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I heard there is a 2% cut from 6% in paying into SS and Medicare. I think this mean that since I am putting less into SS I will get less when I retire. Should I be moving my 401k or Roth up by 2 percent more to cover my losses?

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The income cap on SS taxes WILL be removed, it's only a matter of time. Medicare's income cap was removed in 1993 -- do... (more)

boden11 (Jan. 01, 2011 @ 2:32p) |

I don't see any reason both caps cannot be removed simultaneously. Social Security is progressive: You get 90% of your i... (more)

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I stand corrected. The projection was incorrect. The budget deficit is not $25 billion. It is $27 billion. I was off by ... (more)

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personally, I wouldn't count on SS at all (granted, I've got about 40 more years before I can collect)

Superdude99 said:   I heard there is a 2% cut from 6% in paying into SS and Medicare. I think this mean that since I am putting less into SS I will get less when I retire. Should I be moving my 401k or Roth up by 2 percent more to cover my losses?
Incorrect. SS benefits will stay the same since it is based on lifetime earnings.

yes, the SS system got shafted with this deal. but since it probably won't be around in 40 years (at least as we know it know), i don't care. money now > maybe money later.

Here's basically what will happen in January:
After the new year, every working American will automatically receive a bigger paycheck. It's part of the tax cut negotiations coming out of Washington, D.C.

The amount withheld for Social Security taxes is dropping by 2 percent. Currently, 6.2 percent of what people earn is withheld for Social Security, up to the first $106,800. The percentage withheld is dropping to 4.2 percent.

So under a system of 26 pay periods a year -- or every two weeks -- your paycheck would grow by about $26 if you earn $35,000 a year.

If you earn $50,000, your paycheck will grow by $38. And if you earn $75,000, you will be taking home $57 extra.

Employers should start reducing the amount of Social Security tax withholding as soon as possible. But because the tax deal just passed, some employers will need more time than others to implement the change.

According to the IRS, the payroll boost should be implemented no later than Jan. 31, and it will have no effect on future Social Security benefits.

Source: http://www.wdsu.com/r/26194854/detail.html

If the extra 2% in your paycheck will permit you to allocate additional savings somewhere else, by all means DO IT!

obama being mentioned in the title is a stretch. But bush? common man. Guy hasnt been in office in nearly 2 years.

edit: nm just read the link posted.

Sweet I was under the impression that our take home pay was gonna remain the same!

Superdude99 said:   I heard there is a 2% cut from 6% in paying into SS and Medicare. I think this mean that since I am putting less into SS I will get less when I retire. Should I be moving my 401k or Roth up by 2 percent more to cover my losses?
No “losses”.

The difference will be made up from the general revenues fund to the Social Security Trust Fund, so it’s really just an indirect tax cut.

defjukie said:   personally, I wouldn't count on SS at all (granted, I've got about 40 more years before I can collect)
Social Security is more financially sound today than it has been throughout most of its 75-year history. The actuaries show it solvent through 2085, and they only do 75-year projections.

Superdude99 said:   I heard there is a 2% cut from 6% in paying into SS and Medicare. I think this mean that since I am putting less into SS I will get less when I retire. Should I be moving my 401k or Roth up by 2 percent more to cover my losses?

Where did you hear that?

Social Security will still be around in 40 years. I do not worry at all. A quick sollution would be to stop capping the tax at $100,000ish.

Beyond that lets go into reality for a second. Suppose in 30 years Social Security ran out of money.

Do you really think the government is going to stop sending out checks? It would wreck the economy. Would we just throw 70 year old people out on the street and have them eating dog food? Our country has become dependent on social security for old age I do not foresee it drying up for better or worse.

In 40 years ( or less ) - US will be caught in the same situation which the european laggards are in today - cut their benefits or default.

Funny some troll keeps redding all the posts. keep posting the red. But ask yourself this chicken little. If the SS fund starts taking in less money than it gives out for a few years and essentially runs a deficit. What is the big freakin deal? This country has been running on a deficit for the last 60 years!!! yet here comes chicken little oh no social security is goign to run out of money in 30 years sound the alarms. lol

Woodchuck312 said:   A quick sollution would be to stop capping the tax at $100,000ish.Raising taxes is not the solution.

huffboy said:   In 40 years ( or less ) - US will be caught in the same situation which the european laggards are in today - cut their benefits or default.

Totally agree. Looking at Europe is like looking at the future of the U.S. (though without the women not shaving their armpits I hope!!)

I think there are two problems: the rich (who really control the country) and the lazy dumbsh!t poor. 1) the rich have rigged the system where they pay much less tax than they should when you include the fact that they make/steal most of the money in this economy. Current recession is proof (>$100 million to run a company into the ground?).


