Thanks Doug: US Outsourcing 7 cities

[CallawayGolf]

Fine. I'll ask. Assuming it's there when you're ready to collect, will you, or will you decline?



People paying in their fair share is absolutely a great idea.

I don't know what I may do in 20 or thirty years from now, do you? There are many forces (inflation, US dollar becoming worthless, etc.) for me to know what this country and my personal financial will be. My plan is to save an invest over the next thirty years or so to fund my own retirement if the country stays on the current economic footing (doubtful). If I'm feeling charitable after donating 25-50 percent of my wages through a lifetime of overtaxation then I might just forgo SS if I can do without it, just based on principle.

People paying their fair share Is liberal code word for raising taxes on those who produce and generate wealth and jobs in this country. When the top 1 percent pay 35 percent of the total taxes and the top 50 percent pay 97 percent of all taxes, I think the notion of fair share has already been taken care or and then some. What would be fair is having every American to pay the exact same tax rate regardless of income levels. Any other system is not only unfair, but it harms ever American because only people with money actually hire people and buy goods and services to fuel the economy. Taxing them more has always caused people with money to find ways to avoid paying them altogether. Theynmove jobs and houses overseas. Remember the "sin tax" which all but eliminated the luxury yacht business in this country? People bought and registered their vessels in foreign countries and American workers ,lost their jobs because fools in Washington thought the rich should pay more. Unintended consequences strikes again.

 

[Dog Wonder]

that's my 2 kids paying in to fund my benefit. SS has "promised" me nearly $17K in annual benefits plus cost of living increases, or $8.5K in payments for each of my kids every year and increasing with the cost of living. That's $700/month each. Throw in medicare, which is funded just like SS and my kids could easily have to pay in $20K or more per year - EACH - just to fund my SS and medicare benefits. You can tell them that they're not paying enough if you want...

Jim

We can only hope your retirement lasts as long as the time your kids spend in the workplace does.

 

[Jester]

When the top 1 percent pay 35 percent of the total taxes and the top 50 percent pay 97 percent of all taxes, I think the notion of fair share has already been taken care or and then some. What would be fair is having every American to pay the exact same tax rate regardless of income levels.

Not to say that that often mentioned stat is wrong or inaccurate, but it leaves out one important detail... what was the percentage of total income earned by those taxpayers? For example, if the Top 50% pay 97 percent of all tax, but earned 97 percent of all income, then that tax would be "fair", as obviously, some people earn far more than other people.

With this in mind, let's review some of the total Adjusted Gross Income percentages relative to total Federal income taxes paid, according to The Tax Foundation, citing IRS data:

"In 2008, this top 0.1 percent filed 140,000 tax returns, reporting nearly 10 percent of all adjusted gross income earned and paying approximately 18.5 percent of the nation's federal individual income taxes."

"...the top 1 percent of tax returns paid 38.0 percent of all federal individual income taxes and earned 20.0 percent of adjusted gross income..."

"The top-earning 5 percent of taxpayers (AGI over $159,619), however, still paid far more than the bottom 95 percent. The top 5 percent earned 34.7 percent of the nation's adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes."

And in the chart, the Bottom 50% earned 12.75% of the total AGI, but paid only 2.70% of the total Federal income taxes.
http://www.taxfoundation.org/news/show/250.html

Of course, as we have a "progressive tax" system based upon the higher the income, the higher the tax rate, so these aforementioned numbers should not be surprising. What is surprising would be how the Top 1 percent paid an average annual income tax rate of 23.27%, while the bottom 50 percent paid 13.65%, and it is not considered to be "fair share" enough.

I think the lightening rod in the debate are those individual wealthy people who earned nearly all of their income through long-term capital gains at the 15% tax rate, and those maybe legitimate issues, but I believe it to be a mistake to make a blanket statement that "the rich don't pay their fair share," as many rich people (doctors, lawyers, professional athletes, pilots(?) and alike) earn ordinary income which is taxed at the highest marginal rate of 35%.

So Surmises Jester.

 

[BoeingBoy]

And that, Jim, is true of any defined benefit system of which SS is a type. The difference is that it is also a safety social net system which means many people DO receive benefits above and beyond what they paid in.

While I agree that the safety net aspects of SS are real, making the statement that any defined benefit system has the same problems as SS is a mis-statement of fact. As long as a defined benefit system is properly funded if faces none of the problems that SS faces. Even if underfunded, there is money in the system. The problem that SS has always had is the legal requirement to "invest" any funds in surplus of what's needed to pay benefits in low interest treasuries (lower interest than you or I could purchase). That legal requirement means SS will never earn much income from any surplus AND that any surplus is available to Congress and the President to spend, which they have done as quickly as the money comes in to the general fund. In effect, SS is a DB pension plan that pays current retirees but the company funds future retirees' benefits with IOU's instead of money. And the company is broke and can't make good on those IOU's.

SS was never based on actuarially sound principles. It was based on there being plenty of workers paying into the system to fund the benefits paid out. As it became clear that that wasn't the case, various band-aids have been applied to theoretically put off the day of reckoning. Theoretically because the extra money was never put in Al Gore's "lock box" to be used for paying future benefits but went straight to the general fund and was promptly spent. And where is Congress going to get the money to pay back SS in an era of $1-2 TRILLION deficits? No, SS (and medicare down the road) has become a house of cards waiting to collapse.

Jim

 

[BoeingBoy]

We can only hope your retirement lasts as long as the time your kids spend in the workplace does.

That's already taken care of. There's enough money sitting in a Roth IRA to repay them all that my SS/Medicare benefits will statistically cost over my remaining life expectancy and it's growing as time goes by. My two kids are the sole beneficiaries.

