It seemed like a simple question.
How much does the top 1% make total? Not in percentages, but in total income. I could not find it. So I did some math on the back of a paper napkin (okay, okay it was on my computer’s calculator but my point is it is a rough guess).
The US national income is around $20 trillion dollars and the top 1% make close to 20% of the national income. So that means roughly $4 trillion dollars.
So why do I care. Because this 20% of income does NOT pay social security taxes (12.4%) like the rest of us.
We have been convinced that social security is actually a retirement account for each of us – it is not. And we have been convinced there is a trust fund where all the excess payroll taxes have gone to make the program last until 2035 – there is no fund.
The extra payroll taxes offset lower corporate taxes along time ago to keep tax revenue neutral. Most Americans fell for it. And still do.
2020 may be the last year the social security inflows matched outflows… so lucky we have the “trust me fund”.
So where exactly is the extra money going to come from the next 20 years and beyond…
Well they said the “trust me” fund was invested back in America – you know corporations paid lower taxes so they could invest in America and grow the economy faster or some false narrative like that if you really bothered to ask. Except US businesses have never invested their tax cuts in increased business investments… but that is another story.
My rant is about fixing the problem we have today. And the simple way is to remove the social security tax deduction on income ABOVE $140,000 – the threshold above which richer people do not have payroll taxes.
And why did they get this deduction? Because we were convinced SS is an investment account of sorts and the rich did not need it.
Let me redefine it.
Social Security is a transfer tax from the current generation to the retired generation. It is a generational tax, not an investment account, so the rich in our generation should NOT get off the hook…
HELL, the top 1% are earning 20% of the income. TAX it DAMN IT. It would raise $500 billion at current rates.
And guess what? We could lower payroll taxes on the rest of us because the outflows are around $1 trillion a year matching the current inflows.
So they could lower payroll taxes by 1/3 and breakeven. And working Americans would have more money to spend and the economy would grow at a higher pace.
Stop the social security surplus crap.
The Federal Reserve printed $3 trillion in 2 months earlier this year to bailout Wall Street again. The Federal Reserve is now buying $1.4 trillion a year of financial assets with money created out of thin air. They could plus up the fake social security trust fund by $3 trillion and cut payroll taxes in half with a few key strokes.
I solved social security, inequality, and economic growth.
Tomorrow, I will start working on world peace. It will have something to do with stopping the central bankers from destroying the middle class.
PS. The numbers in this article may be off by a large amount, but the concept is sound.
Categories: Perspectives, The Smart Bird