So it is time to give you a different perspective than what
you will see from the two major parties. I have done this before so some of
this may sound familiar to regular readers. And I think that is good. Hopefully
my ideas are consistent. Some changes may be made here and there, yet that is
because the times change every four years and some of my ideas getting
furthered developed as time goes on. As I mentioned in a post last month I will
be presenting the platform in multiple posts. And I am starting with one topic
I have discussed many times previously. This should be shorter than future
posts since I hope to more or less consolidate what I have expressed
previously.
Part one is about social security and ideas to help it survive
and even thrive. Social Security is something that I think most Americans agree
needs to not only be kept, but improved so that it is available for all working
Americans now and in the future. One point I recently mentioned was I am glad
Ms. Haley is talking about it, but her main point of extending the retirement
age until 70 should not be considered. You can choose to work as long as you
want, but you should always be able to choose to have your own life after
working 40 or more years. I know this is not a “right”, yet if the company you
work for won’t take care of you when you retire and we have a system to help
you in place then we should make it as strong as possible.
So to keep social security viable we really need to have a
multi prong approach. Trying to keep social security solvent beyond next decade
is too difficult for a one solution fix, so I propose these ideas to keep it
funded and to build up the future.
The first step is to change some of the current income tax
policy. Currently the worker and the employer each contribute an equal share
into the coffers of the Trust Fund. And more on the Trust fund later. You could
say just raise the amounts that are contributed which would be helpful for
social security, yet would be difficult for both the employer and worker. You
are taking more out of the pocket of the employer and worker at a time when
many workers are struggling with high inflation and high cost of rent or
mortgage. And the housing situation is another platform idea that will be
addressed in a future post.
A better approach is to lower the income tax bracket of the
working and middle class by a certain percentage and use some of that tax
reduction and move it into social security. And yes this does mean that the
worker contributes more than the employer, but this helps many small businesses
by not raising how much they have to contribute to social security. You can
create an inordinate amount of mathematical examples, yet to keep it simple I
will say, cut the tax rate for the first few tax brackets by ten percent. Verbiage
here is important, I am not saying cut the tax rate by ten percent so we are
not moving the fifteen percent bracket to a five percent bracket. No I am
saying cut the fifteen percent bracket by ten percent so a worker’s income is
now taxed at 13.5 percent. And then of that 1.5 percent reduction half stays in
the worker’s pocket and the other half, .75 percent, goes to social security.
Honestly we would need to cut more than ten percent, but the math is going to
be much more involved as to how much we can cut into the fifteen percent and
other brackets once the numbers are looked at in depth. I just use the ten
percent example so you can see how the cut can be hypothetically applied. This
also means there will be changes to the overall tax code to make this work and
that will be discussed in a future post. I will say for now that corporations
and people with large incomes will see a shift upward, however for corporations
if they apply certain other aspects of the taxes to their employees their tax
increase can be mitigated, but not removed.
The second idea is to increase earnings in the Trust
fund. To some people this sounds like we
need to have Wall Street manage the Trust fund. I am one hundred percent
against Wall Street or any facsimile of private enterprise taking over this
amount of money. I along with you fear the potential for abuse of people with
this much at their disposal. What kind of havoc would be unleashed on the
financial system by people trying to cook up earnings for social security so
they could get paid? I know some people will say they would just manage it
according to whatever protocol Congress sets up, but as you know the same
people managing money have an extensive lobbying apparatus set up in Washington.
It would not take them long to change whatever laws set in place to keep them
in check were drastically changed. And I am saying this with complete confidence
that this would be a horrible mistake. No I am talking about a more measured
approach. And yes I realize some experienced money managers would need to be
hired to run the amount of money in the Trust fund, however, you keep it out of
the Wall Street economy by only allowing investments in public/private
partnerships in infrastructure. Another words social security is invested in municipal
projects such as water treatment plants where revenue bonds are normally
issued. Or public school districts needing to build new schools. I also have
some development projects that will be discussed in an economic platform post
where to solve problems private enterprise entities that might benefit from the
development will be required to invest their own money and not totally rely on
tax payer funds for the specified project.
This way the project is developed for the general good, but any type of
industry or business that benefits has skin in the game for their own rewards. A
Social Security public/private partnership projects allows some public money to
be invested in larger projects to help reduce the burden on local governments
and entities so taxpayers are not funding someone else’s profits. Businesses
develop as the project is built while the public benefits in general from the
project itself. This is a quick example, but try thinking about toll roads
being partially funded by the company that profits from running the toll road.
In Texas we have companies making significant profits from roads that are built
by tax payers so there needs to be a balance to building the road, and if we
have to pay tolls then then the money should go back somehow to the general
populace who pays for it. Or some of the tolls collected go back to the social
security trust. Rates can be set by local government also so the tolls do not
become overly burdensome. End result is a road is built by the public/private
partnership, less, not none state and local tax money is used, some private
enterprise money is used to help lower this taxpayer cost and then the company
receives a portion of the profits and they can make a reasonable profit, and
some is used to pay social security back for their investment with a competitive,
but maybe a half point to point lower interest rate than on the open market for
bonds. Not all the money comes from social security so the overall markets are
not left out of infrastructure development. It allows for multiple partners on
public projects to benefit.
The third idea is a small addition. Social Security is taken
from all paid wages. Basically there is no cap on income. Some may say corporations
will find away around this to pay their higher wage earners and this means some
creativity will need to be created in the tax code to discourage this behavior.
And there will be a future post on taxes. Now a strange difference though is
that high wage earners can take a cash payout of their social security when
they retire. I heard and I forget who said this, yet it made sense to me. The
person was reputedly a billionaire and he was complaining what the heck am I
suppose to do with this monthly check. I sure do not need it. Or something to
that affect. And I agree with him. It is
possibly a burden to keep track of this check in his income and tax planning,
there is no need for this check, and he understood paying into the system for
him to receive this money was to him a waste. I still think a person should pay
into the system because until you reach a certain point financially it might be
good to have social security available until you reach said certain point
financially. Yet at that point it does become a potential hindrance. So to
avoid social security having to pay out over a person’s life time they can
elect to receive back what they have contributed. Now the question becomes is a rate of return
calculated so they receive their contributions plus? Maybe something similar to
an annuity cash out where you end up with less than if you took the lifetime
payout, but more than you contributed. I think you could work something out
where the person who does not need social security still receives a small
investment return while the majority of the people who need it can receive the
lifetime payout amounts. Making this available to all might be dangerous because
this is suppose to be their lifetime support. So creating a buyout option would
need to have some serious caveats, but I think should be offered if we up the
requirement that all wages are included in social security. If people want to
invest their own money in retirement they still can through work place and IRA
savings accounts. I would make using social security to try and increase their
earnings difficult since there are no guarantees in the investment world. And that
does go back to corporations saving some on their taxes by offering more to employees
as touched on above.
These are just a few ideas and I am open to others. The goal
is to find ways to strengthen and improve social security so it is viable for
our grandchildren’s grandchildren without putting the burden on workers to work
so long they never receive anything in social security. Hence working until 70
as a solution only means every few years we just keep adding to the retirement
age until we work until our death and receive none of our contributions. This
may be what the corporate world wants from us, or the short sighted, but I am
of the mind set that social security is a healthy option for so many people
that it needs to be preserved.
Happy New Year and Cheers
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