2) The poor are lazy and want handouts. At some level, I don't blame the rich for rigging the system. They worked hard and all they see is a bunch of sorry ass whiners wanting more "services". However, it is still "rigging" the system so that they can get richer, without regards to even the middle class, who is not rich but definitely not the lazy poor. The middle class works hard and is getting poorer every year.

dcwilbur said:   Woodchuck312 said:   A quick sollution would be to stop capping the tax at $100,000ish.Raising taxes is not the solution.

Taxes is an interesting conundrum. When you look at the past 2 decades, high tax rates DID NOT stifle the economy nor did it increase unemployment (look at the 90s under the Clinton tax scheme).

Low taxes did NOT trickle down, did NOT give job growth and did NOT grow the economy. That wealth was sucked up by the top 2%, leaving the middle class at par since the beginning of the Bush years. In fact, low taxes and lax regulation resulted directly in a recession.

I am not saying raise OR lower taxes. I am saying that the current discourse that high taxes stifles the economy is wrong and that low taxes "create" jobs is wrong. I don't know the solution, but it has been experimentally PROVEN that this is true.

I've read the 2% would be funded by the general budget, so would not have any direct impact on OASI/DI funds. Of course it's still a robbing Peter (young, who will eventually be forced to pay down the national debt) to pay Paul (baby boomers, who need the funds to be as valuable as possible) exercise.

TheMeliorist said:   I've read the 2% would be funded by the general budget, so would not have any direct impact on OASI/DI funds. Of course it's still a robbing Peter (young, who will eventually be forced to pay down the national debt) to pay Paul (baby boomers, who need the funds to be as valuable as possible) exercise.

What is the possibility of the 2% cut being extended past just the one year? I can see the media right now, "2012 looks like a tax RAISE year with SS taxes going from 4% to 6%". Politically a killer.

If there is in fact further extensions of this tax cut, will it affect future payouts?

JoeFriday said:   defjukie said:   personally, I wouldn't count on SS at all (granted, I've got about 40 more years before I can collect)
Social Security is more financially sound today than it has been throughout most of its 75-year history. The actuaries show it solvent through 2085, and they only do 75-year projections.
Better go check those assumptions again. You can start with the GDP projections.

If there is in fact further extensions of this tax cut, will it affect future payouts?Yes. Anyone that disagrees is a horrible liar. What they will tell you is the the trust fund is backed by government issued bonds. Those would be the same bonds presently getting killed in the Bond market.

Anyone that says SS is going to be around after 2041 is someone that lives in a fantasy world where unicorns breed like rabbits and math isn't required.

axiom said:   If there is in fact further extensions of this tax cut, will it affect future payouts?Yes. Anyone that disagrees is a horrible liar. What they will tell you is the the trust fund is backed by government issued bonds. Those would be the same bonds presently getting killed in the Bond market.

Anyone that says SS is going to be around after 2041 is someone that lives in a fantasy world where unicorns breed like rabbits and math isn't required.




I don't know how unicorns breed, but I'm pretty sure math isn't required

Love8008s said:   dcwilbur said:   Woodchuck312 said:   A quick sollution would be to stop capping the tax at $100,000ish.Raising taxes is not the solution.

Taxes is an interesting conundrum. When you look at the past 2 decades, high tax rates DID NOT stifle the economy nor did it increase unemployment (look at the 90s under the Clinton tax scheme).

Low taxes did NOT trickle down, did NOT give job growth and did NOT grow the economy. That wealth was sucked up by the top 2%, leaving the middle class at par since the beginning of the Bush years. In fact, low taxes and lax regulation resulted directly in a recession.

I am not saying raise OR lower taxes. I am saying that the current discourse that high taxes stifles the economy is wrong and that low taxes "create" jobs is wrong. I don't know the solution, but it has been experimentally PROVEN that this is true.


I disagree somewhat. Look at the low tax states and how much they have grown and created jobs compared to higher tax states. Texas alone has created more jobs than the rest of the country combined over the last 2 years.

soundtechie said:   axiom said:   If there is in fact further extensions of this tax cut, will it affect future payouts?Yes. Anyone that disagrees is a horrible liar. What they will tell you is the the trust fund is backed by government issued bonds. Those would be the same bonds presently getting killed in the Bond market.

Anyone that says SS is going to be around after 2041 is someone that lives in a fantasy world where unicorns breed like rabbits and math isn't required.
I don't know how unicorns breed, but I'm pretty sure math isn't required
Unicorns don't breed, they divide.

" A quick sollution would be to stop capping the tax at $100,000ish."

It is quick alright but you are changing the nature of SS from an old age safety net into yet another government run welfare. I am not against welfare; but we pretty much already have all the welfare programs we need--food stamps, housing, medicaid. SS's cap is extremely fair if you don't think of it as a welfare scheme--you income subject to the tax is capped because your benefit is also capped.
Remember SS was started by FDR, the father of modern american libralism. Obviously FDR didn't think the cap was unreasonable.

