Obama endorses Social Security expansion

[True Federalist (진정한 연방 주의자)]

They need to raise the age limits and get rid of the stupid ceiling and drop the percentage taken.  Is there any tax (other than maybe cig taxes) that affect the poor so much more than the rich?

I wouldn't call FICA a tax, because you are (theoretically) paying premiums directly into programs that you will benefit from later.

A tax isn't a tax if you maybe benefit from the programs you are funding with it at some point? 

Read what I said. FICA is directly tied to two social insurance programs - Social Security and Medicare. When your payments are directly tied to a service, that is a premium, not a tax. If you park at a parking meter at City Hall, is the money you drop in the meter a tax? Of course not, it's a parking fee. We should look at FICA the same way. Many other countries refer to such payments as exactly what they are - social insurance premiums.

From an employer point of view, yes, FICA can be considered a tax of sorts.

You can choose to park elsewhere, you can't choose to avoid FICA for the most part.  Also, there never has been a direct linkage between what you pay and what you get, with the middle class getting the worst of it.

[True Federalist (진정한 연방 주의자)]

Social Security is a government-run pension program, and Medicare is a government-run insurance program that provide services directly to individuals.

Taxes imply that you, as an individual, will never get your money back because you are paying into the collective good as part of the social contract. Payroll taxes are directly tied to a benefit that you receive, making them premiums.

Actually, you're completely wrong.

First off, while politically it would never happen, the Government could end Social Security and Medicare any time it wanted to.  There is no legal obligation for the Government to pay anything. So it categorically is NOT a pension.

Secondly, as I already pointed out, the linkage between taxes paid and benefits received is at best fuzzy.  At the lowest levels of income (below $359,520 in indexed earnings over your 35 highest pay years), each dollar paid in results in six times as much benefits as at the highest levels of income (above $2,525,460 in indexed earnings). If you earn over $72,156 per year, then effectively all you are doing on the reducing the amount of time it takes to reach maximum benefit levels below 35 years of work. Similarly, once you've been working 35 years, all you might do to improve your benefits is replace a lower valued indexed yearly income with a higher totaled yearly income.

Thirdly, unlike any actual pension, Social Security benefits can be subject to income tax if you have other income. While some types of retirement benefits are subject to tax, that is entirely dependent upon whether the pension was funded with pre-tax or post-tax income.  As a general rule, if the money used to fund your retirement benefit lowered your taxes when you funded it, it'll be taxed when you receive the benefit, but if not then not.

Fourthly, another little dirty fact arguing against considering Medicare an insurance program is that unlike Social Security and the employer portion of the Medicare tax, the employee portion of the Medicare tax is uncapped. Social Security taxes (both on the employee and employer) and the employer portion of the Medicare tax are only levied on the first $118,500 of earned income. The employee portion is levied on it all.  That 1.45% comes out of every dollar of wages, regardless of whether it is the first dollar or your ten millionth, and yet it doesn't matter how much you paid in Medicare tax when determining your Medicare premiums.  Part A is free, presuming you worked at least 10 years and premiums for Parts B, C and D don't depend on how much you paid in Medicare tax.  Part B and D premiums might be higher if you have sufficient income (from whatever source) to trigger surcharges (i.e., added taxes) to the premium.

I like Social Security and Medicare, but the part that comes out of our paychecks is absolutely, positively, 100% a tax and not a premium for a pension or insurance.  Granted, to make the programs more politically palatable, they been paraded around from the beginning as if they were simply a Government-operated pension/insurance plans, but they aren't and never were.

[True Federalist (진정한 연방 주의자)]

I like Social Security and Medicare, but the part that comes out of our paychecks is absolutely, positively, 100% a tax and not a premium for a pension or insurance.  Granted, to make the programs more politically palatable, they been paraded around from the beginning as if they were simply a Government-operated pension/insurance plans, but they aren't and never were.

So SS and Medicare do not have market-based pricing and are treated differently under the law from private pension/insurance plans. That doesn't mean they are not pension or insurance programs. Every contribution you make to SS increases your SS benefit in the future. You can't say the same about education, the military, infrastructure, or any of the other things that actual taxes pay for. The government could end the programs tomorrow, but that would be a gross violation of their end of the social contract.

I'm far from the only person who believes that FICA is not a tax. Many people on both sides of the political spectrum, and arguably most in federal government, think so.

So where do I sign up to pay more contributions to increase my benefit?  Also, it's not every contribution.  Once you've worked 35 years, additional so-called contributions only increase benefits if they replace a prior year with a lower indexed value.

I work at a firm that does accounting, tax prep, and financial advising.  From the viewpoint of all three, FICA is a tax, and a slightly regressive one at that because of the cap on taxed earned income (somewhat balanced by the fact that benefits are taxed in the higher brackets).  Indeed, the benefits that are loosely linked to it make Social Security overall a program that benefits the middle class the least, tho because it currently is actuarially deficient, even they get a benefit. If the taxes were raised to make the program actuarially sound (or the benefits cut) then the middle-class would be the group screwed over most by Social Security.

Granted, it behooves politicians of all stripes to pretend it is not a tax but a pension/insurance scheme, but it also behooves them to pretend they can balance the budget by getting rid of waste.  Both fanciful notions are agreeable to the voters, but they have zero relevance to reality.

[True Federalist (진정한 연방 주의자)]

If I sound irritated, it's precisely because of the mistaken notion that Social Security is a pension that we get the idiotic proposals to privatize the "pension" that would ruin the program and undo the benefits it has wrought.