Why do we have Social Security at all? To put it simply, because we must. When people reach the age at which they can no longer work, we must have a mechanism in place by which they can obtain the necessities of life; the alternative — just letting them starve — is unthinkable. SocSec benefits ensure that people who work all their lives get a decent standard of living during their retirement.
We all have a compelling interest in this. Were it not for the blue collar worker, nobody in the country would possess anything at all. The labor of the working class enables all of us to share our nation's bounty. We — rich and poor alike — have an obligation toward the retired worker. That burden should fall on all citizens. The current system places the entire burden on the worker to provide for his or her retirement, letting the 1% ignore that obligation entirely. This is just flat wrong.
We tax the 99% heavily (especially at the state and local levels), while allowing the rich to seize virtually all of the productivity gains, gains which can be attributed principally to the efforts of the 99%. This means that the 99%, with a dwindling share of the pie, not only must do all the heavy lifting, but they must also support the SocSec Trust Fund, and also must feed the greed of the 1%. That's a heavy load.
Conservatives tell us that we must raise the retirement age because people are living longer. They insist upon a benefit cut, pure and simple. The workers get less, so that the 1% can get more. It works like this: With a larger work force competing for the same number of jobs, downward pressure is exerted on wages. Lower wages means more for the 1%, and with less in wages, the 99% contributes less to the Trust Fund. The net result is less for the worker, both during his working life and in retirement. Would you care to guess where those dollars go?
Statistically, the worker at the lower end of the economic spectrum has a lower life expectancy than his wealthier fellow citizens. This means that worker pays the highest price, in terms of lower benefits, for extending the retirement age. It would seem that the rules of the game always favor the 1%.
What a surprise.
Class warfare is spiraling out of control, and the working class is losing that war. A mere 400 people, hardly enough to populate a decent size subdivision, control a staggering $2.3 Trillion. Over the past year, the Forbes 400 have extracted an additional $300B from the 99% over the past year. It is simply impossible for the average reader to comprehend how immense these amounts are. There is no conceivable national purpose to be served by having 400 people control $2.3 Trillion, nor having their wealth to increase without bound each year.
As a modest first step, I propose that we impose an 8.0% tax on all income of any kind in place of the current 12.4% SocSec tax plus the 2.9% Medicare tax. This number is arrived at in the following manner: Total payroll tax receipts of $947B for 2013 are found here. Total USA personal income numbers of $13.4T are found here. Dividing $13.4T by $.974T gives us a rough rate of 7.27%. I have chosen 8% because I think the retired deserve a bigger slice of the pie than they now get. A more refined calculation than mine might come up with a different number, but almost certainly that number would fall between 6.5% and 8.5%. This would make the SocSec tax a flat tax instead of a regressive one. (I would rather see a progressive SocSec tax, but we must start somewhere.) As with the current payroll tax, there would be no exemptions, deductions, credits, or tax breaks of any kind. If my algebra is correct, the end result would be a tax increase for those making more than $284,000 and a tax decrease for the rest of us. In very rough terms, the 1% would pay more and the 99% would pay less.
I understand that there are those who would oppose this proposal vehemently, but I cannot for the life of me understand why. Please join me below the fold.
This proposal would increase the well-being of the vast majority of Americans. Every dollar of the income of the blue collar worker is taxed at 15.3% to fund SocSec and Medicare. The income of even the lowest part of the 1% is taxed at only a fraction of this. I contend that there is a fundamental unfairness in this because the 1% enjoy many inherent advantages over the blue collar worker.
Money as a weapon
Money has become a potent weapon in the class war. Through political action they can tilt the playing field, and many of them do so ruthlessly. Elections have become an exercise in economic aggression, especially with SCOTUS on their side. ALEC fills out the dance card, and Republican state legislatures dance to their tune. One example is "Right to Work" laws, which effectively nullify any power that unions might have.
The blue collar worker cannot work as long as the 1%
A corporate manager can perform at maximum output much later in life than can a construction worker or fork lift driver. Over the years, physical work takes a toll on the body. This gives the 1% another built-in advantage over the blue collar worker.
The skills of the blue collar worker are subject to becoming obsolete
Technological change affects the blue collar worker much more than it affects the rich. Do we just discard him as one crumples up a paper cup after drinking its contents? If not, then how do we react to workers displaced by technology?
