#WhyIsMyPaycheckLessThisWeek

[Torie]

All of you red avatars need to decide whether you think tax cuts are good or bad.

False dichotomy. Not all tax cuts/hikes are the same. Don't be obtuse.

You're right. They're not all the same. This relates to a tax that actually funds a specific program.

The social security fund has been looted for decades so there is no point pretending payroll taxes are only used to fund social security and medicare. It's a question of who gets taxed. Due to this deal, most working people will have to pay 2% more while income taxes won't rise for those making even $350,000 a year. And a good bit of that income (even assuming it is from both spouses earning equally) is not subject to the payroll tax. Why don't the Democrats propose raising the cap on payroll taxes? Oh that's right, because they are pussies.

Sbane, you just can't resist embracing that most wrong headed notion that earned income should be taxed at a higher rate than non capital gain investment income, eh?  Punish the upper middle class on their earned income (those making 100K to 200K per year), and punish them some more! This notion is one of the dumbest ideas the Dem Left has ever had really.  Dumb!

I am perfectly fine with decoupling payroll taxes from SS, and dissolving the SS "trust fund" and making SS an old age pension plan, even though much of the Dem party is itself opposed to that notion, because they want this entitlement to have the safe harbor moniker that it has been "earned" and therefore is just a mandatory savings plan, that becomes inviable from the normal budgetary process. But don't F up the tax system to do it, darn it!

[Torie]

All of you red avatars need to decide whether you think tax cuts are good or bad.

False dichotomy. Not all tax cuts/hikes are the same. Don't be obtuse.

You're right. They're not all the same. This relates to a tax that actually funds a specific program.

The social security fund has been looted for decades so there is no point pretending payroll taxes are only used to fund social security and medicare. It's a question of who gets taxed. Due to this deal, most working people will have to pay 2% more while income taxes won't rise for those making even $350,000 a year. And a good bit of that income (even assuming it is from both spouses earning equally) is not subject to the payroll tax. Why don't the Democrats propose raising the cap on payroll taxes? Oh that's right, because they are pussies.

Sbane, you just can't resist embracing that most wrong headed notion that earned income should be taxed at a higher rate than non capital gain investment income, eh?  Punish the upper middle class on their earned income (those making 100K to 200K per year), and punish them some more! This notion is one of the dumbest ideas the Dem Left has ever had really.  Dumb!

When Social security was designed, 90% of income was taxed by the SS tax. Now it has gone down to 80% as there are a lot more people earning more than the threshold. Actually incomes rise pretty fast beyond that threshold because suddenly companies don't have to pay 6% on top of that. So why shouldn't the cap be raised to cover 90% of income again? Moreover, why shouldn't it just cover 100% of income? I can understand the fairness argument, but why doesn't it make economic sense? I don't know if you were trying to make that argument.

Oh, that is a different issue. The payroll tax is paid with after tax dollars, so when you get the money back, in theory you should only pay tax on the imputed interest earned over time, not return of principal. 80% is a pretty good approximation of the breakdown - 80% interest, 20% principal. If we make SS into a welfare program, paid our of the general tax fund, probably higher income folks should get nothing, and one gets gradually more as one's income goes down (with tax free income included this time for means testing purposes). If SS is means tested, there is no good reason to tax it at all - that is money just going out of one pocket and into another, and then back to the original pocket - from Tinker to Taylor to Chance.

Economics is just such a beautiful thing isn't it, and even more beautiful, is that I am quite talented at it really.  

[Torie]

Torie, if you were trying to compare capital gains vs income, yes I don't think it is fair that people get to sit on their ass and make money either. In fact, haven't I ranted about that before? Still, as long as short term investments get taxed at the regular rate of income (and tack on payroll taxes on it as well), I am fine with a lower rate for long term investments. We do want investments in the economy, don't we?

So you think dividends and interest should be taxed at a lower rate than earned income for a given individual?  Anyway, if you want them all (excluding long term capital gains which ain't dividends and interest) taxed the same (makes sense to me), I guess what you are saying is that everyone should have their tax rate jacked up by about 7% or something. Man, are you turning into a tax revenue addict sbane? When did you so fall head over heels in love with such a robust social safety net?  Are you sublimating or something?