Budget talks: This is getting nasty

I wonder if there's a tax break from INCOME taxes you can receive if you are, say, 66 and still working? That can be an incentive too. If you hold off til 70 you can A. Get more in your SS check when you do retire and B. Save money on your income tax in the years leading up.

All this may already be in place. I've still got a few more good years before I start worrying about it ;-).

 

But three-quarters (73.2 percent, according to one website I checked) apply for SS before their expected retirement date, so evidently the number of people holding off until age 70 is very small.

 

The people who would be in position to hold off are the people who have large amounts of their own wealth and can draw from their IRAs. In many cases, those would be Roth IRAs, whose withdrawals are tax-free. So it would be another way to give a tax break and other incentives to the rich (who don't need it) that doesn't much apply to the middle class. That's what we need, more help for the rich.

 

So what do you propose? Get rid of the government and just let the special interests run the show?

Seriously, who do you think takes charge if the federal government calls it a day? Right-minded everyday citizens with nothing but the best interests of humanity at heart? Hardly. The same goddamn corporate behemoths to which you claim, quite correctly, the government is in thrall.

 

Aren't upper-income earners ineligible for a Roth and have to use a traditional IRA? I think it's people over $120k or so right now. But I'm not sure on that.

 

So you are against what the Fed did to avoid the banking collapse?

 

Ragu for President !

 

The income limit is $169,000 for a couple. But in 2010 there was no limit for a conversion. So rich folk all over America were playing out this scenario:

--Convert $500,000 (or less, or more, or a whole hell of a lot more) from a regular IRA to Roth.
--Pay the conversion tax (income tax on the amount you're converting) over a two-year span.
--Grow money tax-free forever and ever and ever and ever.

A 45-year-old who had $800,000 in an IRA could pay about $300,000 of it in taxes, then put the other $500,000 in a Roth IRA. At 9 percent annual growth, by age 62 he will have $2.1 million that the government cannot ever touch. I would imagine that person would be OK with the added benefit of delaying Social Security payments and getting a bigger payment in return.

The one-year waiver of the income tax to allow the super-wealthy to avoid paying taxes on their even greater wealth. Another example, though a somewhat underreported one, of giving away the store to the people who already own it.

 

Yikes. I did not know this. But I bet, to some, eliminating this loophole would be "raising" taxes even though I don't think the Roth was ever intended to be used this way.

 

The SS trust fun is still viable. That thing you call "creative accounting practices" is, more money is being taken in payroll deductions than is than disbursed via benefits. Yes, the government borrows against the trust fund. But that's a problem with the government, not with the actual trust fund itself or the mechanism that funds it.

Simply raising the amount of taxable income that is subject to payroll taxes would more than fund the program in perpetuity. As I said, make every dollar of wages subject to payroll tax, not just the first $85K or whatever, and lower the rate across the board. Virtually everbody wins.

Like anything, the SS model needs occasional tweaks, but it is far from broken. But the bankers, investment houses and money managers, generally the puppet masters of the Republicans, just want their hands on more of your cash, money the government has ably protected for decades, while paying the promised rate of return every single month.

People lose their investment in Ponzi schemes. Bernie Madoff ripped off more people in one week than SS has in over 70 years. Please tell me who has ever lost their Social Security investment because the government defaulted or otherwise failed to pay?

SSI is government protection for the middle and lower classes, who simply do not have the cash for the retirement packages such as outlined by LTL.

 

That happens with $15,000 screw drivers.