Author Topic: Iowa senator pitches retirement fix  (Read 710 times)

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Offline Rapunzel

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Iowa senator pitches retirement fix
« on: February 04, 2014, 01:12:34 AM »

Offline jmyrlefuller

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Re: Iowa senator pitches retirement fix
« Reply #1 on: February 04, 2014, 07:30:34 AM »
So basically they are going to cut an additional 6% out of your paycheck (plus 3% you don't see) for a personal retirement even though the feds already cut 6% out of your paycheck (plus an additional 6% you don't see) for Social Security.

This is just a backdoor to double the Social Security tax.

Online Bigun

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Re: Iowa senator pitches retirement fix
« Reply #2 on: February 04, 2014, 10:59:30 AM »
Tom Harkin is an out and out COMMUNIST!

Offline massadvj

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Re: Iowa senator pitches retirement fix
« Reply #3 on: February 04, 2014, 11:40:31 AM »
They alleviate Americans of personal responsibility, that exacerbates the problem they were trying to fix, and so they "fix" it again by further alleviating Americans of personal responsibility.  It's an endless cycle that ultimately results in the absolute loss of freedom.  I hate to be the bearer of this bad news to socialists, but guys, freedom and personal responsibility go hand in hand.  You can't have one without the other.  Too many of you seem to think you can be free if only you could do what you want with the other fellow's money, or in this case, tell people what they should or must do with their own.

The only difference between a "voluntary" and "involuntary" government program is time.
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Online Bigun

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Re: Iowa senator pitches retirement fix
« Reply #4 on: February 04, 2014, 11:56:44 AM »
They alleviate Americans of personal responsibility, that exacerbates the problem they were trying to fix, and so they "fix" it again by further alleviating Americans of personal responsibility.  It's an endless cycle that ultimately results in the absolute loss of freedom.  I hate to be the bearer of this bad news to socialists, but guys, freedom and personal responsibility go hand in hand.  You can't have one without the other.  Too many of you seem to think you can be free if only you could do what you want with the other fellow's money, or in this case, tell people what they should or must do with their own.

The only difference between a "voluntary" and "involuntary" government program is time.

 :amen:  :amen: and  :amen:

Offline Rapunzel

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Re: Iowa senator pitches retirement fix
« Reply #5 on: February 04, 2014, 02:58:05 PM »
BTW I would not have known to go looking for this article if I didn't watch The Blaze - Wilkow was all over this yesterday.

Offline xfreeper

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Re: Iowa senator pitches retirement fix
« Reply #6 on: February 04, 2014, 05:11:49 PM »
they can keep the money in a lock box
let's start with congress people's pensions
« Last Edit: February 04, 2014, 05:13:05 PM by xfreeper »

Online Oceander

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Re: Iowa senator pitches retirement fix
« Reply #7 on: February 04, 2014, 08:51:33 PM »
So basically they are going to cut an additional 6% out of your paycheck (plus 3% you don't see) for a personal retirement even though the feds already cut 6% out of your paycheck (plus an additional 6% you don't see) for Social Security.

This is just a backdoor to double the Social Security tax.

Actually, the employee bears more than half of the employment tax; although the nominal incidence of those taxes is 50/50, employers have a greater elasticity of demand for labor than do employees for the supply of labor; as a result, part of the economic cost of the 50% nominally imposed on the employer ends up being borne economically by the employees.  Effectively, employment taxes represent an extremely regressive income tax on personal compensation of roughly 8% to 10%.

Online Bigun

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Re: Iowa senator pitches retirement fix
« Reply #8 on: February 04, 2014, 09:22:33 PM »
Actually, the employee bears more than half of the employment tax; although the nominal incidence of those taxes is 50/50, employers have a greater elasticity of demand for labor than do employees for the supply of labor; as a result, part of the economic cost of the 50% nominally imposed on the employer ends up being borne economically by the employees.  Effectively, employment taxes represent an extremely regressive income tax on personal compensation of roughly 8% to 10%.

Very good! But I contend that they fall 100% on the employee.

Employers calculate the costs of employees and then decide what they can actually pay the employee directly. ALL of the employer's costs are included in this calculation.

Offline Rapunzel

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Re: Iowa senator pitches retirement fix
« Reply #9 on: February 04, 2014, 09:24:03 PM »
Very good! But I contend that they fall 100% on the employee.

Employers calculate the costs of employees and then decide what they can actually pay the employee directly. ALL of the employer's costs are included in this calculation.

28 years of Cost Accounting tells me you are exactly right.

Offline Fishrrman

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Re: Iowa senator pitches retirement fix
« Reply #10 on: February 04, 2014, 11:10:02 PM »
Wait a minute....
Lemmmeeeseee here....

It's easy to jump on Harkin's proposals because he's a democrat, but tell me...

How much different are Harkin's ideas than those that G.W. Bush and other Republicans were proposing back around 2005 -- essentially proposals to create "individually owned" retirement accounts for workers as an alternative to Social Security?

I'll admit upfront I'm not that bright a guy, but I really don't see all that much difference.

What most working class people need (those who don't have 401k's or defined-benefit pension plans) is a way to accumulate savings, even if the amounts "accumulated" are relatively small. (Aside: I didn't see in the article as to whether worker contributions would be tax-deferred, as are 401k contributions.)

Of note is that the plans would be privately-run, not government run. I'll guess that the money invested would probably be limited to low-yield securites with relatively low (or no) risk.

Looks like the major distinction here is that under Harkin's plan Social Security would remain, whereas (I believe) under the Bush/Republican proposals of 2005, a system of private retirement accounts was intended to replace SS outright.

