Constructive Anarchy: The Great Social Security NonCrisis

Social security can be easily fixed by eliminating the cap which is now $110,100. The cap makes the FICA Social Security tax the most regressive of the federal tax because this tax primarily affects the middle class and the poor.

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How to fix Social Security

Sen. Bernie Sanders is correct. The cap on Social Security is absurd and puts a regressive tax burden on the middle class.

Getting rid of the Social Security cap would tax everyone's income at 100 per cent. This would only effect people making more than $110,000 per year.

The Federal government would also be able to reduce the FICA payroll tax which would help working Americans and small businessmen.

Essentially, for the first time in US history, some of the tax burden for Social Security would be shifted to the most affluent Americans.

This will make people like Rush Limbaugh, Mitt Romney, the Koch Brothers  and Donald Trump unhappy.

What's the problem with that? 

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The "nickel and dime" politics of the GOP

Do Americans want to preserve tax entitlements for privileged Americans or start a rebirth of a dynamic middle class?

Do we want the affluent to pay lower tax rates than middle calls Americans in capital gains and deferred interest?

Can we continue to tolerate CEOs making 400 times what he average worker makes? Do we need to make income tax and Social Security FICA tax  more progressive?

What about Estate Tax? Bush suspended and when restored, the estates of 50,000 millionaires were exempted.

Then there is corporate tax. At one time corporations provided 30 per cent of federal revenues, but it is now 6 per cent because of offshore tax breaks in Ireland and the Netherlands.

Many Americans fail to realize that the tax burden has been ever shifted to the middle calls by the "nickel and dime" politics of the GOP over three decades. Taxes have been shifted away form c-corporations and the affluent.

This has weakened the middle class. As one business owner put it, the tax refund at the end of the year is nice, but it won't help if you don't have customers.

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Far Left Side: Federal Revenues since the 1950's

It's clear that the FICA payroll tax has been going up that pay for Social Security and Medicare while the corporate income tax has been going down.

The FICA tax is regressive and has a tax cap. After the $107 cap is reached, the FICA tax is not paid. To keep Social Security and Medicare solvent, the cap has been periodically  raised.

Corporate tax revenues have declined because Congress has given the Fortune 1000 C-corporations numerous loopholes and exemptions. This is why the largest US corporation, GE, has paid no taxes for years.

Lefty form Far Left Side is correct. It isn't fair.

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2012 federal budget: Discretionary spending

This chart appears to show how federal revenues from income tax are spent. The DoD, Homeland Security and Veteran Affairs budgets are combined to give a more accurate cost of US "defense."

Starting in the Vietnam war, the government combined both FICA payroll tax revenues with federal income tax revenues which made defense obligations look smaller  and entitlement programs (Social Security/Medicare) look bigger. 

Of course, income tax revenues are discretionary while entitlement revenues are usually not.

There is one exception, The government has been using FICA over payments to fund discretionary programs like defense.

These FICA over payments  are issued as IOUs that have to be paid back to the federal trust funds for Social Security and Medicare.

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