Our Ridiculous Approach to Retirement (US Stupidity)
Moderator: Edi
Re: Our Ridiculous Approach to Retirement (US Stupidity)
Before we go about redesigning our society and all that, maybe we should first figure out what we what we want Social Security to do, how much it would cost, and all that other fun stuff. Take the Canada Pension Plan for instance, unless you live in the boonies where the cost of living is next to zero it's unlikely to pay for your living expenses. Add in the Old Age Security payments and a couple may be able to live modestly in the suburbs, assuming they have their home paid off. If I'm reading the charts correctly, the average retirement payouts for a couple would be around 30-40% of the average household income of a working family. There's no way you can continue living the same lifestyle in retirement as you did while working unless you got the short end of the stick in your working life.
So the next step - is this what we want Social Security to do or do we want to be more or less generous? Then we cost it out and figure out how much everyone needs to contribute to make it work. After that's sorted you get to argue over who gets how much taxed from them, and who gets how much money and when.
So the next step - is this what we want Social Security to do or do we want to be more or less generous? Then we cost it out and figure out how much everyone needs to contribute to make it work. After that's sorted you get to argue over who gets how much taxed from them, and who gets how much money and when.
aerius: I'll vote for you if you sleep with me.
Lusankya: Deal!
Say, do you want it to be a threesome with your wife? Or a foursome with your wife and sister-in-law? I'm up for either.
Lusankya: Deal!
Say, do you want it to be a threesome with your wife? Or a foursome with your wife and sister-in-law? I'm up for either.
Re: Our Ridiculous Approach to Retirement (US Stupidity)
[quote="Surlethe
Strawman: The claim is that the income available for taxation, hence tax revenues, would rise as a very high tax rate fell, not that there would be no wealth left.[/quote]
No. You're misreading her justification for that:
Strawman: The claim is that the income available for taxation, hence tax revenues, would rise as a very high tax rate fell, not that there would be no wealth left.[/quote]
No. You're misreading her justification for that:
The argument being made is that rich people will not continue the activities that made them rich if tax rates exceed a certain threshold. An argument that has no validity in either the historical or contemporary world.
That is to say that, psychologically, even if they can afford to pay 95% tax and still live comfortable and rich lives, the mega-rich running the automated factories will not do so. The most we can possibly hit them for is probably around 55 - 60% of their income, and if capital becomes so concentrated that this level is no longer sufficient to pay for the benefits to youth and retirees, then we still hit the crunch.
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'You're a bully putting on an air of civility while saying that everything western and/or capitalistic must be bad, and a lot of other posters (loomer, Stas Bush, Gandalf) are also going along with it for their own personal reasons (Stas in particular is looking through rose colored glasses)' - Darth Yan
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
Yet there is a productivity depression that has been statistically proved above 48% cumulative taxation. One moment.
The argument being made is that rich people will not continue the activities that made them rich if tax rates exceed a certain threshold. An argument that has no validity in either the historical or contemporary world.
"The Case for a Progressive Tax" by Peter Diamond and Emanuel Saez, referencing also one of their own earlier papers, both of which state a 48% rate as the present optimum.
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In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
Re: Our Ridiculous Approach to Retirement (US Stupidity)
I also recently read that the Laffer curve maximum (for the US) had been computed from empirical estimates of income elasticities to be at about 50%. Let me try to find the argument.
A Government founded upon justice, and recognizing the equal rights of all men; claiming higher authority for existence, or sanction for its laws, that nature, reason, and the regularly ascertained will of the people; steadily refusing to put its sword and purse in the service of any religious creed or family is a standing offense to most of the Governments of the world, and to some narrow and bigoted people among ourselves.
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
Thank you, Surlethe. My original argument in this thread before it got sort of derailed, and the only one I want to defend, is that tripling the Capital Gains Tax rate from 15% to 45%, eliminating the cap on social security taxes, and raising the retirement age to 70 would let us provide a reasonably comfortable retirement for everyone, ample disability payments to people who can't work before age 70, and unemployment benefits to young people who don't presently enjoy support from existing unemployment plans.
