Is ObamaCare even sustainable?

Jun 15, 2014 0:51:07 GMT pjohns1873 said:

Well, I am not entirely sanguine with the mandatory aspect of your proposal; although, in all fairness, it should also be noted that Social Security is not entirely voluntary. (In fact, it is not voluntary at all.)

I can understand your desire to increase taxes temporarily, in order to pay off the debt.  But realistically, just how many "temporary" tax increases have been abolished, once they had achieved their stated goal? 

I don't believe it can be claimed that my privatization of Social Security (elimination of Medicare) proposal is a tax increase.

Those funds collected (FICA/Payroll/Self-employment taxes) for private investment are not a tax because the person "owns" that money. They are vested in their private investment accounts from the first dollar. The fact that I offset this loss of revenue but applying the 15.3% tax to all incomes regardless of source without any caps is not a tax increase but instead is merely a universal application of the tax without favoritism to anyone. The "Social Security" taxes have always been a dedicated tax and as the expenditures for Social Security/Medicare decline during the transitional period the tax would likewise decline until they all but disappear (relatively speaking) at the end of the 45 year transitional period.

As for paying down the national debt that is a component of my income tax proposal but that proposal, based upon a single tax rate on all income above the "exemption" level, to fund all expenditures of government that could/should include paying down the national debt, is a tax cut. As noted for 2013 it would have reduced the income tax rate from 39.6% to 29% to fund all federal expenditures. 

Remember that all of the income tax rates below the 39.6% are to make the income tax "progressive" but my "exemption" makes my tax progressive so the tax rate can only be compared to the highest tax rate imposed. 

So ultimately the Social Security/Medicare tax remains the same (15.3%) initially and then declines as expenditures decline and the federal income tax declines (e.g. from 39.6% to 29% based upon 2013) because in both cases the taxation is applied equally to all Americans without favoritism under my proposals. 

What can be said is that when favoritism (crony capitalism in the tax codes) is removed some people pay more and some people pay less in actual taxes but that doesn't imply a tax increase. It just establishes that "fair" taxation is being imposed because there is no favoritism.

Jun 16, 2014 1:27:36 GMT pjohns1873 said:

I may be misunderstanding a portion of your proposal.

Are you saying that you would abolish the Social Security (FICA) and Medicare taxes immediately, just as soon as this new "private investment" tax kicks in? Or that you would merely eliminate these taxes gradually, over a 45-year period?

The tax rate decreases gradually at first and then more rapidly based upon an increase in the personal wealth of Americans created by private investments. We can't instantly make the financial obligation to those that have been paying into Social Security for decades disappear.  

Jun 16, 2014 23:31:51 GMT pjohns1873 said:

Within this 45-year interim, would this not result in an additional payroll deduction (whether you wish to call it a "tax" or not)?

The 15.3% is all that my proposal required although additional voluntary contributions to the investment portfolio would be allowed. The tax rate would not increase but would be applied to all income above the investment portion until it was reduced by the private investment account contributions to retirement income.

Admittedly the transition period was hard for me to deal with because I'm not an expert at all of the transitional analysis but by about 30 years into the transition most of the 15.3% tax would have gone away and by the end of 45 years it all but disappears completely except for the non-tax investment portion. Even the 15.3% investment might be reduced slightly depending upon outcome but that would be speculative at this point.

Jun 17, 2014 20:52:23 GMT pjohns1873 said:

Would the person who is paying this 15.3 percent tax be receiving Social Security income whenever he (or she) becomes eligible and elects to take it? Or would this person receive retirement funds only through the "voluntary" contributions to this other plan, plus the 15.3 percent mandatory contributions to Social Security, for the benefit of others?

I am not just slamming your pkan; I am sincerely confused as concerning this point. 

These are very good questions because the transition is the hardest part.

One of the components of the privatization proposal is to improve the retirement income safety net. 

Today benefits start at about $7,800/yr ($650/mo) and go up to about $30,000/yr ($2,500/mo) at full retirement age with the average being about $15,000/yr.

My proposal is to have a flat "safety net" income of $30,000 ($2,500/mo) but we would have to transition into that from where we are today.

In the simpliest means to accomplish that we'd start with the "baseline" of what the person would receive today under Social Security then, based upon the income from the private investments, that additional income would increase their monthy/annual income until they reached the $30,000/yr income at which time their "government" benefit would begin to decrease because they'd reached the "safety net" limit.

By way of example let's assume that someone would receive $1,000/mo ($12,000/yr) under Social Security today. They start the private investments so they will receive income from them. If their investments provide another $1,000/mo ($12,000/yr) they would receive both the $12,000/yr from traditional Social Security plus the $12,000/yr from the private investments. That is really identical to what we have today.

Let's change that so that they receive $2,000/mo ($24,000/yr) in income from their private investments then the "Social Security" portion would be reduced by $6,000/yr because the "safety net" only provides a subsidy up to $30,000/yr and once that income level is reached then the safety net is providing the "maximum" benefit necessary. When a person reaches $30,000/yr then they don't recieve any "income" subsidy at all.

As the "private investments" begin to reduce the expenditures of Social Security we would begin to increase the "current" benefit schedule slowly until it ensured the full $30,000/yr but that would be very slow and gradual based upon savings and not reach that $30,000/yr safety net until full transition at the end of 45 years. Remember that very few would qualify for any "subsidy" under the safety net at the end of 45 years but the real substantial savings don't begin to mount up until about 30 years into the program. 

Basically the "transition" does not increase the costs of Social Security and instead lowers the costs and necessary taxation to support it over time. At the sametime it does incease the income benefits to the individual that reaches retirement age as well as providing an "estate" to the heirs of the worker because all of the "investments" are privately owned by the person. It benefits the worker at retirement as well as the family of the worker regardless of when they die dramatically reducing generational poverty.

That doesn't address the elimination of Medicare though where Medicaid becomes the safety net. Would you like me to address that?