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Fighting Words on Social Security: Apply the FICA Tax to All Income Including Investment Income and Lower the Retirement Age
It's time for us progressives to stop playing defense on Social Security.
We've watched the retirement system suffer years of attacks by conservatives and by class traitors in the Democratic Party. We have seen the retirement age raised since 1983 from 65 to 67, and the cost-of-living calculation altered so that our benefits have declined in value over time, while the tax rate on working people has risen.
It's time to stop fighting rear-guard actions and to go on the offense.
Beginning next year, the Baby Boom generation born after 1945 is going to start retiring en masse. That means the size of the retiree portion of the population is about to double. Far from being a threat to the Social Security system though, as conservative critics falsely claim, this new wave or retirees will actually strengthen the system, because soon there will be a far larger voting population of retirees and pending retirees who will all have a vested interest in preserving and improving Social Security.
That is precisely why the Obama Administration, ever solicitous of the wishes of the corporate elite and Wall Street, together with bought-and-paid Republicans and treacherous Democrats in Congress, are attempting through the latest so-called Deficit Commission, to push through more cuts to weaken the Social Security system now, while they still can.
If we Baby Boomers, who are just about to start collecting Social Security, would recognize our own (and our children's) interests, we could put a stop to this betrayal of the New Deal's greatest legacy immediately.
There is no Social Security "crisis."
In fact, it is time to demand a return to 65 as the age for retiring with full benefits, and to demand a restoration of the original methodology for calculating cost-of-living adjustments.
It is all the more important that we lower, and not raise the retirement age, because with the unemployment rate now stuck at close to 10% officially, and with one- in-five Americans either unemployed, working part-time involuntarily, or "out of the labor force" (meaning they gave up trying to find work in an economy where there are six workers chasing each job opening), the last thing we should be doing as a nation is forcing older workers stay on the job against their will, keeping those positions filled and unavailable for younger workers.
By fighting to restore and improve Social Security, we kill three birds with one stone--solidifying Social Security's funding, improving life for retirees, and helping open up jobs for younger workers.
How to perform this triple miracle?
Easy. Just eliminate the cap on income subject to the FICA Social Security tax (currently set at just the first $106,800 of wages or net income from a business or profession), and end the exclusion of investment income, so that people who earn their money by sitting on their butts trading stocks at home or by sitting in fancy offices buying and selling companies, pay Social Security taxes on their profits, and bingo, there's no more risk of burning through the Trust Fund during the wave of Baby Boom retirees. (A Senate report found that by just taxing all earned income, the Social Security Trust Fund would be flush indefinitely, right through the Baby Boom retirement era, but Congress didn't even look at what happens if we also applied the FICA tax to investment income.)
So listen up Boomers. It's time to get back to our roots. This time it's not the draft and a criminal war in Southeast Asia. It's our retirement! The banksters have destroyed our IRAs and 401(k) plans, and have stolen our home assets. Social Security is all we've got left, and they're trying to steal that now, too.
Are we going to let them? Hell no! We won't let it go!
And remember, it's an election season.
Time to demand that all candidates for Congress pledge to end the regressive nature of the Social Security tax. For starters, let's simply make it a flat tax on all income, including investment income. (We can talk later about making it progressive so that the rich pay a higher percentage than low-income workers.)
Time to demand that candidates for Congress also pledge to lower the age for retirement with full benefits back to 65, where it was originally before President Reagan and the wretched Greenspan Commission got Congress to start raising it in installments, beginning in 1983. If enough money comes in from the tax on higher incomes and investment, maybe we can talk about even lowering the age for full benefits to 64 or younger.
The vultures who are trying to weaken Social Security, raise the retirement age to 69 or 70, and cut the benefits--which means most Republicans and all too many Democrats--claim it's appropriate to raise the age of retirement because we're all living longer, but that's not the point.
If someone is healthy and wants to work into their late 60s, or early 70s or beyond, nobody is stopping them, and such people are not going to start collecting Social Security until 70 anyway, because they don't need it.
But many people are burned out at 66, or 65 or even 62. Think of nurses, teachers, miners, fire-fighters, sanitation workers, bus drivers, store clerks, etc. These are hard, grinding jobs, and nobody should have to do them into their mid or late 60s, much less until they are 70, unless they want to.