Does anyone dispute that? Or is this all just people spinning off on tangents? (I acknowledge I'm guilty of it too).
Does anyone dispute that? Or is this all just people spinning off on tangents? (I acknowledge I'm guilty of it too).
The threshold for inclusion in Wikipedia is verifiability, not truth. -- Wikipedia's No Original Research policy page.
In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
I think Duchess and D.Turtle, at least, were doing exactly that. Or at least doing it implicitly, in that it informs their posts.aerius wrote:Before we go about redesigning our society and all that, maybe we should first figure out what we what we want Social Security to do, how much it would cost, and all that other fun stuff. Take the Canada Pension Plan for instance, unless you live in the boonies where the cost of living is next to zero it's unlikely to pay for your living expenses. Add in the Old Age Security payments and a couple may be able to live modestly in the suburbs, assuming they have their home paid off. If I'm reading the charts correctly, the average retirement payouts for a couple would be around 30-40% of the average household income of a working family. There's no way you can continue living the same lifestyle in retirement as you did while working unless you got the short end of the stick in your working life.
So the next step - is this what we want Social Security to do or do we want to be more or less generous? Then we cost it out and figure out how much everyone needs to contribute to make it work. After that's sorted you get to argue over who gets how much taxed from them, and who gets how much money and when.
I dispute the part where raising the retirement age is a necessary or desirable part of the plan. It would work at least as well without doing that. Social Security as such is not in danger of collapse unless we project so far in the future that we'll have to rewrite everything all over again anyway. Letting people retire at 65 is not the problem, and keeping 67-year-olds in the workforce at the expense of currently unemployed 27-year-olds is a recipe for long term economic disruptions.The Duchess of Zeon wrote:Thank you, Surlethe. My original argument in this thread before it got sort of derailed, and the only one I want to defend, is that tripling the Capital Gains Tax rate from 15% to 45%, eliminating the cap on social security taxes, and raising the retirement age to 70 would let us provide a reasonably comfortable retirement for everyone, ample disability payments to people who can't work before age 70, and unemployment benefits to young people who don't presently enjoy support from existing unemployment plans.
Does anyone dispute that? Or is this all just people spinning off on tangents? (I acknowledge I'm guilty of it too).
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
Although I am having difficulty finding the argument I remember distinctly. In the meantime, this suggests 60-70%. (Revenue maximization is obviously greater than current rates.)
A Government founded upon justice, and recognizing the equal rights of all men; claiming higher authority for existence, or sanction for its laws, that nature, reason, and the regularly ascertained will of the people; steadily refusing to put its sword and purse in the service of any religious creed or family is a standing offense to most of the Governments of the world, and to some narrow and bigoted people among ourselves.
F. Douglass
Re: Our Ridiculous Approach to Retirement (US Stupidity)
Here is the most recent paper Wikipedia cited.
A Government founded upon justice, and recognizing the equal rights of all men; claiming higher authority for existence, or sanction for its laws, that nature, reason, and the regularly ascertained will of the people; steadily refusing to put its sword and purse in the service of any religious creed or family is a standing offense to most of the Governments of the world, and to some narrow and bigoted people among ourselves.
F. Douglass
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
For myself, on grounds of "better safe than sorry," I'd be happier sticking to 50% or lower. We do have more than one layer of taxation in the US, and accidentally tipping ourselves into GDP-killing territory...
Hah.
Who am I kidding? We're nowhere near in danger of that happening.
Hah.
Who am I kidding? We're nowhere near in danger of that happening.
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
Yeah, I'd remind everyone that cumulative experienced taxation is what matters, so even if it is 70%, you have to set the maximum rate at 58% for federal income tax if cumulative local taxation would add up to 58% of income for someone that rich. Honestly I suspect the sources may actually mostly concur on that. I believe the highest proposed is 76% seriously for a top marginal rate. Now, the fact that your first 500k or so of income is taxed much lower helps, but if you have a 10% sales tax (and you have to plan for total consumption to avoid overtaxation), 5% state income tax, property taxes works out to about 2% of income a year, you're down to a 59% top marginal rate, which you can increase slightly, but that first 200k being taxed at a lower rate doesn't go very far. Since the study actually recommended a top marginal tax rate of 48%, the average experienced taxation would actually be higher. So you see, optimizing the Laffer Curve isn't so simple.
