The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Friday, November 16, 2012

Leadership From Alaska! Sen. Mark Begich (D-AK) Proposal To Kill The "CAP"

While the people who read The Progressive Influence (TPI) are not part of the growing numbers of the "informationally deprived and generally less informed"  (AKA Fox News viewers, Limbaugh listeners et al),  I have a question.   Are you familiar with the provisions of Social Security to know the program has a maximum annual contribution amount  ("CAP")?  Yes, of course you already knew that once your income hits the $110,000 level during the course of the  year, you pay no additional Social Security Taxes.   Therefore, if I earn over the $110,000 compensation level, beyond that earnings figure, I pay no additional contribution to the system.  I factually have a  4.2 percent increase to my gross pay.    2012 Social Security tax rate and maximum taxable earnings.

The wealthy receive so many breaks. 

While  I do not know the reasoning behind the development of Social Security. Thus, I have zero knowledge of why higher income earners  cease paying the tax after the adjustable maximum level. As we look back from 2012,  the provision seems ludicrous. Probably the "CAP"  has much to do with potential payout to retired higher income earners vs the amount paid to middle to lower income earners.  I speculate if that was the reasoning, it was a major case of federal governance lack of attention to such a critical program influenced by an aging and growing population.   Was life so wonderful since the mid 1930's (the inception of Social Security) it took yet another GOP recession and near economic depression to force a scrutiny of the "CAP"?   As we have watched the engulfing of Medicare by the aging baby-boomers, I posit the same level of federal indifference now forces potential drastic measures.  And, who suffers from the indifference and lack of strategic attention to Social Security?  Anyone who becomes eligible for the benefits as they grow older, thus you and me.

Someone has finally proposed a bill to eliminate the Social Security "CAP".    You might have guessed the bill was proposed by a Democrat.  

Think Progress

Democratic Senator Introduces Bill To Lift Social Security’s Tax Cap, Extend Its Solvency For Decades

Democratic Senator Mark Begich of Alaska
Social Security, the government entitlement that provides support to seniors in retirement, the disabled, and other Americans, has long been in the cross-hairs of budget reformers. The program’s trust fund currently won’t be spent out until 2033, and after that it would still pay 75 percent of scheduled benefits.
Sen. Mark Begich (D-AK) put forward a reform package that goes in the opposite direction, while still financially securing the program’s trust fund for roughly the next seven decades. The Washington Post’s Dylan Matthews laid out the details:
The Begich bill would lift the current payroll tax cap, which exempts wages in excess of a certain amount ($110,100 this year) from the tax. In turn, it would give high earners, who would pay more, additional benefits upon retirement, just as benefits increase as wages do for workers below the cap. […]

It also increases benefits across-the-board. While Bowles-Simpson and Domenici-Rivlin adopt a stingier “chained CPI” measure for inflation, Begich adopts “CPI-E,” or a measure that specifically captures inflation in goods that seniors buy.

Due to deteriorated health and other considerations, goods seniors buy tend to be more expensive than those younger people purchase. Begich’s CPI-E change would mean, effectively, a 4.5 percent benefit increase for the program’s beneficiaries, including not just seniors but their designated survivors and disabled Americans as well.
Read About the efforts to eliminate the "CAP".

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