Besides, we are a wealthy society. We should allow our elderly citizens to enjoy their grandchildren, to volunteer in their communities, to create things. Sure they should be able to work as long as they want to, but the operative word is "want." Not "need."
Besides, the longer we make the elderly worker stay on the job, the longer we keep that job filled, and unavailable for some younger person who is desperate for a paycheck.
The truth is younger workers could use some of the jobs that older workers are filling, not because they want to, but because they cannot afford to retire yet. So let's allow those people to leave the workforce and retire on the Social Security checks that they have earned.
And let's watch our unemployment rate fall.
Those new workers, by the way, will be paying into the Social Security system, further strengthening it.
So here's the deal. No more playing defense on Social Security! We go offense!
Demand that candidates for Congress promise to make everyone pay Social Security taxes in full on every dollar earned, whether in wages or from investing.
Demand that candidates for Congress support lowering the age for retiring on full Social Security benefits back to 65.
And give the boot to any member of Congress, and any President, who talks about privatizing Social Security, or about "tinkering" with the system by raising the retirement age, cutting benefits or reducing the cost-of-living adjustment formula.
And if the vultures win election anyhow, and try to cut Social Security, or if a lame-duck Congress and a lame president try to screw us out of our retirement during the interim between Election Day and the start of a new Congress in January, we go back to our old street politics and take the fight to Washington!
Of course, we Boomers should be marching on Washington again anyhow, because there are also two criminal wars underway again, too. And if the Deficit Commission really wants to cut the nation's huge budget deficit, that is where they should be pulling out the knives: the military budget, which is the real "discretionary" item in the national budget, taking almost half of every tax dollar collected, and stealing it from schools, health care, environmental protection, parks, alternative energy research, housing programs and all the other things this nation desperately needs.
43 Comments so far
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Demand our members of Congress?? Are you on Drugs?? These members are now bought and paid for my American Corporations. We can Demand yes, but they are in there offices or at fancy Coctail Parties laughing at everyday citizens. Grassroots with nice letters and showing sincerity will not make these politicians respond. We Need to Take it to the Streets. My Sister was teared Gased at the University of Maryland in 1970. My best friend was attending Berkley in 68 and got attacked and tear gased under then Gov. Ronald Regan. Letter writting and robo emails will not be effective regarding SS. When will Americans go to the streets?
I guess you didn't read to the end of the story, where I said if Congress doesn't respond, we need to return to our '60s roots and take the streets (not take TO the streets)!
Dave Lindorff
www.thiscantbehappening.net
AARP is a capitalist corporation. It's members pay to join (and get their advertising leaflet called a magazine) and are then sold cruises and other things that only well-off retirees can afford.
jg
Dave,
Don't we have a little organization problem? I don't know of any radical/revolutionary senior organizations.
The cops would need many wheel chairs to haul the old farts off to jail, then the jail would go broke trying to supply the Depends-and the odder.
Good Grief.
Bravo!
FICA taxing all investment true income (capital gains, interest, dividends) is probably doable, but it will be an additional tax on many retirees. Those are the retirees who have some investment income to supplement their Social Security and IRA/401K/pension income, not necessarily rich people. And, it would be a tax on many pension funds too, probably sizable for some funds unless they are exempted like IRA's will presumably be, and allowed to grow without the tax.
That may not be a reason not to do it, but it's worth noting that it will entail these additional taxes on some sources of retirement income itself for average citizens, and there will be exemption requests among pension funds. These issues need to be thought out in advance ...
Even if investment income were not subject to the tax, just eliminating the cap would sustain the fund for a considerable period.
And, I heard a fellow on the radio recently who said that if the Bush tax cuts for those making more than $250,000 a year were allowed to expire, the amount the government would receive for the next 75 years would be almost equal to the amount Social Security will have to pay over that same period.
Allowing that tax cut to expire would mean raising the maximum tax from 35% to 39%, the value it had during the Clinton administration. It does not seem to be too much of a burden - but of course, I am not in the 35% bracket, so what do I know?
Hey, if we're going to go on the offense, let's REALLY go on the offense. Let's not ask for what we think is good enough. Let's ask for the IDEAL, always remembering the Overton Window.
Someone's got to do it, so here I go.
1. Let's lower the retirement age to 55! Do it over a few years. This will drastically increase the number of jobs for younger workers.
