Tuesday, December 9, 2008

Michael Messner’s feeling guilty. And I have a solution.

Michael Messner, a professor of sociology and gender studies at USC, writes in the LA Times that he is feeling a bit guilty because his Social Security taxes have been reduced. Folks who earn over the taxable maximum of $100,000 have a few weeks or months at the end of the year in which Social Security payroll taxes are not deducted from their paychecks. Is Messner happy? No way.

I don't want it. My message to President-elect Barack Obama and to the Democratic-controlled Congress is this: Tax me more.

Don't worry, Prof. Messner. I suspect it won't be too long until President Obama and the new Congress oblige you.

In the meantime, though, here's a solution: under the 1972 Amendments to the Social Security Act, right-minded citizens were at last given the right to donate cash gifts to the Social Security trust fund. Here we have it:


Sec. 132. (g) [42 U.S.C. 401 note] For the purpose of Federal income, estate, and gift taxes, any gift or bequest to the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund, or to the Department of Health, Education, and Welfare, or any part or officer thereof, for the benefit of any of such Funds or any activity financed through any of such Funds, which is accepted by the Managing Trustee of such Trust Funds under the authority of section 201(i) of the Social Security Act, shall be considered as a gift or bequest to or for the use of the United States and as made for exclusively public purposes.

So feel free to donate that extra cash to Social Security. They'll gladly take it and your guilt will be assuaged.

As for the rest of us, though, bear in mind that Social Security taxes were capped for a reason. FDR was very concerned that Social Security benefits be seen as an earned right, as distinct from what was then called "relief" or today is called "welfare." Social Security has always been progressive, but that progressivity has been tempered with a focus on equity, the idea that people receive benefits in reasonable proportion to the taxes they pay. Equity is hard to define, but it's worth pointing out that the system's progressivity hasn't changed a lot since it began. (Happy to provide some examples if anyone is interested.) President-elect Obama's plan to levy new taxes for folks earning over $250,000 is truly out of character with Social Security's history. Now, there may be good reasons to change how Social Security is structured. But we shouldn't miss the fact that it would be a big change.

1 comment:

Anonymous said...

I thought I'd heard that taxable payroll for SS as a percent of payroll (or something like that) was at historical lows. Not true? Does it make sense (equity or efficiency-wise) to keep this percent somewhat constant?