No longer willing to spend my time uncovering every bad idea concocted by Congress, Media, Politicians, and others who hope to become noticed, I have narrowed the search to only the worst of the recent batch. At least for a while, until I get rejuvenated. It takes too much time and effort to find and refute each and every dumb thing these days, so I am being selective.
Our “Best of the Worst” stupidity entry is a proposal to bolster Social Security--itself a good idea. Before getting into the weeds, I refer our readers back to my past 2 Blogs, available on vanwiefinancial.com. Both fall into the general category of faulty “Tax the Rich” problem-solving, as does our current highlighted proposal.
Today’s Hall of Fame entry is presented by two ostensible researchers, who propose to save Social Security by reducing or eliminating tax breaks for contributions to Qualified Retirement Accounts. You know, those pesky and discriminatory 401(k) Plans, 403(b)s, IRAs, and the like? Higher-income Americans seem to enjoy greater benefits from contributions than do their lower-earning counterparts. Maybe they make more and larger contributions?
There is Dumb, there is Really Dumb, there is Government Dumb, and then there is Hall of Fame Dumb, like this proposal. From its very enactment in 1935, Social Security was intended to be an insurance system, providing a supplemental retirement income plan for those who needed it the most at the time of retirement.
As with any insurance program, it stands alone and independent financially, taking in premiums, and doling out benefits. Social Security inflows include mandatory FICA withholding, income tax collected on benefits paid out, and an occasional one-time boost to adjust for a change made by Congress. A classic example of Congressional program expansion was adding Disability Benefits to Social Security, and the Trust Fund had to be bolstered until collections covered initial and ongoing disability claims.
Today’s winners have thoughtfully(?) set out a plan to – wait for it -- Tax the Rich. Since only the top half of American Workers pay income taxes, using General Revenues to bolster Social Security amounts to simply letting “The Rich” pay yet another gigantic portion of the American lifestyle, the Social Security System. Lower-income earners get off unscathed.
Regardless of how much wealth is controlled by “The Rich,” it is a pittance compared to the rate of government spending. Confiscating 100% of assets held by the uber-wealthy would fund the government for a few weeks, after which those spent assets would earn no more income or tax revenue.
Hall of Fame Dumb.
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