Exploitation
Ask yourself this question: Is it more likely that the blue collar worker was exploited economically by the 1%, or is it the other way around? We have all but abolished unions in the private sector, so the 1% can do to the blue collar worker pretty much as it pleases.
Job security
The blue collar worker is always subject to layoffs. Not so much the 1%.
For all the above reasons, the blue collar worker is at an extreme disadvantage under our present economic system. But there are other arguments.
Wealth production — including infrastructure
The blue collar worker has, with brute physical labor, puts in place all the infrastructure that the 1% routinely enjoys, as well as creating all the goods and services that they use. With their hands and their muscle and their sweat, the blue collar workers create all the tangible wealth of the country. They are also responsible for the bulk of the productivity gains. In a moral sense, the 1% are strongly indebted to them, but they not only welsh on that obligation, they use their power and privilege to squeeze every possible dollar from the 99%.
This new SocSec tax plan would be a major boost to the economy.
This proposal would increase the purchasing power of the 99% by about 7.3% and would increase the purchasing power of the retired worker by even more. The 1% would hardly be affected in any material way. They would still own the most luxurious cars, eat the most tender steaks, drink the finest wines, and sleep under satin sheets. They would just have 8% less to buy up real estate and stocks to increase their monopoly of the nation's assets.
SocSec is an integral part of an economic system that pretty much insures that the 99% will always get a dwindling slice of the economic pie, during both their working years, and during their retirement as well. Productivity gains are only for the rich to harvest, even though the 99% literally does all the heavy lifting. This proposal wouldn't entirely right that wrong at a single stroke; it would be a start, however.
Let's clear up a couple points. First, retirement benefits under this proposal would be calculated pretty much as they are now, but would probably be generally greater. The bulk of the benefits would be paid to the workers, not to the 1%. Call it "means testing" or "welfare" (typical Republican dirty words) if you want, but it would be absurd to convey even more wealth to the 1% by increasing their SocSec benefits.
Second, we should end the fiction that the employer pays half, and mandate that all wages be increased by that amount. In other words, the 7.65% that the employer now "pays" would, by law, be added back to the employee's wages, and the employee would then become solely responsible for the 8% tax. The gain would be tax transparency; citizens have a right to know their true tax bill.
Now let's examine some of the possible arguments against this proposal.
FDR intended SocSec to ... (Fill in the blanks).
SocSec was instituted 79 years ago, and 2014 is much different from 1935. For one thing, the original tax was 2% of income, split between employee and employer. It's now 12.4%. The original cap on SocSec taxes was $3000; now it is $117,000. In terms of constant dollars, FDR underestimated the funding need by a factor of about 14, by my calculations. This alone should make you skeptical of FDR worship. For another, back in 1935 there was no great concern about income and wealth inequality. Today you have your head in the sand if you think this is not a problem. (Remember that $2.3 trillion?) Yes, FDR had a great idea, and should be given full credit for that. However, it is up to us to modify that idea to fit the reality 2014.
This would turn SocSec into welfare
This is an unworthy argument for progressives. It is a Republican argument and relies on Republican think tank memes. Government should follow policies that improve the net well-being of its citizens. Just read the Preamble. One of the six ultimate goals of government is to "promote the general welfare". (If that word leaves a bad taste in your mouth, then substitute "well-being") Why on earth should we think that the overwhelming majority of Americans shouldn't enjoy a better standard of living?
I argue that SocSec benefits should be seen as the proper reward for a lifetime of work rather than a monetary return on taxes paid by the worker. Society as a whole benefits from the labor of the worker. In today's world, the 1% squeezes the worker's wages without mercy, and then the SocSec system squeezes an additional 12.4% out of what little is left, and finally, the system squeezes the retirement benefits because the worker has a poor earnings history. All that money ends up in the hands of the 1%.
What a surprise.
SocSec contributions are not really a tax; they are wage insurance
This argument stretches the definition of "insurance" well beyond the breaking point. If I lose my job, SocSec doesn't replace my income. SocSec is wage insurance only to the extent that it pays benefits to the disabled. It is plainly a retirement benefit, not wage insurance.
If SocSec were wage insurance, then we should adjust SocSec taxes to reflect the worker's life expectancy. Those with medical conditions or history that predict an early death should pay less in SocSec taxes than those who are healthy and vigorous.
