General Discussion

We don’t want to pay social security benefits out of general funds as that would give politicians too much sway over it. However we kinda gave away too much in 1983. So tacking on the tax to FICA may be the road back to fairness.

Back in 1983, FICA taxes were raised in order to fund a trust fund that was promised to keep social security whole for 75 years. (Additionally, Reagan started taxing benefits.)

However, things happen. Looks like the trust fund will be exhausted in, say, another 5 or 6 years, so we only got about 50 years out of it. Then it can only payout around 75% of existing benefits. Ok, you may say. Others might disagree.

The $2-3T added to the fund was bound by law to invest only in Special Treasury Bonds paying a paltry 2% (it may have changed in recent years). They weren’t allowed to be traded, so we were stuck. We were losing money, as the CPI over most of this period was over 3%.

The debt, further, was “off the books”, it wasn’t included in yearly deficit figures. This allowed more borrowing than the public may have otherwise tolerated. Of course, various R administrations blew the top off of borrowing, leaving anyone who looks at it in shell shock.

Meanwhile there have been 3 tax cuts primarily for the wealthy totaling around $6 trillion. The rich, rather than paying taxes — like we of the rascal multitudes — would loan the government money, get a decent return, and then get their principal back. Good deal! Problem is 99% of us are not in that rarified club.

Back in the day when the top FIT rate was 50%, taxes were pretty equal (at about 30%) all across the income spectrum except for the very top and bottom (this includes sales taxes, state taxes, FIT, etc.). With all the generous tax cuts for the wealthy over the years, I doubt it’s as fair as back then. It never was very progressive. Asking the well off to chip in another 6.2% is not asking too much. It is fair. Equitable. And long past due.