[jtzhou]

True, but there is definitely a lot of staying power in those currently of retirement age, kicking the can down the road, with a growing proportion of the population over age 65 (20% in 2020 versus 9% in 1970) receiving the benefits of Social Security and Medicare which are largely unfunded.

There will have to be a number of cut-backs in retirement benefits for future retirees, including means-testing, removing the maximum wage for Social Security contributions, and higher Medicare premiums.

[jandrewrogers]

The reason there is a maximum on Social Security contributions and no means testing is that it is strongly marketed politically as a universal retirement account. Many of the system's characteristic are designed to ensure this perception. You receive Social Security roughly proportional to your contribution. This positioning is very important to the political support because there is the pretense of having earned it.

If you remove the cap on contribution and/or means test the receipt then that pretense is gone. Politically, it becomes explicitly a welfare system for people that did not save for retirement and penalizes those that do save. Once Social Security is perceived as "unearned" it becomes an acceptable target for reduction or elimination to the population at large.

Social Security is in fact a welfare tax and no one is entitled to receive it (see: https://en.wikipedia.org/wiki/Flemming_v._Nestor) but its political viability is dependent on the popular perception to the contrary.

[dragonwriter]

> You receive Social Security roughly proportional to your contribution.

Well, its a monotonically increasing function of your contributions, but its not proportional to them, because of the bend points.

> If you remove the cap on contribution and/or means test the receipt then that pretense is gone.

Means testing might arguably do that in theory (except that it empirically doesn't in practice, as SS is, in fact, already means-tested via the rules for taxability), but how does removing the contribution cap so long as further contributions above the old cap still contribute to the benefit calculation?

[ForHackernews]

People are dumb and don't pay close attention. I say raise the contribution cap, but don't means test it. That way everyone is still "paying in" and "getting back" the way they are now, but the extraordinarily wealthy will pay in much more than they receive. The average voter will continue to see SS as something "earned" rather than the entitlement program it [already] is.

[toomuchtodo]

> removing the maximum wage for Social Security contributions, and higher Medicare premiums.

Ahh! So the question is, at what point will Millenials (myself included, at the older end of the spectrum at 32) say "f* it" when we're paying Europe-level taxes with third world country benefits

* Single-payer Medicare for retires, expensive private insurance for everyone else

* Social security essentially becomes a basic income for retirees, as its not an account that can be depleted but an entitlement until death, supported by younger workers with terrible job prospects and long hours at low pay

Maybe the problem is that no one saves enough anymore, but that's because no one makes enough to save because most new income/wealth is kept by the very top wealth bracket.

[nemo44x]

You already do pay Europe level taxes - or should I say we do. Add up what you spend on all your taxes, state and Federal, look at medicare, SS your health insurance and other fees. Look at sales tax, property tax (even if you rent it is built in) and the various "fees" we have for things.

Subtract all of this from your income and look at most of Western Europe and you'll see we pay roughly the same overall.

I agree most people don't save enough. Part of it is people buy a lot of things they don't really need but "deserve" and the other is as you said.

[refurb]

US taxes rates are much lower than Western Europe save for a few outliers.[1]

Note that this graph doesn't include VAT which can be 15%+ in the EU.

[1]http://www.economist.com/blogs/graphicdetail/2012/10/focus-4

[mikeash]

Why does that count employee social security contributions, but not employer contributions? Both ultimately come out of your paycheck. The fact that social security contributions are split is just a fiction that makes the tax rate look lower.

It also sounds like it doesn't count state and local income taxes, nor property taxes or any of the many other taxes we have the privilege of paying.

The conclusion may well be correct, but the data presented doesn't seem to be nearly complete enough to support it.

[toomuchtodo]

> Why does that count employee social security contributions, but not employer contributions? Both ultimately come out of your paycheck.

Employer contributions don't come out of your paycheck though; for the business, its a cost of doing business.

[mikeash]

It's specifically a cost of labor. The business spends $X on you as an employee, and you receive $Y. The difference between X and Y is tax. The fact that some of the difference is technically removed before the money is transferred to you, and some of it is technically removed after the money is transferred, makes no difference in the end.

[ForHackernews]

> removing the maximum wage for Social Security contributions

This sounds like a great idea to me. It's absurd that only the first $118,500 of earnings are subject to to social security tax, and it means that our tax structure is much less progressive than it appears at first glance (which is one reason certain people strenuously avoid talking about any taxes except Federal Income Taxes).

[twoodfin]

It's not absurd: Social Security's benefits formula has significant "bend points" that make it an increasingly bad "investment" for higher income workers. Eliminating the wage cap would remove any remaining fig leaf covering its essentially redistributive nature: High income workers would have to live to 140 to get back what they "paid in" even without interest.

[mikeash]

Why do we need to keep a fig leaf to cover up what everybody already knows is there? We should either accept that Social Security is a form of welfare and rationalize it accordingly (my preference) or we should overhaul it to actually be the mandated savings scheme that it's said to be.

[bmelton]

Because welfare isn't popular, it makes it more subject to the political climate, and because as a mandated savings scheme, social security isn't terribly performant.

[jmulho]

The goal of the tax is not redistribution of wealth. The goal is to fund the benefits. The tax is capped because the benefits are capped.

[plonh]

That is nonsense. The first social security recipients paid 0 in. SS has always been a redistribution from workers to retirees, with no actuarial basis for the connection between how much you put it and how much you get out.

[andyv]

The social security tax is capped because the benefits are also capped. Billionaires don't need $100k/month in SS benefits.