Tax whiplash

Remember a few years ago when the GOP was leading the charge to dimantle save Social Security?  Some of us observed that excess Social Security taxes collected over the past 25 years had intentionally created a $2 trillion trust fund, enough to pay 100% of benefits until 2042 according to the CBO.

No, no, no, said the GOP.  It’s unbelievably naive to think of Social Security as a stand alone insurance plan with a “trust fund”.   You need to think of all taxes and expenditures together.  And taken together, the federal government’s in a bad hole.  Social Security will have to be cut back.

One reason that argument is outrageous is because the $2 trillion was accumulated by taxing ONLY income below $102,000 (current cap).  Income above that level is tax free—always has been.

Fast forward three years and Obama is considering imposing a Social Security tax on income above $250,000—from its current 0% to maybe 4%.  The GOP response to this?  A whiplash inducing reversal of opinion.  (from the Wall Street Journal):

…lifting the cap would change the nature of Social Security from an insurance program — which pays out based on how much you paid in — into a wealth-transfer program that is far more progressive.

Got it?  A tax structure that transfers wealth TO the wealthy is just plain ol’ taxes.  A tax structure that transfers wealth FROM the wealthy is a contemptible “wealth-transfer program”—aka Socialism.

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Filed under economics, social insurance

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