How the Wealthy Enjoy a 365-Day a Year Holiday
Some things for some people are a day off every single day of the year. Social Security for wealthiest of wage earners is one of them. This is because taxes are not taken above $114,000 a year under the current tax code about. Before the Fiscal Cliff by the US Congress this past January there was a 2 % payroll “tax holiday”. This was true for all employers and income levels. Since January of 2013 this tax break had been terminated under the budget deal known as sequestration.
Separate from the payroll tax those earning higher incomes pay no social security taxes while enjoying full benefits. This is why it is a daily holiday throughout the entire year. After retirement they enjoy all of the benefits over and above what they have paid for. Requiring all wage earner to pay the same percentage into social security will not solve everything, but it an important start. I have chosen this topic because many of the progressive parties including working families, socialists, and the Green Party have argued that a 2% payroll tax holiday is weakening social security further.
For many millionaires their savings from not paying these taxes are far greater than anyone else regardless of whether this payroll tax cut is kept in place or removed. The full social security tax is 6% of income without this payroll holiday and thus 4% when it is in effect. This is not just uneconomical; it is also nonsensical. It is regressive in the most obvious way possible.
There are millions of senior citizens living in poverty. This has been especially true since the financial crisis of 2008. This is also because women, people of color, those with disabilities, and the LGBTQ Communities continue to feel the effects of tighter social security benefits. What President Obama is willing to do when he describes chained CPI is tie payment increases to the CPI which is the consumer price index. The CPI understates the cost inflation because it is applied as the core CPI leaving out the cost of food and clothing in the calculation.
Here in Jersey City and Hudson County nursing homes and homeless shelters are beyond capacity at nearly all times. I have participated in 3 of the Hudson County Homeless Counts since 2007, and the situation is rampant. The coldness of the winter months accelerate and exacerbate this, but these facilities are near capacity during the summer months.
There are job training programs for seniors, but they have limited success. Those who are old enough to remember the Great Depression are near 90 years old or greater, but those who are in the 60’s and 70’s lack the skills with to days technology. In some ways the elderly and young adults first graduating from college are facing the same dilemma. The oldest of our population never grew to adapt to the technology, and for the youngest population they have to learn about a whole different system of production. This is why I support government spending on construction and manufacturing at all times.
It’s not that the need for these sectors has lessened. In fact this need only continues to grow. What it comes down to is that the technology has changed, and the assembly line has a different meaning. Production has become more specialized. It is not done as batch processing the way it used to be. What is needed is more vocational hands-on job training. The senior population is among the fastest growing demographic. We will never have a country or economy where there are between 15 and 20 workers to each retired person. Today it is estimated to be 3 workers to each retired person. If there could be another few million workers employed in these trades and skill sets then it would 4 to 5 workers for every retired person.
Requiring millionaires to pay this extra 2% on their income would raise this ratio if not to 10 to 1 at least into the upper single digits as adjusted for gross revenues generated to pay into social security. Examining the allocation of social security payouts will always be an important policy issue on government spending, but there will be enough funds to pay benefits at the full rate of inflation for another few generations, at least another 50 to 75 years. Requiring the wealthiest of tax payers to continue paying social security at higher income levels and getting more workers employed in these manufacturing and construction occupations will strengthen our retirement system and economy both in the short and long runs.