Love8008s said:   dcwilbur said:   Woodchuck312 said:   A quick sollution would be to stop capping the tax at $100,000ish.Raising taxes is not the solution.I am not saying raise OR lower taxes.You said removing the limit on the amount of income taxed for social security would be a quick solution. THAT is what I would call a tax increase. I didn't bring up the issue of lowering taxes or what's good for the economy; I just don't see how doubling my social security tax is going to solve the problem. There are fundamental problems with the present social security model that an increase in revenue alone is not going to solve.

That wealth was sucked up by the top 2%, leaving the middle class at par since the beginning of the Bush years. In fact, low taxes and lax regulation resulted directly in a recession.Not at all. The recession is the immediate result of the Fed's interest rate policy from 2004-2006. They kept rates too low for too long thus creating the real estate bubble. Bubbles are all the Fed really creates in trying to play peacemaker between its member banks.

Look, go play the stock market right now. You can buy, buy, buy for the next 12 months and then dump it all. You'll book a very healthy capital gain right before the real estate market plummets when the Fed is forced to raise interest rates.

PS: The "Clinton boom" is really NAFTA and has nothing to do with the Clinton administration's massive tax increase on the middle class.

Never mind

axiom said:   That wealth was sucked up by the top 2%, leaving the middle class at par since the beginning of the Bush years. In fact, low taxes and lax regulation resulted directly in a recession.Not at all. The recession is the immediate result of the Fed's interest rate policy from 2004-2006. They kept rates too low for too long thus creating the real estate bubble. Bubbles are all the Fed really creates in trying to play peacemaker between its member banks.

Look, go play the stock market right now. You can buy, buy, buy for the next 12 months and then dump it all. You'll book a very healthy capital gain right before the real estate market plummets when the Fed is forced to raise interest rates.

PS: The "Clinton boom" is really NAFTA and has nothing to do with the Clinton administration's massive tax increase on the middle class.


Not to mention the whole .com boom. Microsoft secretaries were showing up to work in Ferrari's because their stock benefits were shooting through the roof.

Is the employer share dropping also? If so, it is a bunch of crap that that share is not returned to the employees. Employers get a 2% raise

dmlavigne1 said:   Is the employer share dropping also? If so, it is a bunch of crap that that share is not returned to the employees. Employers get a 2% raise

Only the employEE share is dropping, the employer share remains the same.

And even if it did go down, you do realize that the company keeping more money either equals higher shareholder value, or the potential to have more people (2% more people!) working for the year. But I can see how you would think it was crap...

axiom said:   JoeFriday said:   defjukie said:   personally, I wouldn't count on SS at all (granted, I've got about 40 more years before I can collect)
Social Security is more financially sound today than it has been throughout most of its 75-year history. The actuaries show it solvent through 2085, and they only do 75-year projections.
Better go check those assumptions again.

OK.

Still shows 2085 in a 75-year projection.

You can start with the GDP projections.
The GDP projections are about HALF what they were over the previous 75 years.

Next ?


SO-CALLED TEXAS MIRACLE
Disclaimer
lonestarguy said:   Love8008s said:   dcwilbur said:   Woodchuck312 said:   A quick sollution would be to stop capping the tax at $100,000ish.Raising taxes is not the solution.

Taxes is an interesting conundrum. When you look at the past 2 decades, high tax rates DID NOT stifle the economy nor did it increase unemployment (look at the 90s under the Clinton tax scheme).

Low taxes did NOT trickle down, did NOT give job growth and did NOT grow the economy. That wealth was sucked up by the top 2%, leaving the middle class at par since the beginning of the Bush years. In fact, low taxes and lax regulation resulted directly in a recession.

I am not saying raise OR lower taxes. I am saying that the current discourse that high taxes stifles the economy is wrong and that low taxes "create" jobs is wrong. I don't know the solution, but it has been experimentally PROVEN that this is true.

I disagree somewhat. Look at the low tax states and how much they have grown and created jobs compared to higher tax states. Texas alone has created more jobs than the rest of the country combined over the last 2 years.

I’m afraid not.

< SEE CHART

axiom said:   PS: The "Clinton boom" is really NAFTA and has nothing to do with the Clinton administration's massive tax increase on the middle class.
There was no “massive tax increase on the middle class”. Federal income taxes were raised on the top 1.2% of taxpayers.

chripuck said:   axiom said:   That wealth was sucked up by the top 2%, leaving the middle class at par since the beginning of the Bush years. In fact, low taxes and lax regulation resulted directly in a recession.Not at all. The recession is the immediate result of the Fed's interest rate policy from 2004-2006. They kept rates too low for too long thus creating the real estate bubble. Bubbles are all the Fed really creates in trying to play peacemaker between its member banks.

