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Thread: Obama would raise SS payroll tax on incomes over $250K

  1. #1
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    Obama would raise SS payroll tax on incomes over $250K

    [url]http://news.yahoo.com/s/ap/20080613/ap_on_el_pr/obama_social_security_3[/url]

    COLUMBUS, Ohio - Democrat Barack Obama would apply the Social Security payroll tax to [B]all annual [U]incomes[/U] above $250,000, which he says would affect the [U]wealthiest[/U] 3 percent of Americans[/B].

    The presidential candidate told senior citizens in Ohio on Friday that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make, while millionaires and billionaires are only paying it on a very small percentage of their income."

    The payroll tax is now applied to all income up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to incomes between that amount and $250,000. But all annual income above the quarter-million-dollar amount would be taxed under his plan.

    ---------------------------------

    Believe it or not, I agree with the idea of payroll taxes not phasing out for high incomer earners. I think phasing out the tax as people make more money is backwards logic. I'm also against the high marginal tax rates at upper income levels but that's another story. A fair tax is a flat tax....for everything and everyone IMO.

    The problem I have with this is in the first paragraph. I sincerely hope that Obama understands the difference between wealth and income. There's a HUGE difference. Just because you make a lot does not mean that you have a lot. And, just because you have a lot does not mean that you make a lot (you can either be "living off your accumulated pile" or enjoying the haywire tax system we have to find loops holes for your income to avoid tax). Income is not wealth and wealth is not income.
    Last edited by jetstream23; 06-13-2008 at 01:05 PM.

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    I think it is great idea. And if you make over 250K you [B][I]should [/I][/B]be one of the wealthiest... if you piss it away that is your problem. Even in NY, that is not chump change.

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    [QUOTE=ChadLover;2582223]I think it is great idea. And if you make over 250K [B]you [B][I]should [/I][/B]be one of the wealthiest[/B]... if you piss it away that is your problem. Even in NY, that is not chump change.[/QUOTE]

    True, but that's not always the case, even for people through no fault of their own. I know a recent Med school graduate with over $200K in debt, living in a Chicago apartment who will probably clear a quarter million next year depending upon when he starts doing surgeries. He is nowhere near "wealthy" and probably won't be so for 5+ years.

    But in general, I certainly agree with your point.
    Last edited by jetstream23; 06-13-2008 at 01:18 PM.

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    I like that he has a gap between $100k (the current cap) and where the new cap would start ($250k).

    Seems to protect the middle class (in big cities, upper-middle everywhere else, I guess) from getting slammed by a tax hit, but also addresses the basic problem that SS needs more revenue to survive. If you added a slight benefit reduction to this, you've likely saved the program.

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    [QUOTE=jetstream23;2582219][url]http://news.yahoo.com/s/ap/20080613/ap_on_el_pr/obama_social_security_3[/url]

    COLUMBUS, Ohio - Democrat Barack Obama would apply the Social Security payroll tax to [B]all annual [U]incomes[/U] above $250,000, which he says would affect the [U]wealthiest[/U] 3 percent of Americans[/B].

    The presidential candidate told senior citizens in Ohio on Friday that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make, while millionaires and billionaires are only paying it on a very small percentage of their income."

    The payroll tax is now applied to all income up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to incomes between that amount and $250,000. But all annual income above the quarter-million-dollar amount would be taxed under his plan.

    ---------------------------------

    Believe it or not, I agree with the idea of payroll taxes not phasing out for high incomer earners. I think phasing out the tax as people make more money is backwards logic. I'm also against the high marginal tax rates at upper income levels but that's another story. A fair tax is a flat tax....for everything and everyone IMO.

    The problem I have with this is in the first paragraph. I sincerely hope that Obama understands the difference between wealth and income. There's a HUGE difference. Just because you make a lot does not mean that you have a lot. And, just because you have a lot does not mean that you make a lot (you can either be "living off your accumulated pile" or enjoying the haywire tax system we have to find loops holes for your income to avoid tax). Income is not wealth and wealth is not income.[/QUOTE]

    If Obama is so concerned about taxing the wealthy, then that is exactly what he should do - tax the wealthy, anyone making over a 1 million a year that has a tax liability of less than 15% of total income. To imply that someone that makes $250K a year is wealthy and should, therefore, pay more taxes is complete bull****. Our taxation system is not equitable today and would be even less equitable with that proposal in place.

    That same family making $250K will now pay more taxes while not having the advantage of deducting the many expenses they may incur (like college tuition which they will pay out of pocket because there are no grants for kids whose parents earn $250K a year or low interest loans for that matter).

