Tax increases, loopholes, millionaires, social security and who pays?

 Tax increases, loopholes, millionaires, social security and who pays?

by Richard Leonetti

The newspaper letters are full of opinions about tax increases, loopholes, social security and who should pay. Many writers do not appreciate the terms they are using.

If you pay any income tax at all your household is in the upper half of the income brackets. The lower half file returns but pay zero taxes or get a check back from those who do pay.

If you rail against big time investors you should know that public employees as a group are the biggest in Oregon. PERS has $50 billion invested in stocks, bonds, hedge funds, swaps etc. plus an implied note from Oregon taxpayers of $8 to $12 billion not funded. Some of these 200 thousand PERS beneficiaries have pensions and benefits that will pay out more than a million dollars–are these the “millionaires” we should be mad at?

When it comes to “loopholes”, two of the biggest are “no tax on health benefits paid by your employer” and the “deduction for mortgage interest.” For a renter or an employee whose employer does not buy his health insurance, these loopholes are unfair.

For those saying they “earned” their Social Security: be aware that you will receive substantially more than what you paid. The same goes for Medicare payments: a lot more benefits than you paid for.  This was made even worse last year when these payroll deductions were stopped as a “stimulus.”

Maybe the most difficult to understand is that corporations aren’t really the ones who end up paying for corporate taxes. If they only compete regionally, the tax the corporation pays gets built into their prices and the consumer pays. If they compete internationally, and there is a raise in corporate taxes, they become less competitive and the jobs move to other countries with lower taxes. All developed countries have lower corporate rates than the US.

A major reason our Congress can’t fix the jobs and debt problem is not that they don’t know what should be done. The problem is that citizens, who do not understand these complexities, threaten their next election instead of encouraging them to do the right thing.

tt twitter big4 Tax increases, loopholes, millionaires, social security and who pays? tt facebook big4 Tax increases, loopholes, millionaires, social security and who pays? tt linkedin big4 Tax increases, loopholes, millionaires, social security and who pays? tt reddit big4 Tax increases, loopholes, millionaires, social security and who pays?

Posted by at 05:00 | Posted in Social Security, Taxes | 18 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    Sure would be a lot simpler if we each paid for the services we consume rather than the current obtuse payment system.  I think an analogy might be:  When you go out to eat with friends (of equal standing), do you tend to split the bill or ask for individual checks instead?  I think in most circumstances I’ve found folks tend to want individual checks.  The convoluted tax system has effectively pushed us into a class system as we do not look at each other as equals able to make our own way through life.

    I think every body should have to pay something towards the basic government services of police, national security and public infrastructure.  For those who have little extra means, maybe community service instead.

    Good article, Richard.

  • Founding Fathers

    Still nothing on Oregon Catalyst about the G.O.P.’s reliance on a criminal enterprise and a religious cult as its prime media outlets.

  • Founding Fathers

    Still nothing on Oregon Catalyst about the G.O.P.’s reliance on a criminal enterprise and a religious cult as its prime media outlets.

    • Rupert in Springfield

      The King of Making Things Up speaks!

      • Founding Fathers

        Rupert, I have not made anything up, and you know it. You, however, are the King of Defending the Indefensible (last I saw, you were still making the false claim that there was a Senate INVESTIGATION into McCain’s citizenship).

        You think I’m making it up that the G.O.P. relies on Fox News and the Washington Times?

        The Murdoch Empire is being shown to be a criminal enterprise.

        The Washington Times is owned by the Moonies.

  • Rupert in Springfield

    “Loophole” is the current abuse of the language by this president I’m beginning to find most irksome. Look, if you use the tax code to influence behavior, something Democrats are wont to do, its is really a little disingenuous to come back later and pretend those taking advantage of the behavior you encouraged as using a “loophole”.

    “Taxpayer” is another one. Look, it’s fine to call everyone who pays taxes a tax payer. However if you are going to include those who only pay their side of payroll taxes as tax payers, you can’t then turn around the next day and claim those payroll taxes are “all the benifits they are entitled to and that they have paid for” when anyone talks about cutting SS or Medicare. It’s either one or the other, a tax or a benefit payment. Besides which, I have met precious few people, myself included when I was younger, who paid no Federal income tax just payroll tax, and didn’t get back more than enough in refunds to cover whatever those payroll taxes came to. In other words, if you are getting back more in refunds or damn close to it, such as if you get the EITC, sorry, you aren’t a tax payer even if you did pay payroll taxes, since you got all that refunded anyway.

    “Uh uh uh, let me be perfectly clear”  – OK, Obama has probably never given a speech or a press conference without using this little gem. Mr. President, it was a favorite phrase of Nixon’s (sans “uh uh” ), it seems to be of yours, its kind of getting worn out. It’s especially annoying when following a statement of obvious meaning. Oh, and by the way the “uh uh” thing has got to go. I will never understand why those who try and affect deep intellectualism think stammering and “uh uh’ing” makes them sound smarter. It doesn’t.

  • HoboJoe

    With almost half the country not paying ANY federal income taxes, it is a joke.
    Simplify the system, spread the pain, reduce spending, and quit giving everyone a free ticket.

    • valley dude

      Raise taxes on the poor? I thought conservatives were against raising taxes on anyone?  Maybe Obama has taken the wrong tack. Maybe he should put raising taxes on the poor on the table and see what Grover Nortax and Eric Cantax say to that.

