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Tell me if I'm paring this down correctly - Americans won't have to pay the payroll tax until January of 2021. However, all taxes not paid during this period must also paid back in January of 2021. These taxes fund Social Security and Medicare, no?

If I'm correct, it's basically a pretty dirty trap set for Biden if he gets elected because he'll have to 'raise taxes' in order to fund SS and Medicare. If Trump gets elected he'll what? Just absorb the loss? Defund the programs? This one is a head scratcher, for sure.

- Doc

The thing I think matters here is he has nothing to lose. If reelected, he doesn't have to worry about protecting social security or Medicare. He's term limited and won't need voters anymore. So he can follow through on forgiveness with no downside to himself. And if Biden gets elected, he's booby trapped the office of the President.

Doctor CamNC4Me wrote: ↑

Mon Aug 10, 2020 1:51 pm

Tell me if I'm paring this down correctly - Americans won't have to pay the payroll tax until January of 2021. However, all taxes not paid during this period must also paid back in January of 2021. These taxes fund Social Security and Medicare, no?

Correct. But it is only middle-class earners that get the deferral. Basically, if your income is over about $100k, you don't get the break.

Doctor CamNC4Me wrote: ↑

Mon Aug 10, 2020 1:51 pm

If I'm correct, it's basically a pretty dirty trap set for Biden if he gets elected because he'll have to 'raise taxes' in order to fund SS and Medicare. If Trump gets elected he'll what? Just absorb the loss? Defund the programs? This one is a head scratcher, for sure.

Technically, this money isn't needed to fund the programs--it is needed to slow down how fast the trust funds are being spent down.

The end-game of this is to force Congress to make the tax deferrals tax breaks. Trump is giving Congress a choice--either pass a law that says taxpayers don't have to pay the money back, or do nothing and then take the heat for making them pay it back. That's the situation regardless of who is in the White House and who controls congress come 2021.

This really doesn't have any effect on the long-term financial stability of these programs--it just accelerates the day of reckoning.

Analytics, thanks for chiming in. If you had to, uh, analyze the tea leaves, when would you guess the day of reckoning (SS insolvency?) is going to land and what ought the federal government do in order to make sure I can cash those sweet, sweet checks in 2041 when I attempt to max out the entitlement?

- Doc

Doctor CamNC4Me wrote: ↑

Mon Aug 10, 2020 7:21 pm

Analytics, thanks for chiming in. If you had to, uh, analyze the tea leaves, when would you guess the day of reckoning (SS insolvency?) is going to land and what ought the federal government do in order to make sure I can cash those sweet, sweet checks in 2041 when I attempt to max out the entitlement?

- Doc

The good news is that once you start cashing your SS checks, you'll be a part of the most powerful voting cohort represented by arguably the most powerful lobbying group in America.

The Chief Actuary of Social Security happens to be a friend of mine, and he always points out that the worst case scenario is that Congress does nothing and the trust fund goes to zero. If that happens, it won't mean you won't get any SS benefits. What it means is that the government will prorate all benefits due every month by the same percent so that the benefits paid that month equal the social security revenue coming in that month. What that means is that your benefits will be about 30% lower than your full entitlement. But that 30% reduction will go up and down depending upon the payroll tax collected each month and the full benefits owed each month. But I doubt the reduction will ever be much more than 30%.

That said, the chance of the worst-case scenario actually happening is pretty close to zero--the politicians in power just won't allow everybody's social security check to be cut. My expectation is that the overhaul they'll do instead will include:

1- Raising the retirement age.
2- Tax overhaul.
3- Allowing the SS program to go into debt (possibly by making payments paid by the government out of general funds rather than out of a separate SSDI account like it is now).
4- Encouraging more immigration so that there will be more workers paying SS tax.

Tax overhauls will almost certainly include removing the cap on SSDI payroll tax. Currently, you only have to pay SSDI taxes on the first $137,700 of income. After you hit that, the tax disappears for the rest of the year. So, the SSDI tax is literally a regressive tax--the working poor and middle class pay 12.4% of their income in SSDI tax (including the 6.2% you see taken out of your paycheck and an additional 6.2% that your employer pays on your income but that was never counted as an explicit part of your salary). But since you stop paying taxes after $137,700 of income, the more you make above that, the lower your tax rate. For example:

Income________Tax Rate
$20k__________ 12.4%
$60k__________ 12.4%
$100k_________ 12.4%
$137.7k _______12.4%
$200k__________ 8.5%
$500k__________ 3.4%
$2M____________ 0.8%
etc.

A regressive tax scheme like this just isn't fair and doesn't generate the revenue the government needs to pay its obligations.

and what ought the federal government do in order to make sure I can cash those sweet, sweet checks in 2041 when I attempt to max out the entitlement?

- Doc

It'll taste just like Bolivares or Rubles by the time 2041 rolls around.

Thanks, Analytics! I really appreciate your input on the matter. Also, very cool that you’re a connected guy.

- Doc

Analytics wrote: ↑

Mon Aug 10, 2020 7:11 pm

The end-game of this is to force Congress to make the tax deferrals tax breaks.

The full end game is the Steve Bannon dissolution of the United States as we know it, to give way to right-wing alliances like the New Confederacy and the Kingdom of Deseret. Moscow can deal with these lesser entities and Trump Enterprises will come out on top.

Trump has promised that if he is reelected he will end the payroll deduction funding Medicare and Social Security.

So, the simple explanation is that Trump is forcing Biden's hand to admit that his Democrat plan is to raise taxes on middle class to pay for programs etc.

Wow. It already worked, and the election hasn’t happened, yet.

-Doc