2. The Rich have gotten away for generations without paying their fair share of the payroll tax. A flat tax now means they start paying a more fair share, but it does nothing to make up for the unfairness of the past. So we need a PROGRESSIVE payroll tax, just like we have in our Income Tax. We should not only lift the cap, but make it so those above the cap pay a few more percentage points than the current rate and then we CUT it for the middle class! I propose we make this progressive enough to cut the payroll tax in half (back to the level before Reagan raised it) for those below the current cap.
3. Let's INCREASE Social Security payments.
4. Let's OUTLAW required 401Ks at work. Let's SHOUT a lot about it being MORALLY WRONG to force employees to buy shares in Wall Street. "What, are they going to tell me what transportation I have to buy to get to work? Are they going to tell me what food I can buy or not? Where's our FREEDOM?"
5. Let's instead go back to encouraging employers to offer pension plans and let's have a National Pension plan that small businesses and the self-employed can buy into so they can compete with the big corporations on a level playing surface.
6. While we're at this, let's increase Medicare so people don't need supplementary plans.
Um...Employers cannot "require" 401(k) plans. It's always optional for workers to have to make contributions to a retirement plan.
Dave Lindorff
www.thiscantbehappening.net
Hmm. My employer has a required 401K. I can choose not to add anything to it. But my retirement benefit is a 401K and my benefit goes into that. I have no choice. Plus I have little choice over how it is invested. Some company manages it and everyone who works for my employer has only a choice of which 4 funds it goes into.
Dave, you are one of the best tell it like it is journalists around! You make some excellent points.
However, if you remember the so called "health care debates," this is not going to be explained to the American people, at least not through the MSM. It makes too much sense and helps too many of the "wrong" people.
Readers: Get the word out. Send this article to everyone you know. We cannot let these monsters cut SS benefits!
One of the most important things you can do (besides alerting people to our new newspaper, This Can't Be Happening!, at www.thiscantbehappening.net, where this article first appeared, and where there are a number of other articles about Social Security), is communicate with young people about the importance of Social Security, and of defending and fighting for Social Security.
The Right is trying to create an "age war" by putting out scare stories to young workers that Social Security will be "bankrupt" when they need to use it. This is pure BS designed to get those younger workers to support an end to Social Security.
In fact, because of the Baby Boom generation entering retirement, the prospects for Social Security have never been better. The percentage of the population that will be relying on, and thus politically defending and promoting Social Security will be greater than it has ever been.
The other argument to make to young people is that if Social Security is weakened, it means that providing for their parents is going to fall to them personally. If they want their parents to be able to make it on their own, they'd damn well better support a strong Social Security program with generous benefits.
Tell them too, that Social Security provides disability benefits and surviver benefits to children, both of which have nothing to do with the elderly or retirees.
Dave Lindorff
www.thiscantbehappening.net
Hey Dave - Thanks for all your good work researching and writing and blogging. You tell it like it is in plain language - I have never found myself NOT in total agreement with your politics, and philosophical viewpoint.
I am totally amazed, given what has just recently occurred on Wall Street, (again, for that matter), that any average citizen would want to see SS eliminated, and as a replacement.....you get to invest in the stock market for your retirement!
They can't be serious.
So, the average worker, if he decides to, becomes a stock picker. Yeah, I can see that working out real well.
Not.
Hell, the way it stands now, a lot of us are going to die before we can draw on it anyway, even if we have the luxury of contemplating retirement. I can't see being able to afford it in my future. So while we have been paying into it for 45 years, we won't ever see a damn dime.
Start taxing the rich for all of their income, lower the damn retirement age, after all as the author says, there will be those that won't want to retire, and that's fine, raise the amount on SS checks so that it actually means something, and tie it properly to inflation.
If the wealthy class howls because we want a decent society, that includes some dignity for our elderly, let them leave the damn country.
It is worst than that: the ruling economic elite on Wall Street want to privatize Social Security then invest the SS Trust Fund in the stock market.
Buy, buy trust fund, if they get their way.
Good Grief.
Meanwhile, I am starting to see why it's so hard to find work. I checked with my state employment office and pulled up the list of jobs in my area. Every single job posting stated that drug testing was a requirement of employment.
I don't use drugs, but I am opposed to forcing employees to be drug tested, and I certainly don't want to be forced to pee in a cup for any employer. So, if I'm opposed to drug testing and don't want to work for an employer who requires it as a condition of employment, that narrows my potential employment opportunites to... even fewer jobs, or no jobs at all.
