I’ve been reading a book called “Perfectly Legal”. It’s a great book. The only problem is with how mad I get while I’m reading it.
Check this:
We all pay Social Security tax. It’s supposed to be for our retirement. For some reason, it’s in trouble and the government needs to either cut benefits or raise the tax *again* (same scare happened in 1980). Right now, the tax is over 6% and really over 12% since your employer has to pay half (mmm, I wonder if I would make more money if my employer didn’t have to pay that 6%?). If I’m paying into a fund then why wouldn’t my money be there when I’m ready to retire?
Okay, the government uses the Social Security money for things other than Social Security. Also, if the government doesn’t invest that money it will stay stagnant in time. Say I pay $2000 in SS taxes in 2000. Not invested that $2000 is still $2000 but it’s even less because in 2040 $2000 is only $400 in 2040 dollars. So, somehow because of inflation and poor investments Social Security is in trouble . . . so, we should get to keep it and invest it ourselves. Remind me about the Global Crossing story and see if that “invest in the company . . . you could be rich . . . pensions are for chumps” story reminds you of George’s “invest it yourself” story.
I was off track. So, we all get taxed about 6% (or 12%) for SS. Oh, and, after $85,000 of income, there is no 6% tax. So, someone who makes $90,000 per year (living large) pays a little more than $5000 in SS tax. Guess how much Bill Gates pays in SS tax? Yep, A little more than $5000 (maybe less if his tax people can show his income is less than $85,000 . . . and that probably wouldn’t trigger an audit).
You say that SS is to support us later on and blah blah blah. I say it’s a tax. I don’t get to choose how much I get back or when so I say it’s a tax like every other tax. Except that, really, it’s a tax break for the rich. $5000 to a guy who make a million a year is nothing. Now, 6% of a million *is* something just like 6% of $50,000 is something. The guy making $50,000 may be in the 25% income tax bracket and Bill Gates may be in the 35% tax bracket but keep in mind the little tax break Bill gets for all that money past $85,000.
Okay, some of my numbers are off but you get the point. Check out Wikipedia:
http://en.wikipedia.org/wiki/Income_tax
http://en.wikipedia.org/wiki/JGTRRA
Sheldon