    Family's making $250K - $500K a year have assumed a disproportionate amount of the tax burden in this country. Let's just exacerbate the problem by putting this Dem in office.....yep, that's what I'll be doing! :mad:

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    [QUOTE=TexJet;2582276]That same family making $250K will now pay more taxes while not having the advantage of deducting the many expenses they may incur (like college tuition which they will pay out of pocket because there are no grants for kids whose parents earn $250K a year or low interest loans for that matter).
    ...[/QUOTE]

    Ummm. Dude.

    That same family making $250k can afford to put their kid through college [B]easier [/B]than a family making $45k a year. The reason they lower earning can claim a deduction is because they make less and the deduction makes it easier for them to afford to pay their children tuition.

    Also, a family making $250k can afford to pay slightly higher interest rates than a family making $45k because....duh...250 minus 45 is 205. When you have $205k more than another person, you can afford more. I learned that in 1st grade.

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    [QUOTE=PlumberKhan;2582992]Ummm. Dude.

    That same family making $250k can afford to put their kid through college [B]easier [/B]than a family making $45k a year. The reason they lower earning can claim a deduction is because they make less and the deduction makes it easier for them to afford to pay their children tuition.

    Also, a family making $250k can afford to pay slightly higher interest rates than a family making $45k because....duh...250 minus 45 is 205. When you have $205k more than another person, you can afford more. I learned that in 1st grade.[/QUOTE]

    Ummm...while you have a point, you do need a slight correction in your math:

    The family making $250K pays about 40% in state/fed income taxes....even more in states with high tax rates and adding in the AMT. The family making $45K pays about 0% in income taxes...

    $250K-$100K+ = $150K+/-

    $45K - $0 = $45K.

    The $100K+ in taxes pays in some part for the grants to the lower income family.

    Just sayin'.

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    I've always wondered why the cap on ss wasn't either raised or had no maximum like the medicare tax.

    In the case of someone making 45K SS is is 6.2% = $2790 for the year

    Under this proposed plan a worker earning 400K would pay a total of $15,624 in SS or 3.9% of their wages.

    If the $45K worker paid a similar 3.9%, their take home pay would increase by $1755 for the year.

    $1755 to a $45K worker is a years worth of gas. Just sayin.

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    [QUOTE=Pac2566;2583022]I've always wondered why the cap on ss wasn't either raised or had no maximum like the medicare tax.

    In the case of someone making 45K SS is is 6.2% = $2790 for the year

    Under this proposed plan a worker earning 400K would pay a total of $15,624 in SS or 3.9% of their wages.

    If the $45K worker paid a similar 3.9%, their take home pay would increase by $1755 for the year.

    $1755 to a $45K worker is a years worth of gas. Just sayin.[/QUOTE]

    Well, for one, there is a cap on potential benefits...and the SS program is a defined benefit program based on contributions, not percentages. If they increase the cap on earnings subjected to the tax, are they going to increase the maximum you can get in retirement from SS? Will they write into law that they will not at a later date means test the program?

    The other thing to remember is that a lot of the people that make over $250K, such as myself, are both business owners AND employees. Remove the cap on SS, and I get a 12% additional hit, not 6%.

    I'm not saying this to garner any sympathy...lord knows the class warfare crowd runs rampant here. But as a business owner, if anyone thinks I'm going to just accept a 12% paycut because someone in Washington thinks I don't pay my fair share...they ought to think again.

    People, businesses and business owners do not operate in a vacuum; there are reactions to every monetary action the government takes with regard to taxes.

    My business, in addition to the 10 owners (of which I am one), employs about 60 others...decent, well paying jobs with supreme benefits...ours is the only company I know of, in this area anyway, that contributes the maximum allowed by law to EVERY employees retirement plan. We pride ourselves on taking care of our employees and have a very low (in fact, non-existent) turnover rate.

    But will I sit here and take a 12% pay cut without looking for ways to decrease it? Not on your life. Maybe I find ways to get benefits to my family without it showing as income...and I'll certainly look at my payroll costs. Perhaps it costs a few people their jobs....I don't know at this point.

    Just sayin.

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    When i reach 250k a year..... Im gonna go back to 45k!! cause its betta!!!

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    [QUOTE=Greenwave81;2583040]Well, for one, there is a cap on potential benefits...and the SS program is a defined benefit program based on contributions, not percentages. If they increase the cap on earnings subjected to the tax, are they going to increase the maximum you can get in retirement from SS? Will they write into law that they will not at a later date means test the program?

    The other thing to remember is that a lot of the people that make over $250K, such as myself, are both business owners AND employees. Remove the cap on SS, and I get a 12% additional hit, not 6%.