This is yet another issue we need to be fighting, but is it too late?
I actually spoke to a woman who had to pee in a cup before she could apply for the job opening.
Barbara Ehrenreich's book, Bait and Switch, is a revelation on the many scams job-seekers run into when they are searching.
Guess I'm gonna be unemployed for a long, long time.
Thanks for mentioning the $106,800 cap. That alone is a quick, easy, and productive fix.
The fact that it stands while talk of Social Security insolvency is circulating is proof what a good job is being done by mainstream media to keep the average Joe focused on red herring issues, instead of focusing on where the problems truly lie.
People seem to think that the elderly can be supported on (non-governmental) income (wages) of the working class.
This is no longer feasible--there needs to be a combination of taxes which include taxing the usage of (non-recyclable) raw materials, the most notable of which is oil (taxed at the refinery gate).
Activities which create carbon dioxide also need to be taxed and form part of the SS as well as general revenue base.
Most important of all, there needs to be a "wealth tax" in which assets of the "leisure class" are gradually reabsorbed into a more productive, as opposed to a consumptive, society.
Sustainability should be the watchword.
"Retirees" who can still work should be required to "give back" by performing useful tasks (say 2 days a week) which are an alternative to the work available from the "profit-making" sector.
""Retirees" who can still work should be required to "give back" by performing useful tasks (say 2 days a week) which are an alternative to the work available from the "profit-making" sector."
Are you saying Social Security recipients should now perform mandatory "workfare"?
Unemployment would also be drastically reduced with a single-payer health care plan that granted health care to all without exception, thus eliminating the reason why many older folks still work. HR676, if adopted would extract less than five percent of wages from each the employer and employee, thus making it easy to hire new employees while covering all medical expenses and putting the country on sustainable, moral path.
Apathy
From my perspective, for the most part, I am seeing a lot of disinterest by citizens in saving social security for future generations.
Those that have retired know they'll get their benefits and aren't concerned about the younger generation, including their grand-children.
Those baby-boomers about to retire know they'll get their benefits or most of them and aren't concerned about the younger generation, including their kids.
The young aren't thinking about that far in the future.
That leaves a small group of citizens concerned enough to fight to preserve social security in a decent form.
It appears that the Republicans will retake the House if not the Senate this November. They will surely move to gut Social Security if this happens. They can be turned back if the following happens. One, Speaker Pelosi can use parliamentary procedure to prevent a vote in the lame duck session. Two, if the incoming Congress attempts to steal our benefits, our fearless President Obama can always veto any such action. If one cent is cut or one minute is added to the retirement age I'll never vote for a Democrat again. This time I really mean it! Really!
Thanks for the laugh.
Very funny.
Can we really trust the voting system ? If Diebold is involved forget it. People can go vote all they want however if it is not an honest system what good does it do?
Dave,
Great piece. Thanks...and keep up the fight for the good.
To whomever wrote about the tear gas.
I remember the overuse of force in 1969 on a college campus in the midwest. I remember the tear gas. I remember some of the students throwing the tear gas back at the troops.
I also remember that none of the protests got me out of my coerced obligation to sign up for the draft. The only lottery I ever won or lost.
To conserve some semblance of choice I enlisted in the navy.
During boot I had to go through a dark chamber filled with gas. Due to alphabetical considerations I did not have the gas mask that we were being trained to use.
This was a quick course in NBC warfare. Nuclear, biological and chemical. We recruits were either supposed to believe or accept that we would survive such assaults.
Shortly after that, while on liberty I read about the Kent state massacre.
I could not continue in good conscience to participate in military endeavors. Even if it meant disgrace or death.
It has gotten much worse since then.
I am somewhat glad that I lived to be 60. I grieve for my brothers who did not and my brothers who were crippled physically, morally and spiritually.
I have met young and admirable people who have served their time in both iraq wars.
I was raised by a man who was once young and fought in WW2 in the battle of the bulge.
He is gone and I will join him in that last battle eventually.
My message to all is never forget and always forgive. Take it to the elite bastards that wish to rule us all. Take their harm level down to nothing.
For the love. For the Peace. For the understanding.
Peace to all.
Dave,
You must be insane to think such a sensible policy would even be considered by these pigs. I wonder... have you ever before been called insane and sensible in the same sentence?
Stay optimistic, if you can.
