The Social Security Trust Fund is running low and may not have enough income to to pay the expected outflow and it will then need to start reducing payments such that income and outflow balance. Sometime in the 2030’s is projected.

Currently an employee contributes 6.2% of income up to $160,200 (in 2023), with the employer matching that 6.2%. If they really can’t get rid of the cap on the employee’s side of the equation, why don’t they get rid of the cap on the employer’s side and let them continue to contribute 6.2% of income with no cap? That should put a bit more money into the trust fund.

Some Fast Facts & Figures About Social Security.

I heard a story the other day about how states are looking at ways to tax EV to pay for the road taxes they no longer collect on the lost gasoline sales. There is also the issue of declining gas tax revenues because of improving fuel efficiencies without the reduction of the wear and tear on the roads themselves. Some of the ideas included charging an EV tax on annual registration renewal or taxing at the charging station (but if you charge at home and not at a charging station, no taxes?)

Why not just tax the tires? Add a certain tax based on the expected mileage of a set of tires. The actual usage of the roads will be captured by how often the tires are changed.

If we look at consider the average car gets @ 16 MPG and the gas tax is $.18 per gallon then the average tax is $.01125 per mile. So a set of 4 -40,000 mile tires would be taxed $450. A set of 60,000 mile tires would be taxed $675.

Heavy Duty Vehicles and their tires can be taxed at a different rate since the heavier vehicles put more where and tear on the roads.

It might be easier to collect the tax at the annual registration time and ignore the difference between the the folks that only put 3,000 miles a year on their cars and those that put 30,000 miles a year on them. If we assume the average car is getting 12,000 miles a year, then an average $135 a year can be collected in the registration fee.

All this is in lieu of the gasoline tax and could be applied to all types of vehicles. Although the registration tax could just be used for EV and gas taxes can stay until the last pump dies.

I forget though. The $.18 gas tax is the federal tax rate. The same process can be used for states gas taxes to add on to the figures above.

I see that the average State Gas Tax is $.31 per gallon. That comes to $ .019375 per mile additional state tax and a total of $.030625 per mile combined Fed and State Taxes. Tire taxes would be $1225 for a set of 40,000 mile tires and $1837.50 for a set of 60,000 mile tires. I can see that would cause a bit of sticker shot for the consumer. The registration cost, using 12,000 miles as the average, is $367.50 per year.

If there was a way to spread out the tire tax over a period of years, it may be a more appropriate way to tax for actual road usage. Those of us who only drive 5,000 miles a year will only be getting new tires every 10 years or so. (Do tires actually last that long?) Or maybe a combination of registration tax and tire tax such that it isn’t such a big hit at once.

Either way, the EVs do need to pay their way for road maintenance.

Bloomberg’s Awful Comment; What Can We Say For Certain Regarding the GSEs? | Rortybomb.

 

Rule of Thumb: Whenever a politician opens their mouth – verify what they are lying about. And whose lie are they repeating?

I would like to propose a few taxing proposals.

First is to take federal social insurance (Social Security, Medicare and Medicaid) off the books and let them be funded by a straight 20% payroll tax. Those payroll taxes go straight through to the trust funds and don’t go through the Congress. Congress can oversee the Trustees. I would also suggest that Medicare/Medicaid will provide universal coverage.

Let’s get rid of the itemized deductions, give every household a flat deduction of $75,000, calculate the non-social insurance expenses for the government and figure out how much revenue we need to collect to cover the difference.  Then calculate what we need to tax everyone to meet our goals.

As an example: We have $13T income in the US. With the 20% payroll tax the Social Insurance Funds are collecting $5.2T (employer matching). That should cover the annual medical costs and retirement funding with no problem.We have ~$9T in flat deductions, leaving about $4T to cover the federal budget. Taking the Social Insurance costs out of the picture we have about $2T to cover. So a 50% tax on everyone’s income over $75,000 will cover the budget with no deficit. And the Corporations don’t have to pay any taxes!

Or we could arrange for the personal income tax to cover 3/4 of the budget and Corporations to cover 1/4 of the budget. Then we have $0.5T coming from Corps and $1.5T coming from the people with a 37.5% tax rate.

I am sure there are some tweaks that need to be accounted for. What about folks whose income doesn’t come from payrolls? They need to contribute to the Social Insurance funds. And what about 1 person households and 2 person households and 10 person households, etc? Do they all get the same $75,00 deduction? Some more pondering is needed.

I heard someone ask the other ” What was fair?”. They were referring to the ‘tax cuts’  and the idea of letting the high income folks move back to the pre-Bush rates while the lower income folks stayed at the Bush rates. Was this ‘Fair’?

In my view, letting higher income earners pay taxes at a higher rate commensurate with the higher income is more than fair.  One of the primary reasons these people have such a high income is because the government has built an infrastructure that provides for them. We have regulatory agencies that provide a a safe and stable commercial environment.  We have troops stationed around the world, fighting in foreign countries, trying to maintain a safe and stable political environment.  Our government manages to maintain a safe and stable personal environment for most of its citizens, allowing them to direct their energies to personal growth and achievement rather than to day-to-day survival (I said most.) This all requires an infrastructure paid for by our taxes.

Over the past few years,  the national infrastructure has become suspect. Debts and deficits have risen because no one seems to think they should pay for all this infrastructure, and so, the infrastructure is weakening.

TAANSTAAFL.

What is fair is that the folks whom benefit the most from this infrastructure pay the most for it. And it isn’t like anyone who makes more than another should  take home less than someone who makes less. Additional taxes are applied to the the monies earned over and above the threshold level. Someone making $1,000,001 pretax is still taking home more after tax than someone making $1,000,000 pretax.  Until the infrastructure is repaired, those that have reaped the benefits of the past should continue to make it right for the future.

The ones trampled by the infrastructure shouldn’t be expected to pay for it. Effectively, they can’t pay for it.  The infrastructure should provide the all of society the opportunity to grow and prosper and it doesn’t always catch everyone equally. I am sure that most people would rather make $1,000,000 a year and pay some taxes than make $10,000 a year and not have to pay taxes.

So let the ones who profit from our society pay for it.  Not only is this fair;  it is equitable.

I read Paul Krugman’s column on our future prosperity, and then found that Avedon had also read and commented on it along with some links to other commentors. One of the best I saw was about cheap-labor conservatives.

Work cheap or starve, a motto to live by.

These cheap-labor conservatives should read the mission statement for the United States sometime. It’s right there in the first paragraph of the Constitution –  after “We the People of the United States, in Order to”.

• form a more perfect Union,
• establish Justice,
• insure domestic Tranquility,
• provide for the common defence,
• promote the general Welfare, and
• secure the Blessings of Liberty to ourselves and our Posterity

and ends “do ordain and establish this Constitution for the United States of America.”

About the only mission they seem to care for is to provide for the common defence, because there is money to be made there.

I guess I would have to put myself in the single payer camp on health care. I would like to see an expanded Medicare system be the primary basic health care insurer/provider. Everyone will get a Medicare account at birth and keep it until they die, and beyond. We will pay for it with a payroll tax such that Medicare and FICA will be 15% of a pay-check. That should provide enough income to both systems to grow flourish as the baby boomers hit their retirement age.

A condition for this payroll tax is that the monies go into the Medicare and FICA trust funds and not into the general fund.  As away to ameliorate the impact on household incomes, I would also suggest that every household get a deduction equal to the median household income.  (I believe that is somewhere about $50K today). No other deductions, just one flat deduction and then tax everyone above the average household income what is needed to balance the rest of the budget.