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In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
Simon_Jester wrote:For myself, on grounds of "better safe than sorry," I'd be happier sticking to 50% or lower. We do have more than one layer of taxation in the US, and accidentally tipping ourselves into GDP-killing territory...
Hah.
Who am I kidding? We're nowhere near in danger of that happening.
Setting a top marginal rate of 50% above 200k and 40% above 100k while leaving the rest of the tax structure alone would barely inconvenience anyone alive. The bigger deal is getting the Capital Gains Tax up to something sane.
The threshold for inclusion in Wikipedia is verifiability, not truth. -- Wikipedia's No Original Research policy page.
In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
Re: Our Ridiculous Approach to Retirement (US Stupidity)
Just eliminate capital gains and tax income once and for all when it hits your checking/savings/money market account. By the way, while we're solving tax code problems, let's index the brackets to proportions of nominal GDP per capita, rather than set them at particular levels. So, e.g., let's start the top bracket at 40*NGDP/capita.
A Government founded upon justice, and recognizing the equal rights of all men; claiming higher authority for existence, or sanction for its laws, that nature, reason, and the regularly ascertained will of the people; steadily refusing to put its sword and purse in the service of any religious creed or family is a standing offense to most of the Governments of the world, and to some narrow and bigoted people among ourselves.
F. Douglass
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
The fundamental problem with capital gains is that it doesn't discriminate between classes of investment. Investing in a factory or a startup start-up that creates valuable products and thousands of new jobs is treated the same as frontrunning (skimming) pension funds with high-frequency trading, or speculating on oil price futures, or shorting euro periphery sovereign bonds. In the former case you have helped to create a great deal of economic value, and taken a small fraction of it as a personal return. In the later case you have essentially tricked gullible people into giving you some of their money. While I personally have a soft spot for anyone engaging in the last activity, it does not make economic sense for the tax incentives to be the same. In fact in the UK we have the R&D tax credit which effectively exempts small amounts of personal investment (e.g. the original seed capital for my company) from capital gains. Something similar should be applied on a much wider scale across all investment classes. This would do much more good than simply increasing the capital gains rate, beause it would reduce malinvestment and incentivise capital into improving the economy, instead of just sucking aware more of it to be squandered by corrupt governments. That said I would be happy to increase the capital gains rate if you abolished corporation tax (probably in concert with a Federal sales tax in the US), as corporation tax has the highest differential between the poor (small companies) being forced to pay it and rich (multinationals) being able to completely avoid it of any tax.The Duchess of Zeon wrote:The bigger deal is getting the Capital Gains Tax up to something sane.
Of course in practice the 'all investment is building jobs (and hence shouldn't be taxed)' distortion is heavily promoted by rich individuals and the entire finance industry, and any local attempt to raise taxes on capital has a crushing effect on inward investment from international finance. As such I don't expect this kind of change to happen any time soon.
Re: Our Ridiculous Approach to Retirement (US Stupidity)
I ... I ... I agree with Starglider on an economic matter?
I need some rest
I need some rest
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
Starglider makes perfect sense. A targeted tax which incentivizes capital investment while taxing speculation, trading, etc, is the most sensible way to move forward, since it tends to subsidize the creation of jobs which pay well enough to make their holders into taxpayers. Most Americans do not pay income tax as it stands... Which is an issue primarily because of how little money it means they're making. I'd rather put half of minimum wage schlubs on the dole if we could get the other half making enough money to pay taxes, and though that's impractical, we can at least improve matters somewhat.
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In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
In 1966 the Soviets find something on the dark side of the Moon. In 2104 they come back. -- Red Banner / White Star, a nBSG continuation story. Updated to Chapter 4.0 -- 14 January 2013.
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Re: Our Ridiculous Approach to Retirement (US Stupidity)
Any appearance of reasonableness must be a trap for the unwary.D.Turtle wrote:I ... I ... I agree with Starglider on an economic matter?
Never forget what happened to Stas Bush!