    I'm not saying this to garner any sympathy...lord knows the class warfare crowd runs rampant here. But as a business owner, if anyone thinks I'm going to just accept a 12% paycut because someone in Washington thinks I don't pay my fair share...they ought to think again.

    People, businesses and business owners do not operate in a vacuum; there are reactions to every monetary action the government takes with regard to taxes.

    My business, in addition to the 10 owners (of which I am one), employs about 60 others...decent, well paying jobs with supreme benefits...ours is the only company I know of, in this area anyway, that contributes the maximum allowed by law to EVERY employees retirement plan. We pride ourselves on taking care of our employees and have a very low (in fact, non-existent) turnover rate.

    But will I sit here and take a 12% pay cut without looking for ways to decrease it? Not on your life. Maybe I find ways to get benefits to my family without it showing as income...and I'll certainly look at my payroll costs. Perhaps it costs a few people their jobs....I don't know at this point.

    Just sayin.[/QUOTE]

    I was thinking aloud in terms of the removal of the cap altogether and understand it's not really feasible.

    That being said, this plan states everything between 102-250K wouldn't be considered taxable ($9176 or in your case $18352).

    If your making 400K the net effect will be $9300 or approx 2.25% increase in your tax liability (i understand in your case those figures double).

    Do you think the relatively small increase is worth getting too upset about?

    I'm not judging you either way I just wonder how someone in your position would react. I saw what you said you'd do if the cap was removed but how about if this plan happens? Would you still consider trimming payroll or benefits?

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    [QUOTE=Pac2566;2583100]I was thinking aloud in terms of the removal of the cap altogether and understand it's not really feasible.

    That being said, this plan states everything between 102-250K wouldn't be considered taxable ($9176 or in your case $18352).

    If your making 400K the net effect will be $9300 or approx 2.25% increase in your tax liability (i understand in your case those figures double).

    Do you think the relatively small increase is worth getting too upset about?

    I'm not judging you either way I just wonder how someone in your position would react. I saw what you said you'd do if the cap was removed but how about if this plan happens? Would you still consider trimming payroll or benefits?[/QUOTE]

    If you think $9300, or another 2.25% of income out of my pocket is a relatively small increase, you are mistaken. In actuality, an increase of $9300 in my tax basis would not be a 2.25% hit (compared to income) it would be a 12% hit compared to taxes (as expected).

    Let's take an example here....how would you feel if the government took 42.25% of your income next year? Would you be OK with it? If you are, why not pay a little bit more...say 45%? 50%? What is the breaking point?

    I know your not judging me, and even though I wouldn't care if you did, I appreciate it.

    To answer your question, if you increased my tax liability by $10,000 next year, yes I would find some way to recoup that money. I would look at: means to shelter more of my earnings as being 'non taxable', benefits I pay to my employees, or possibly letting some people go...if I could not at a minimum increase my business revenues by increasing prices to counteract the increase.

    We are already looking at all alternatives, at my behest, at our monthly shareholder meetings...I am determined not to get caught short here. I see the potential writing on the wall, and I don't like what it says.

    I suppose it goes back to the question: 'Do businesses pay taxes'? I can assure you, they do not...taxes are a cost of doing business and are considered such by any business that desires to stay in business. So, when taxes increase on a business, either the increased costs are passed on to the consumer or expenses are cut to maintain the bottom line...which for a small business amounts to the business owner's income.

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    [QUOTE=Greenwave81;2583009]The family making $45K pays about 0% in income taxes...[/QUOTE]

    0%, huh?

    [IMG]http://www.hjo3.net/orly/gal1/orly_lemmony.jpg[/IMG]

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    [QUOTE=Greenwave81;2583138]
    I suppose it goes back to the question: 'Do businesses pay taxes'? I can assure you, they do not...taxes are a cost of doing business and are considered such by any business that desires to stay in business. [B]So, when taxes increase on a business, either the increased costs are passed on to the consumer or expenses are cut to maintain the bottom line[/B]...which for a small business amounts to the business owner's income.[/QUOTE]
    Except in the medical field where the government basically sets the bar for what you can be paid and it is very difficult to "trim costs".:steamin:
    Last edited by HDCentStOhio; 06-14-2008 at 10:32 AM.

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    [QUOTE=HDCentStOhio;2583466]Except in the medical field where the government basically sets the bar for what you can be paid and it is very difficult to "trim costs".:steamin:[/QUOTE]


    Which is why I would have little other choice than to let some employees go.

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    [QUOTE=PlumberKhan;2583336]0%, huh?

    [IMG]http://www.hjo3.net/orly/gal1/orly_lemmony.jpg[/IMG][/QUOTE]


    ok...perhaps that was off a bit....but a family of 4 with an income of $45K after personal exemptions, mortgage interest deductions, child care deductions etc. probably has a taxable income of about $20K, with a tax i would guess around $2K.

