Friday, June 13, 2008

This isn't that complicated

Obama wants to implement payroll taxes above $250,000 in income. He says it's unfair for lower-income earners to pay payroll taxes on every dime they make, while wealthier earners do not pay them on the majority of their income.

The thing is, it's not intended to be progressive. The idea is that you fund your own benefits. This is why people who earned more (and paid more into the system) get a larger benefit even though they are more likely to have retirement savings, investment income and other means of support than lower income workers. Social Security is a mechanism for protecting workers from becoming destitute in retirement or disability due to poor financial judgment or catastrophic events, not a mechanism for wealth redistribution.

If not for Social Security, a lot of people would spend all their money on lottery tickets, and wind up destitute in their old age, or if they became disabled.

What Obama is really proposing is that problem that will occur when the system begins paying out more in benefits than it takes in in taxes should be solved by a special tax on the wealthy.

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