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Our View: Larson-Blumenthal Social Security Plan Has Merit
Sen. Richard Blumenthal, D-Conn., and U.S. Rep. John Larson, D-1st District, may not have found the definitive answer to Social Security reform, but last week they put forth a promising proposal that is a good starting point for discussion and one worthy of serious consideration….The Larson-Blumenthal plan would also increase outside income levels retirees could earn without having to pay income taxes on their Social Security from $25,000 for single, $32,000 for joint filers, to $50,000 and $100,000 respectively, thus providing a tax break for an estimated 11 million retirees. That’s a critical component of their plan, since increasing Social Security payroll taxes is also part of their proposal, another stumbling block to Social Security reform in the past. Under the Larson-Blumenthal plan, payroll taxes for individuals would increase from 6.2 percent to 7.2 percent over 25 years. Employers would also see a similar increase in their share of the Social Security taxes they pay. Another potential sticking point in the Larson-Blumenthal plan that negotiators would have to work around is a provision that would keep the cap on payroll taxes on individuals earning more than $118,000 but only up to $400,000. Read more…
This plan is so bad and wanting, it demonstrates the deterioration of our political system which culminated in our having the worst human to become President. I have read the plan in detail, and also the comments about how it will create long term solvency. The mindset of the Committee is that SS# is an insurance policy, a contract, a property right earned by those who pay in. They are in such a state of denial that they contend SS# is not a tax even though a review of the IRS’s documents over and over describe SS# as a tax, a payroll tax. Certain political figures have taken out of context the FICA acronym, (Federal Insurance Contributions Act) to claim it proves SS# is an insurance policy or contract while ignoring looking at the overwhelming IRS material which sets forth that SS# is a tax, a tax on employees and a tax on their employers. They have ignored Supreme Court case law from Helvering in 1937 to Flemming in 1960 to the Affordable Care Act, in discerning what is a tax.
Because of its shoddy foundation, the Congress has not followed a reasonable course, and has ignored the dangers of what they propose. The “plan” will increase what is already an onerous burden on many workers, particularly low and low middle income workers and stressed employers. Example:For the person earning $30k per year, the $2,295 the gov’t takes from a worker is an onerous burden. At a time when all labor markets are confronting the accelerating advances in artificial intelligence/robotic technology, there has been no real consideration of how the costs of SS# affect job creation, hasten lay-off decisions, and management decisions that it is more economical not to use human labor.
This plan takes a system which is already skewed as to benefits paid relative to taxes paid in, to heavily favor the lower income levels, ( I.e It already is a form of welfare paying more for poorer people at the expense of the relatively better off.) and makes it more so by creating a minimum SS# benefit based on 1.25% of the poverty level.
Instead of taking this course, the Congress should go back to the drawing board and open their closed minds to reasoned thinking. That would include taking serious stock of the American labor market now and into the future, and what the costs of doing business, including SS#, together with technology changes, will impact employment/jobs. I suggest the following to consider: That the burden for paying for the goals of SS# should no longer be just on employees and their employers. The burden should be shared, perhaps, with taxes on other forms on income other than wages. As is, that has been happening for years as SS# payouts have been higher than payins, the difference paid by using money for the federal budget office from the “debt” (with 3% interest) it accumulated from the year when annual SS# surpluses were required to be given to the federal budget.
We might have to recognize the truth that SS# is a gov’t social benefit system, a form of welfare. (I get the SS# max for a 66 year-old when retired. I never claim I deserve it or earned it, or paid for it. What was paid was for others.) I get welfare. Needs testing should be discussed. Finally, we should see that times do change, certainly have since SS# was created. Think. Think! THINK! Maybe, just maybe, the time has come for the claimed goals of SS# not be done by a separate office, occupying the same office as the federal budget office. That the separate taxing system be weened out (over time?) and the goals be paid by our regular tax system, rates amended to recognize the change.
My main overall theme is a call to reasoned thinking as opposed to what Washington DC has been doing.
Michael J. Belzer
24 King Edward Rd.
West Htfd., Ct 06117
860-233-5403
[email protected]
Mr. Belzer:
Thank you for your extensive comments about the 2015 article on the Larson-Blumenthal Social Security plan. While the positions currently advocated by Congress on Social Security reform have evolved since that plan, it is nevertheless interesting to read your remarks and suggestions. As you may know, AMAC, Inc. has been active in the search for a balanced plan to resolve the Social Security solvency issue, preferably without additional tax burdens on workers. We will forward your viewpoints to the AMAC team working in this area to ensure they are given due consideration in the current review of H.R. 860 (“The Social Security 2100 Act”). IN the meantime, thanks again for your thoughts and willingness to call them to our contention.
Gerry Hafer
AMAC Foundation, Inc.