  • Kpg2121

    I would figure I should get more on SS than I paid in.  Just like I would if I began investing at age 20 and kept investing, I would expect I would make a profit.  That’s why I do it.  To bad the governement has used SS money for “other” things, such as wars, rather than let the interest accumulate.

    • Steve Buckstein

      Yes, you may very well receive more Social Security income after you retire than you and your employer paid into the system, but the “rate of return” is declining as payroll tax rates rise and the age for full benefits also rises. 

      But the real question is, how much more could you receive in retirement if you had paid into a personal account invested in the economy. Young workers today would be better off putting their money under the mattress rather than “investing” in the current Social Security System. Of course, they don’t have that, or any other choice as long as the federal government forces them to feed its unsustainable retirement system.

    • Steve Buckstein

      Yes, you may very well receive more Social Security income after you retire than you and your employer paid into the system, but the “rate of return” is declining as payroll tax rates rise and the age for full benefits also rises. 

      But the real question is, how much more could you receive in retirement if you had paid into a personal account invested in the economy. Young workers today would be better off putting their money under the mattress rather than “investing” in the current Social Security System. Of course, they don’t have that, or any other choice as long as the federal government forces them to feed its unsustainable retirement system.

      • valley dude

        Everyone has the option of paying into a tax deferred personal account to supplement what they will eventually get from the social insurance, not investment program, known as Social Security. And if you save and invest well and get a bit lucky on market timing (no big downturn just ahead of your retirement date, no Bernie Madoff managing your money,) you can have a financially comfortable old age. If you get unlucky and only have SSI, you will be able to keep a roof over head and food on the table.

        Eliminating SSI, or converting it to a personal account, is not going to happen. And it shouldn’t happen. 

  • valley dude

    Misleading at best. Everyone pays into SSI and Medicare, which together take about 15% out of every paycheck. Some workers at the lower end of the scale with kids get a partial rebate on this through the Earned Income Tax Credit.

    PERS has a lot of money invested distributed amongst a lot of people, But 1% of Americans own over 38% of total stock and mutual fund assets in the US, as of a few years ago. The bottom 80% of Americans, and that probably includes most Catalyst readers and ranters as well as PERS members, own only about 19% of all stock & mutual fund assets.

    The top 1% also own 62% of all business equity and 61% of all financial securities.

  • No SS

    one minor correction.  You state one receives more than paid in.  based on principle along then yes but the TBILLS that the money is “invested” in returns somewhere around 6%.  Check the Social Security web site for the exact return.  Therefore you do not get out what you pay in.  and when you die it is not yours. 

    One of the primary reasons I am an advocate of NO SS.

    • Steve Buckstein

      Yes, the last time I checked the Social Security “trust fund” was invested in special, treasury bills paying around 6%. Because they’re non-marketable they’re just kept in a locked four drawer filing cabinet in a government office building in West Virginia.

      Of course, now that SS has begun paying out more in benefits than payroll taxes bring in, cashing in those T Bills to pay benefits seems to be putting even more pressure on the Treasury as the debt ceiling deadline looms. 

      And, President Obama has said that there may not be enough money “in the coffers” to pay SS benefits on August 3rd. I wonder if he considers that filing cabinet to be part of the “coffers”?

      • valley dude

        Like every Tbill, they can only redeem them by issuing new debt. Congress appropriated  current spending, agreed to only tax 60 cents on the dollar, and now has decided to prohibit the Administration from issuing more debt, threatening to bring down the entire economy unless he meets their non negotiable demands.

        So yes, the trust fund Tbills will probably be just as worthless as all the other Tbills out there unless this Congress agrees to pay the credit card bill it already ran up. If they blow it, the econoy will tank, interest rates will go up for all of us, and it will take another decade to repair the mess.

        I hope you guys like it, because you voted for it.

    • Steve Buckstein

      Yes, the last time I checked the Social Security “trust fund” was invested in special, treasury bills paying around 6%. Because they’re non-marketable they’re just kept in a locked four drawer filing cabinet in a government office building in West Virginia.

      Of course, now that SS has begun paying out more in benefits than payroll taxes bring in, cashing in those T Bills to pay benefits seems to be putting even more pressure on the Treasury as the debt ceiling deadline looms. 

      And, President Obama has said that there may not be enough money “in the coffers” to pay SS benefits on August 3rd. I wonder if he considers that filing cabinet to be part of the “coffers”?

  • just doing the math

    “House Speaker John Boehner, the top Republican in Congress, was quietly
    working on an ambitious “grand bargain” with President Barack Obama,
    until rank-and-file members objected to the $1 trillion in tax increases that
    would have accompanied $3 trillion in spending cuts.”

    “Boehner’s deputy, Eric Cantor, has pitched a $2.5 trillion plan as a more
    modest, realistic option, but members so far have not embraced it.” 
     
    This is with respect to the last paragraph in the article above.

    So, what I am reading is this whole debt deal that Boehner and
    Obama had in the works is now being held hostage by the little
    climber (the label in the corporate world attached to an overly 
    ambitious, to the point of ruining it for everybody else person)
    Eric Cantax, excuse me, Cantor? They should hang this individual 
    by the (I am sorry, forgive me, I will not use profanity) well you know
    what I mean. 

    The GOP and its weird offshoot, the tea party, cannot find unity
    even within their own party. Maybe it is this lack of unity within
    the GOP that is grinding these debt talks to a halt.

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)