Jim

 

[Dog Wonder]

That the government chose to spend the money contributed to Social Security on whatever boondoggle, e.g. wars in the Mideast, doesn't make the contributors parasites when they collect.

Which is how we got on this subject.

 

[WorldTraveler]

Jim,
you are obviously correct that a DB plan does not necessarily have to be underfunded....
My point is that in reality most DB plans were created in developed countries in the US, Europe, and Japan which have slow economic growth rates, lengthening life expectancies, and slowing birth rates - all of which contribute to causing a DB plan that is reflective of that population to become underfunded.
In order for a DB plan to remain funded, there needs to be more younger people paying in as older people grow older as they draw benefits.
This isn't happening for social security or retirement systems in most of the world - and they aren't happening for most companies that did sponsor DB plans - thus the move to replace them.

SS probably will not collapse any more than the public retirement systems in Europe because governments will take on more debt than risk the political ill will - and perhaps collapse of the society - if those benefits are terminated.
There will be cuts in benefits made over time and spending on other things will have to be cut in order to maintain SS... we've seen that in Europe and the latest round of budget cuts in Washington shows it will happen here.

That said, I still wouldn't counsel anyone to count on SS and if there are any options to opt out of the system (and there are options that allow it)- and any DB type system, esp. one that is "public", by all means get out.

 

[BoeingBoy]

That the government chose to spend the money contributed to Social Security on whatever boondoggle, e.g. wars in the Mideast, doesn't make the contributors parasites when they collect.

Which is how we got on this subject.

I agree - those who collect SS were promised certain benefits, as were those that pay into the system during their working years. However, the government has already welched on some of those promises and I fully expect more of that to come. Personally, 20 years ago I would have bet that SS would be means tested by now.

Jim

 

[BoeingBoy]

In order for a DB plan to remain funded, there needs to be more younger people paying in as older people grow older as they draw benefits.

You're still confusing SS with any other DB plan, mostly DB pensions. Generally, workers don't pay into DB pensions so the need for "more younger people paying in as older people grow older" doesn't exist. All that's needed is for the company to stay solvent and have the ability to fund the DB pension. Admittedly, stagnant companies like US during the two BK's, have a problem as the older workers retire but new workers aren't hired - the funding needed to keep the plan fully funded increases. So the plans get underfunded, especially when a recession cuts earnings on the funds already in the plan, and eventually the company tries to end the DB plan because the funding needed becomes too much for the company to pay.

SS is less like a DB plan than it is like a ponzi scheme - a lot of people contributing so the relatively few can get the bennies. And like a ponzi scheme, left to it's own devices it would ultimately collapse as the number of those wanting bennies grows and the number of those contributing declines. That is where SS/medicare are. It may not have been evident when SS started, but it has been evident for the last 50-60 years.

You are right about one thing, though - SS/medicare is still the third rail of politics. The government will do anything to keep the scheme going, as long as they can use the "trust funds" (as in trust us, we're good for it) to say that both programs are funded for the next 40-50 years. But doing that carries long term consequences, either to the taxpayers or the recipients or both. Taking on more debt is easy to say. But what happens when interest on that debt squeezes out spending on other programs - not that some couldn't be squeezed out and the country better for it. For fiscal 2012, SS/medicare spending will be over $1.2 Trillion of federal spending of $3.7 Trillion and SS/medicare spending is growing every year. Just as with those paying in, at some point the bill gets to be too much to pay.

Jim

 

[WorldTraveler]

Jim,
I understand that employees do not sustain a DB plan - the company does... but the principle is still the same that when a company is not growing, the workforce is aging, and people live longer, the cost of maintaining the plan grows exponentially and that is what has happened w/ most DB plans in the US - and why they are being terminated.
It isn't much different from public retirement/welfare systems... the difference is that companies can't print money and they don't promise benefits to people because they believe it is the right thing to do.
The difference between the US and Europe is that Europeans save while Americans do not. Underfunding SS means the Chinese et al pick up the tag and hold us by the proverbial crotch.
THAT has implications for the future of our nation, to be sure... the question for politicians is whether backing off from those promises or selling the soul of the country is more dangerous... I suspect those that have considered the alternatives walked away w/o really thinking either through.

 

[Falcon]

Please get back on topic and take the other talk to the Water Cooler or the thread will be closed. Thanks.

 

[BoeingBoy]

Sorry Falcon.

Jim

 

[767one]

That's probably when he drinks the most....

Somethings never change. In 1973 I got my first furlough notice on X-mas eve. The notice came by mailgram.

Bob

 

[tech2101]

Somethings never change. In 1973 I got my first furlough notice on X-mas eve. The notice came by mailgram.

Bob

If I had a choice of when to receive a furlough notice, prior to Labor Day would be preferrable than after the thanksgiving and christams holidays...right after you spent money you will need to get a new job.

I remember hr people actually having discussions about this. They are human too (most of them), and they try to minimize the damage. It is not a personal attack.

OTOH, I saw selective base closures at NWA at high seniority stations to force people to retire, only to reopen them after the target was met. That was an attack on us at The AMFA after having won a lucrative contract...

 

[skinvalve]

Outsourcing is with US. Don't be a fool, always be ready with a plan "B". Now on a lighter side. Along with the length of service award pins, chairman awards, above & beyond, custom lanyards, and all the other company bagges of honor bestowed upon the praise worthy elites amoung US. I propose a new award that will highlight the dedication of the rank and file to stay the course by documenting the number of station closings, abolishments, furloughs, bumps, downgrads, cities served in, family moves, years working graves, years served without a weekend off, etc endured yet still get the job done. Oh yeah now reply "your lucky to have a job" yeah it's all luck.