Look, go play the stock market right now. You can buy, buy, buy for the next 12 months and then dump it all. You'll book a very healthy capital gain right before the real estate market plummets when the Fed is forced to raise interest rates.

PS: The "Clinton boom" is really NAFTA and has nothing to do with the Clinton administration's massive tax increase on the middle class.

Not to mention the whole .com boom. Microsoft secretaries were showing up to work in Ferrari's because their stock benefits were shooting through the roof.

Once again, the chronology is way off.

The first web browser (Mosaic) wasn’t even invented until 1993, and wide-spread commercial dial-up didn’t exist until 1995. Both the national economy and the stock markets were skyrocketing years before “the whole .com boom”.

juliox said:   dmlavigne1 said:   Is the employer share dropping also? If so, it is a bunch of crap that that share is not returned to the employees. Employers get a 2% raise

Only the employEE share is dropping, the employer share remains the same.

And even if it did go down, you do realize that the company keeping more money either equals higher shareholder value, or the potential to have more people (2% more people!) working for the year. But I can see how you would think it was crap...


Or in a private company's case 2% for the owners.

nycll said:   " A quick sollution would be to stop capping the tax at $100,000ish."

It is quick alright but you are changing the nature of SS from an old age safety net into yet another government run welfare. I am not against welfare; but we pretty much already have all the welfare programs we need--food stamps, housing, medicaid. SS's cap is extremely fair if you don't think of it as a welfare scheme--you income subject to the tax is capped because your benefit is also capped.
Remember SS was started by FDR, the father of modern american libralism. Obviously FDR didn't think the cap was unreasonable.


Totally agree. If any taxes are raised the middle class of America will rebel. The situation will not be pretty.

Lazy folks living on hard-earned taxpayer money forcibly taken away for redistribution by the Government should get off their sofa and start working for a living.

Taxes should only be used for the costs of maintaining law and order, defense, and to create and maintain shared public infrastructure (roads, bridges, forests, etc) that are for the common good of everyone in the society.

Not to pay off lazy indolent people with the fruits of someone else's hard labor.

Anakin

dmlavigne1 said:   juliox said:   dmlavigne1 said:   Is the employer share dropping also? If so, it is a bunch of crap that that share is not returned to the employees. Employers get a 2% raise

Only the employEE share is dropping, the employer share remains the same.

And even if it did go down, you do realize that the company keeping more money either equals higher shareholder value, or the potential to have more people (2% more people!) working for the year. But I can see how you would think it was crap...


Or in a private company's case 2% for the owners.


The employer share is not dropping. But in any case, what would have been wrong with the owners getting 2% more? Don't they deserve to enjoy the fruits of all the labor they put into starting the company and employing all those people?

In America we should amend the Constitution to make it mandatory for someone aspiring to hold public office to have some successful entrepreneurship experience. Someone who wants to be Councilman or Mayor or Governor or Senator or Congressman or President should have created at least 100 jobs and maintained them over a period of at least 10 years in a profit-making enterprise to be considered qualified to hold public office, make important decisions concerning public finances, government policies and the economy, and collect and spend the public's tax money.

I believe that such a requirement will weed out the losers who have been running the country into the ground the last several election cycles, and bring into office qualified and successful people like those who founded this country.

Anakin

As others said the SS payout is based on earnings rather than the tax paid. For a simplified example, if you're someone who earns the SS cap ($107K) and both the cap and your income stayed at that level forever, then the scheduled benefit of how much you'll get paid each year is the sum of: $2750/year for the first 3 years you work, then $975/year for the next 15 years after that, then $460/year for the next 17 years, and $0/year after that. I wanted to see how worthwhile it is to keep working -- the annual SS statement assumes you work until 65, and I wanted to see how worthwhile it was to keep working past 35.

I'm not counting on SS, but the annual statement says they'll still bring in 75 cents on the dollar when the trust fund is depleted, and that doesn't sound that bad but they don't mention whether revenue will get better or worse after that point in time.

Do not forget the Making Work Pay is expiring at the end of the year so in 2011 the tax tables will be adjusted and offset some of the 2% reduction.

Woodchuck312 said:   A quick sollution would be to stop capping the tax at $100,000ish.The social security tax is currently capped at $106,800 (indexed to inflation) because at that level the social security benefit is also capped. So, if you increase the wage cap or even remove it, would you also provide a corresponding increase in social security benefits?

Skipping 116 Messages...
axiom said:   Is this the same Texas that has a $25 billion deficit?No. Texas does not HAVE a $25 billion dollar deficit. Texas has a PROJECTED $25 billion dollar deficit.I stand corrected. The projection was incorrect. The budget deficit is not $25 billion. It is $27 billion. I was off by $2 billion.



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