Medicare Taxes to fund Interest Rate Cut Extension

Joe wrote:

PrintSmith wrote: The Democrats in the Senate and the President are not proposing to "borrow" that additional revenue and pretending that it will be paid back, with interest, at a later date as all others have done - they are proposing to directly appropriate that tax revenue for other uses without a penny of it reaching either the program or the "trust fund".

Are you sure this is right PS ? I don't see how its possible to identify the funds, and doesn't seem legal to call it a medicare payroll tax if it is not for the Trust fund. How would they keep track of the money?

I think they may be talking about an "offset" using the unified budget rules. Same trick they pulled "funding" Obamacare.

Every month, or every quarter depending on how much in tax you owe annually, a business is required to file a return with the IRS noting the amount of money that has been withheld by the company for federal income taxes, OASDI taxes and HI taxes and remit those funds. All the beancounters at the federal level need to do to identify how much goes where is refer to the returns that are filed. That is how they have determined the value of the non-marketable Treasury Securities are deposited into the "trust funds" before "borrowing" that money to pay for other appropriations. It's kind of like you taking your paycheck and saying that 10% of it is going into savings and then issuing yourself an IOU for that money before spending it to pay your utility bill. You have something in your savings that indicates money has been taken from it to be spent on other things along with the promise that at some point that money will be returned to the savings account so that you have a good amount of savings when you retire. Of course, if you don't redeem the IOU you issued, there won't be any funds in the account when you do retire, but you only have to worry about that when you actually retire - until then you can tell yourself, and everyone else, that you have lots of money in savings even if it isn't actually there, which is the scam that the federal government is pulling with the Social Security and Medicare "Trust Funds" at present. As long as the value that is supposed to be in those funds isn't needed, they can tell everyone that there is Trillions of dollars in them. It's only when we need to draw those funds out and all that is in the bank is a bunch of IOUs that it becomes a problem.

Sounds like some sort of AMT SMPSCMT alternative minimum special medicare payroll S-corp millionaire tax. LOL

I don't even see where this is much of a loophole if the S corp is already paying reasonable separate W2 wages to partners. This doesn't even come close to the loophole abuse of Hedge and private equity funds.

Bottom line, Medicare taxes should to Medicare, SS to SS, and Gas taxes to roads.

Closing any tax loopholes should go to deficit reduction, not more spending.

LadyJazzer wrote: Insert standard "Medicare/Social Security is broke" nonsense here: ________________________________

It depends on what the word "broke" means, but the latest projections for Social Security and Medicare came out a few days ago. Just to let you know...

The Medicare and Social Security trust funds are both on "unsustainable paths" — as they have been for years — and will be exhausted by 2024 and 2033, respectively, a trustee report released Monday said.

The date for Social Security moved up 3 years from last year's projection. Yes, they would still collect payroll taxes, but the trust funds would be exhausted and the bills won't be fully paid unless something is done.

http://www.usatoday.com/news/washington/story/2012-04-23/medicare-social-security-report/54494662/1

So, what is the Dems and Obama's plan to do something about it?

Nobody said that as they currently exist they were indefinitely sustainable. And yes, the date was moved up a couple of years. So, you remove the limit on taxable income from $106,800, and the problem is fixed for the next 100 years... The solution is NOT to cut it, but to fund it.

Joe wrote: Bottom line, Medicare taxes should to Medicare, SS to SS, and Gas taxes to roads.

Closing any tax loopholes should go to deficit reduction, not more spending.

That, in and of itself, is too vague to have any meaning. Fuel taxes were raised for "deficit reduction" - which had no meaning outside of "the deficit will not grow as fast now". If what you mean is that closing any loopholes should go to paying down the principle on the national debt, then that is what you need to say because "deficit reduction" currently means little more than "the deficit will not grow as much as we had said it was going to grow yesterday." More spending is guaranteed - we have "mandatory" spending programs on auto-pilot programmed to go up every year. Congress and the President, over multiple administrations, have simply applied an "interpretation" to that phrase so that it has a meaning which is different from the plain meaning that would be associated with that phrase. If the annual deficit was going to be $1.5 Trillion and comes in at $1.2 Trillion, the amount of increase has been reduced, but the total indebtedness has still increased by an obscene amount, and thus the deficit wasn't reduced at all, it was instead increased by a reduced amount.

LadyJazzer wrote: Nobody said that as they currently exist they were indefinitely sustainable. And yes, the date was moved up a couple of years. So, you remove the limit on taxable income from $106,800, and the problem is fixed for the next 100 years... The solution is NOT to cut it, but to fund it.

No, the solution is to cut the benefits so that it is a supplement to retirement and not used as a pension, which was the original intent of the program when it was put into place. It was never intended to be a pension, it was a permanent federal jobs programs where the younger workers were paying the older ones to leave the workforce so that they can have the jobs.

If you want it to actually be a pension plan, a better idea would be to remove the program from federal hands and send both the revenue raised by the taxes and the responsibility for the individual welfare of the citizens back to the States from which it was taken. The States seem to be doing an OK job with the pensions for the public workers, and the health care needs of their retired work force, I'm sure that they could do an equally good job for the private workers with the 15.3% of their earnings that those workers and their employers would pay into the pension and healthcare program for 45 or 50 years. I think the maximum rates for PERA are slightly higher than this at the moment, but I can't think of a single person, or business owner for that matter, who wouldn't be willing to pay more into a system that gives them a private property right to the money they have contributed over the system that is currently in place.

No, the solution is NOT to cut it, but to fund it.

If I want the Ayn Rand sociopath-version, I'll let you know.

At what point do we say enough LJ? When the program consumes 50% of the annual federal budget and swallows up 25% of the union's GDP? The program is no longer consistent with its original purpose, which was to provide some support in retirement years. As with most everything, the desire for more power and influence has taken it well beyond its original goals and it is time to either redefine the program and make it a publicly funded pension program where the participants have a private property right to the funds or cut it back, along with the taxes levied to support it, to their original purpose and allow the revenue that is currently being realized from the tax levy to be used instead to fund actual pensions that people do have a private property right to.