So the basic idea is to invest each person's 15.3% combined Social Security and Medicare tax into individual accounts. What happens to those who are currently on SS and Medicare? This year's payments aren't saved by the government (no matter what financial book cooking is happening to make it look like there is a lockbox with the cash). That means the government would have to grab another 15.3% tax to pay for current spending. Also, those who make little or nothing would have little to nothing saved through this program and thus still be poor.
posted on 01/14/2013 8:39:46 AM PST
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So the basic idea is to invest each person's 15.3% combined Social Security and Medicare tax into individual accounts.
You ask excellent and totally logical questions, and even the authors idea of privatizing accounts is not a bad one.
The fatal assumption comes when one thinks the government has ANY interest in 'ending poverty'.
posted on 01/14/2013 8:51:58 AM PST
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“That means the government would have to grab another 15.3% tax to pay for current spending...”
You don’t understand the Laffer Curve. Cutting taxes 15.3% will cause a net increase in tax revenue due to increased economic activity. As just one example, many seniors would achieve higher investment income which would cause their SS benefits to be taxed, thus reducing net SS expenditures.
Chile did this 20 years ago and it has been a spectacular success. But hey, why not tax ourselves to prosperity instead, despite centuries of evidence that it can never work?
posted on 01/14/2013 12:38:33 PM PST
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