        Yes the rich do not need safety nets but they should help build them

        If you were making a $1m salary. You could give up less than a precent of that and make one unskilled laborer’s life 25% better.

        It’s crazy how much $8,536 more would help someone making $36,000

        Yet the system is designed so it takes your $8,536 selling you a safety net

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      • Ajen@sh.itjust.works ⁨5⁩ ⁨weeks⁩ ago

        As long as the withdraw rate is based on contribution rate it doesn’t really matter what the cap is, because you’d be increasing withdrawal along with contributions. Social security income for someone who was making $185k/yr will be far more than enough to keep them out of poverty, which is the goal of social security. It’s not meant to be people’s only retirement account, it’s a safety net.

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• bss03@infosec.pub ⁨5⁩ ⁨weeks⁩ ago

  There’s a cap on how much you (and your employer) pay per SSN / year. So, for particularly high wages or salaries, the percentage goes down, for every dollar made above the cap.

  Also, things like stock( option)s often made up a significant portion of compensation for high earners and those aren’t subject to SSI tax at all, IIRC.

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• Krauerking@lemy.lol ⁨5⁩ ⁨weeks⁩ ago

  The richer you are the more you take and the less you pay back into the system that made you rich. But the parasites will argue their smaller percentage paid in taxes is fine cause of their size even though it means they hoard a larger percentage of their wealth.

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• CannedYeet@lemmy.world ⁨5⁩ ⁨weeks⁩ ago

  Social Security is not designed to redistribute a ton of money from the rich to the poor. And it isn’t used to fund the government so it doesn’t make the rich pay their “fair share”. It’s intended to force people to save so we don’t have a ton of poor seniors around.

  Rich people are taxed up to a certain amount. So the rich and super rich pay in the same maximum dollar amount. But on the other side the benefits that they get out are capped in the same way.

  It’s not supposed to be like a retirement plan where you assume you’re going to live on 80% of your income in retirement. It’s just there to ensure you have “enough”. The most money an individual can get out of social security, the maximum benefit, is $5181/month.

  To be a little more accurate, Social Security Disability Insurance is redistributive by design.

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