Peace
Oh come on now Dave, are you really going to accept the word of a Democrat on anything. They are as untrustworthy and slimy as any Republican! You want to send a message, vote the bastards out of office, otherwise it will be business as usual! Green Party and Social Democrats should be high on your ballot choices this November.
Voting in this so-called democracy has not shifted the balance of power in any appreciable fashion. Ditto for writing letters to the editor, blogs, research, publishing, and million man marches. The system has been captured. End of Story. Other than sitting in my car and blowing the horn every day at noon for a minute, I am powerless. And they know it.
I would love to see a visible presence by Green Party, Working Families and other alternative grass roots or socialist groups at the Oct. 2 rally. Those parties should raise the issues that are affecting their constituents and bring people from their area.
Joe
YES sir! You are right on.
It will take a giant protest to push our way through the lies.
"If someone is healthy and wants to work into their late 60s, or early 70s or beyond, nobody is stopping them, and such people are not going to start collecting Social Security until 70 anyway, because they don't need it."
Not true. I am almost 68 and was laid off my job as an administrative assistant at a steel mill in January of 2009. I am not rich, I have never had a job with a pension or 401K until this last one (of 3 1/2 years) so I don't have a nest egg. I am healthy, fashionable, look at least 8 years younger than I am, hard-working, intelligent, computer-literate.....do you think anyone will hire me? Hell no!! The minute an employer sees me when I get an interview, and sees that I am over 50, they suddenly have someone who "more closely fits our needs". What the hell does that mean? It is age discrimination, pure and simple, and if anyone thinks differently, well, I advise them to go out and see how easy it is to get a job if you're over 60. Ain't happening.
We should do one more thing to complete your proposal: double the Social Security Pension check.
This would provide "stimulus" to the economy because retirees spend their money.
It would also provide a cushion for taxing retirees investment incomes. Doubling their checks would more than make up for any income tax they would pay.
One more thing: Don't vote it is a waste of time. If enough people refuse to vote the system will loose credibility which will cause it to collapse.
I don't think loss of credibility per se necessarily leads to collapse.
Joe
Nicely written piece which I concur. It is time for massive street demonstrations with a personal commitment toward civil disobedience and personal resolve to get arrested. We need another 1 million man (women) march in DC, letter writing campaign, and organizAtion to make it happen. If it does, count me in. Ive been arrested 18 times since 1969 in various actions including the School of the Ameri[K]as. The only thing that will get the pond scum moving is massive demonstrations. If that does not work, then we ought to take it to the next level.
There will be a March on Washington Oct. 2 for jobs. AFL-CIO is one of the sponsors. Last such rally I attended was populated by union staff, primarily. The content was tepid and supplicatory. Some dull canned music was blasted on the sound system. I hope that this time spirited groups of local people attend this rally and bring strong evidence of their demands. And please, some songs and music, including new stuff from past the sixties!
This time busses are being organized in major cities. I hope that people come from the unemployment offices, the schools and hospitals that are being shortchanged and closed down, the homeless shelters. I hope that wars and war spending are implicated as part of the problem. I hope that there are enough of us so that angry and divisive calls against immigrants, racial attacks (even against Obama - stick to policies and deeds) and other dead end issues are overwhelmed by a huge and positive, confident and united crowd.
(I personally believe that civil disobedience is for those who have the discipline and commitment to train and do it right. It does not just mean getting arrested. When we get arrested repeatedly and nobody knows except the Lawyers' Guild, it does not accomplish much.)
Joe
Good article. We should spread the word among older people, but even more importantly among the young. So many of them have told me that they expect the fund to be bankrupt by time they are ready for retirement. That is a depressing prospect for their future. There are enough real things to be depressed about, particularly with the environment, so why allow the myth of social security bankruptcy to survive? Let's kill it.
"... many people are burned out at 66, or 65 or even 62. Think of nurses, teachers, miners, fire-fighters, sanitation workers, bus drivers, store clerks, etc. These are hard, grinding jobs, and nobody should have to do them into their mid or late 60s, much less until they are 70, unless they want to" - so true.
If you want to work in your think tank or political position until 70, be my guest. However, lowering the retirement age and the age for Medicare eligibility would encourage retirement and free up badly needed jobs for those who are still on the project of raising families.
Joe
President Obama forgave Allen Simpson for his out burst that means the fix is in. Our Social Security is already dead.
RIP