    OK, 5% or less.

  17. #17
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    Does the gov't mandate you must take any and all insurance? You could be a straight cash business, no? I honestly don't know, so don't get pissed HD..

    [QUOTE=HDCentStOhio;2583466]Except in the medical field where the government basically sets the bar for what you can be paid and it is very difficult to "trim costs".:steamin:[/QUOTE]

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    [QUOTE=cr726;2583519]Does the gov't mandate you must take any and all insurance? You could be a straight cash business, no? I honestly don't know, so don't get pissed HD..[/QUOTE]

    I know this wasn't directed to me, but I can answer your question...

    No, we do not have to take any and all insurance...and if you had a 100% office-based practice, I suppose that you could pick and choose patients based on ability to pay and/or what insurance they had....sort of like a Dentist. Most of us do not have that luxury though.

    As soon as you get involved with any hospital however, the rules change as the hospitals are mandated to care for patients regardless of their ability to pay or what insurance they may or may not have.

    Any physician that wants privileges at a hospital has to agree to some sort of 'call' arrangement, and that usually means that whatever walks in the door applicable to your specialty, you have to accept. Additionally, physicians do not have the option to say accept Medicare, and not Medicaid...with the government programs if you accept one, you have to accept them all.

    I think what HD meant was that since the government controls 40-45% of the health care market (medicare and medicaid), and they DO NOT negotiate with providers over reimbursement for care, it is hard for physicians to increase reimbursements...in fact, the government has been reducing reimbursements to health care providers for the past number of years. As a matter of fact, and for example, the government will decrease provider reimbursements for Medicare next month by 10.6%, decrease it yet again next January by another 6%, and is scheduled for a total decrease of up to 40% by 2016.

  19. #19
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    Thanks.

    [QUOTE=Greenwave81;2583547]I know this wasn't directed to me, but I can answer your question...

    No, we do not have to take any and all insurance...and if you had a 100% office-based practice, I suppose that you could pick and choose patients based on ability to pay and/or what insurance they had....sort of like a Dentist. Most of us do not have that luxury though.

    As soon as you get involved with any hospital however, the rules change as the hospitals are mandated to care for patients regardless of their ability to pay or what insurance they may or may not have.

    Any physician that wants privileges at a hospital has to agree to some sort of 'call' arrangement, and that usually means that whatever walks in the door applicable to your specialty, you have to accept. Additionally, physicians do not have the option to say accept Medicare, and not Medicaid...with the government programs if you accept one, you have to accept them all.

    I think what HD meant was that since the government controls 40-45% of the health care market (medicare and medicaid), and they DO NOT negotiate with providers over reimbursement for care, it is hard for physicians to increase reimbursements...in fact, the government has been reducing reimbursements to health care providers for the past number of years. As a matter of fact, and for example, the government will decrease provider reimbursements for Medicare next month by 10.6%, decrease it yet again next January by another 6%, and is scheduled for a total decrease of up to 40% by 2016.[/QUOTE]

  20. #20
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    [QUOTE=cr726;2583519]Does the gov't mandate you must take any and all insurance? You could be a straight cash business, no? I honestly don't know, so don't get pissed HD..[/QUOTE]

    Greenwave answered the question well. I would add also that the "private" insurers (Oxford, Cigna, et al.) base their reimbursement fee scales upon the government mandated medicare fee scale. They are not exactly the same, but do correlate well. So in a sense, the government does affect the reimbursements from private insurers- granted not directly but they definitely have an effect.

    A problem with going "out of network" is that you will lose alot of business. When it comes to medical care, people do not ignore costs. I'll give you a hypothetical- suppose you tore your ACL and needed a reconstruction. You could go to a "world class" surgeon such as James Andrews in Alabama (not sure if he is a "cash only" guy, BTW, just hypothetical situation) and pay $3000 out of pocket as an "out of network" provider (typically responsible for 20% of bill after a $1000 deductible). Or you could go to a very competent ortho surgeon in network where total cost would be a $30 co-pay. I would hazard to say that most everyone would go to the competent guy with the $30 co-pay.
    So to not take insurance puts you at a competitive disadvantage. Yes, many doctors "opt out" of specific private insurances that reimburse poorly as their practice grows. However very few run strictly "cash" businesses and those that do are questioned by many medical societies whether or not such a set up is "ethical" as it prices out all but the wealthiest.
    There are other rules that say you can't charge a lower fee for those who pay in full up front that do not apply to other businesses. Needless to say, the medical business has alot of rules and regulations that do not apply to other types of businesses.
    Sorry for the rambling reply.

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