A Social Security Solution?
Several Democratic senators have come up with a radical idea for preserving Social Security without reducing anyone’s benefits. The solution: cracking down on businesses that evade taxes. The government loses billions of dollars every year because of businesses who avoid paying the employment taxes which fund Social Security and Medicare.
Closing these loopholes would provide at least some, if not all, of the funding necessary to keep Social Security afloat. Senator Max Baucus, D-MT, said “We should not cut the benefits of any law-abiding retiree by one dime or raise the taxes of any law-abiding worker by one dime until we have done our best to ensure that all taxpayers are complying with the current tax laws.”
Businesses organized as sole proprietorships pay employment taxes on all reported profits. A business which is organized as an S corporation only pays taxes on the amount described as salary. These S corporations have become a multibillion-dollar employment tax shelter for single-owner businesses.
In the year 2000, $5.7 billion was not collected which would have been collected if S corporations were organized differently and had to pay the employment tax.
Senator Ron Wyden, D-OR, said “I'm very troubled about the fact that a substantial number of extremely wealthy people aren't contributing their share. They are what I call the Social Security scofflaws.”
According to the chief of staff for the Joint Committee on Taxation, eliminating the $90,000 cap for taxable wages would raise $1.2 trillion over a 10-year period.
So, we have a solution; at least a partial one. Isn’t this great? Add a little fairness to the tax code, and we can save Social Security without reducing anyone’s benefits. Yeah! This is the answer. Let’s do it. What are we waiting for?
Bzzzzzzzzttt!!!! The alarm clock just went off. Reality check!! Of course the above scenario could never happen, but it was a nice dream. Making corporations pay their share of taxes instead of reducing the benefits of wage-earners and retirees — sheesh! Riiiight. That’ll happen.
With most of the U.S. Congress being the personal harem of corporations and lobbyists, what chance is there for these common sense ideas? But it was a nice idea.
posted by Tom Harper @ 11:39 AM
10 Comments:
President Bush also had a good idea, which has been largely ignored, make people pay who are illegally (rather than legally) avoiding payments, this is billions of dollars. Every president has talked about this really, so Bush isn't coming up with anything new, but he is being ignored, just like all the others. Why don't they go after these deadbeats more agressively instead of trying to figure out how to make businesses (which provide jobs) pay more.
Mr. Bob: I'm not sure who you mean. People who get paid in cash, under the table, and don't report their income? Or just tax cheaters in general? Sure, that's a good idea too, but I doubt if that adds up to the $5.7 billion a year that S corporations are wriggling out of.
And I don't buy the argument that businesses will leave if they have to pay their share of taxes. Governors and legislators all over the country are trying to turn the clock back to the 1930s, all under the the banner of "businesses will leave."
OK Democrat: Yeah, it's too bad this idea doesn't stand a chance. Tax cuts for the wealthy are much more important. Wage earners don't have any clout; what good are they?
Hey genius, corporations don't pay taxes dummy. The money they pay comes directly from the consumer, make them pay more "taxes" and the price of goods increases. Make the "corporations" pay more into social security and that's less money they can afford to put in the employees paychecks. It's a great fantasy you're living in but I suggest you learn to look at the big picture and think things through. Your knee jerk thought process is what has got us in this mess to begin with.
Abraham: You're probably right. It's a good idea but the Powers That Be won't hear of it.
Pikkel Weezel: Hey Einstein, if you really believe corporations that sleaze their way out of paying taxes are gonna pass their savings on to consumers, I've got a bridge to sell you. Or maybe some oceanfront property in Nebraska.
By the way, your blog is even dumber than your comment.
El Shrubbo's naked appeal to greed doesn't seem to be aiding him in his real agenda, which is to destroy Social Security.
However, the noise of the "crisis" in Social Security masks the coming collapse of Medicare, which means El Shrubbo will likely bat .500 on this one.
Jolly Roger: Yeah, it's ironic that they're ignoring some real crises -- Medicare and our foreign debt -- so they can make all this noise about the Social Security "crisis." This "privitization" plan isn't selling, no matter what kind of spin Bush and Rove put on it.
Ever since I was a kid in the 60's I used to read Drew Pearson and Jack Anderson quote goverment report that if we would just enfore the payment on
What the Weathy and Corporations legally owe - forget increasing taxes - we could put serious dent on our debt. It still rings true.
In other words inspite of all the tax cuts and breaks we give them. They STILL don't pay what they owe. The IRS doesn't go after them and by the way Mr Bob, that comes from direct orders from every administration - from this one all the way back.
When you realize that the largest concentration of IRS agents is in Nevada and New Jersey i.e. Casino territory to make sure all the service people don't cheat the goverment by mis-reporting their tip wages, then you know something is wrong.
Erik
Bush had a plan to simply crack down on personal tax evasion, nothing to do with business.
God forbid rich people pay their taxes.
Erik: Yeah, I've read similar things before. During the Reagan era, a conservative Time Magazine columnist said that if we brought back the corporate tax rates of the 1950s we could eliminate two thirds of the deficit overnight.
I didn't know Nevada and New Jersey had the highest concentration of IRS agents, but it figures. Gotta make sure those lowly service employees pull their weight.
Cuevas: Oh yeah, they're just going after individual taxpayers. Whenever they talk about making the IRS kinder and gentler, they're referring to corporations. When they talk about cracking down on tax cheaters, they're talking about individuals.
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