"Wage insurance" is a cheap semantic trick. It's a tax. It meets every definition of a tax, and has none of the attributes of an insurance premium. It is a mandatory payment to the government. That's a tax. One cannot opt to buy a higher or lower level of coverage, nor opt out of coverage altogether.
This proposal would amount to a transfer (or redistribution) of wealth scheme
This is Republican propaganda. The fact is that every tax of any sort whatever is a transfer of wealth, as is practically every transaction in our economy. Transferring wealth, where "wealth" is properly understood to mean goods and services, is central to the economy. If wealth were never transferred, non-farmers would all quickly starve.
Instead of using memes so generously provided to us by Republicans and their think tanks propaganda machines, let us do our own thinking. If a given policy is beneficial to 300 million of us and slightly inconveniences 3 million of us, we should adopt it enthusiastically. We have no sacred duty to adhere to ideology. The duty of government is to promote the general welfare (i.e. well-being) of today's citizens.
Taxing primarily the workers themselves insulates the program from politics.
The idea of this naive argument is that if SocSec is funded by a tax that falls most heavily on the blue collar worker, and if benefits are provided solely by that tax and the trust fund it supports, then there would be no political reason for attacks on SocSec. This view is refuted by the constant attacks on SocSec by the conservative wing. Bush II made a very credible attempt during his second term to dismantle SocSec. You see, it's not merely the money involved; it's the ideology. The right wing and their propaganda machines are determined to abolish SocSec because it's what they do; it's what they believe. They will not stop because they have no skin in the game.
Granted that wealth and income inequality are problems, but this proposal is the wrong way to address those problems.
If we don't start somewhere, the problem will just get worse. This proposal will put money into the hands of people who will spend it. It is exactly the right way to address inequality. It would benefit the 99% at the expense slight inconvenience of the 1%, who have systematically squeezed the rest of us without remorse. If you think there is a better way, then propose it.
Taxing the rich is futile. They (or their money) will just flee the country.
This objection is just giving up. It tells us that the rich have already won, and that nothing can be done about it. I don't buy into that view.
We can pass legislation that puts the rich in jeopardy of hard prison time for tax evasion, and enforce those laws vigorously. We can subject the assets of tax fugitives to a departure tax. Evading that tax would make them criminals; they could no longer visit the US or any other country that would honor our request for extradition. If you were a millionaire or billionaire, would you rather pay the 8% or become a hunted man with no real home and no safe harbor? We can enforce our tax laws if we have the political will to do so.
It can't be done; it's dead on arrival in both houses of Congress.
Lots of things were once impossible: abolishing slavery, for example, was once impossible. Meaningful change won't happen without prolonged hard work, and ultimately votes. This objection simply advises us to capitulate; it's exactly the wrong message.
In summary
This proposal would help balance, in a small way, the scales which are now greatly in favor of the 1%. This is not a revolutionary proposal, given the magnitude of the wealth inequality problem. Many of the 1% cannot possibly ever spend the dollars they now possess, but they nevertheless continue to accumulate even more dollars at the expense of the well-being of their friends, relatives, neighbors, and fellow citizens. At some point we as a society must stop them because they are doing real harm to the country. This proposal would only slow them down a trifle, but the journey, as they say, begins with a single step.
Another advantage to this proposal is that it gives the retired a fixed slice of the economic pie, rather than relying on complex formulas to determine the annual adjustments. By law, or better yet by constitutional amendment, every dollar of this tax would ultimately be devoted to SocSec and Medicare. There would never be any concern about the trust fund. The trust fund would, in effect, be the productivity of the US economy.
The relevant question is this: Would the majority of US citizens be be better off or worse off under this proposal? Let's just ignore the Republican memes like "wealth transfer" and "welfare" and "wage insurance" and "other peoples' money". Those who defend the SocSec system as it now exists are in fact defending the extreme wealth and privilege of the 1%. This proposal would greatly benefit our workers, our retirees, and improve the economy as well, without doing any material harm to the 1%.
The poll is very simple, and is designed to get a general yes or no opinion of this proposal from Kossacks. If you think it's not a simple yes or no question, let's talk about that in the comments.
To get back to the question posed in the title, I think we must go on offense. I don't think it will be easy, nor do I anticipate a quick victory. If we are to succeed, we must break the plutocracy and put into place policies the benefit all Americans, rather than just the wealthy.