Rather than dismiss this outright, it might actually be worth some Republican/conservative interest -- and serve as a starting point for something that might actually be worthwhile after negotiations, etc...

Online Bigun

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Re: Iowa senator pitches retirement fix
« Reply #11 on: February 05, 2014, 10:28:30 AM »
Wait a minute....
Lemmmeeeseee here....

It's easy to jump on Harkin's proposals because he's a democrat, but tell me...

How much different are Harkin's ideas than those that G.W. Bush and other Republicans were proposing back around 2005 -- essentially proposals to create "individually owned" retirement accounts for workers as an alternative to Social Security?

I'll admit upfront I'm not that bright a guy, but I really don't see all that much difference.

What most working class people need (those who don't have 401k's or defined-benefit pension plans) is a way to accumulate savings, even if the amounts "accumulated" are relatively small. (Aside: I didn't see in the article as to whether worker contributions would be tax-deferred, as are 401k contributions.)

Of note is that the plans would be privately-run, not government run. I'll guess that the money invested would probably be limited to low-yield securites with relatively low (or no) risk.

Looks like the major distinction here is that under Harkin's plan Social Security would remain, whereas (I believe) under the Bush/Republican proposals of 2005, a system of private retirement accounts was intended to replace SS outright.

Rather than dismiss this outright, it might actually be worth some Republican/conservative interest -- and serve as a starting point for something that might actually be worthwhile after negotiations, etc...

My recollection is that Bush was for letting those below a certain age to direct a portion of their Social Security with-holdings into PRIVATE investment vehicles of their own choosing. I don't think what Harkin is proposing is anything like that at all!
 

Offline Rapunzel

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Re: Iowa senator pitches retirement fix
« Reply #12 on: February 05, 2014, 04:30:24 PM »
My recollection is that Bush was for letting those below a certain age to direct a portion of their Social Security with-holdings into PRIVATE investment vehicles of their own choosing. I don't think what Harkin is proposing is anything like that at all!
 

No it isn't the same at all.  You really needed to hear the way they broke this down on Wilkow Monday night - scary stuff this MyRA -  I thin JMF called it correctly yesterday - it is a backdoor SS tax increase with the same failed promises.  What Bush proposed is what I wish I could have poured all those dollars I sent to SS and my employer sent to SS into - a private account for me and my survivors which is interest bearing and actually worth something when I retired.  They are going to pay less than the rate of inflation on MyRa.. it's confiscation and if you watched the testimony of the woman who came up with this idea in 2008 she recommended they confiscate the IRA's and force them into the government owned plan.

Online Bigun

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Re: Iowa senator pitches retirement fix
« Reply #13 on: February 05, 2014, 07:08:21 PM »
No it isn't the same at all.  You really needed to hear the way they broke this down on Wilkow Monday night - scary stuff this MyRA -  I thin JMF called it correctly yesterday - it is a backdoor SS tax increase with the same failed promises.  What Bush proposed is what I wish I could have poured all those dollars I sent to SS and my employer sent to SS into - a private account for me and my survivors which is interest bearing and actually worth something when I retired.  They are going to pay less than the rate of inflation on MyRa.. it's confiscation and if you watched the testimony of the woman who came up with this idea in 2008 she recommended they confiscate the IRA's and force them into the government owned plan.

 :beer:

Thanks! Glad someone is fully up to seed on this. I just know Tom Harkin and that NOTHING he proposes is going to be a free market solution!

Offline Rapunzel

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Re: Iowa senator pitches retirement fix
« Reply #14 on: February 05, 2014, 07:17:02 PM »
:beer:

Thanks! Glad someone is fully up to seed on this. I just know Tom Harkin and that NOTHING he proposes is going to be a free market solution!

I forgot the other part - the guv is trying to spin it that people are being ripped off by the professionals who manage their IRA's, etc., and they would be better off having the Government manage it instead - in other words they are now going after the wealthy investment professionals.    And as an aside don't tell me this sudden wanting the Post Office to act as a bank won't be a backdoor run around our banks - in other words putting all our banking under the direct control of the Government (as if the Fed doesn't already control banks more than necessary).

Online Oceander

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Re: Iowa senator pitches retirement fix
« Reply #15 on: February 06, 2014, 12:37:30 AM »
Very good! But I contend that they fall 100% on the employee.

Employers calculate the costs of employees and then decide what they can actually pay the employee directly. ALL of the employer's costs are included in this calculation.

It's possible that the employee bears 100% of the economic cost of payroll taxes, but I think it more likely that the employer still bears some of the economic cost of those taxes, it just doesn't bear the tax that is nominally imposed on it.  Clearly, a business treats as labor costs all of the expenditures directly related to the hiring and maintenance of personnel - employees, but that really isn't the issue; rather, what causes the economic burden to fall mostly on the employee is the different elasticities of supply (employees) and demand (employer) for labor.

An employer can readily fine-tune its response to an increase in labor costs; an employee cannot.  The simplest example on the employer's part is for the employer to simply reduce the amount of raises it was prepared to offer to its employees; employers rarely lower the compensation of existing employees - it's called a ratchet effect - but they can certainly forgo paying raises they might otherwise have made in the future.  Since the employer would have spent that money one way or another, it is economically indifferent to whether it goes 100% to the employee or partly to the employee and partly to the government.

An employer can also decide to forgo planned new hires and instead focus on improving the efficiency and productivity of the workforce it already has or of replacing human staff with automation - after all, one doesn't have to pay SS, medicare or unemployment for a robot - in response to an increase in labor costs.

On the other hand, an employee has a much harder time reacting to an increase in those costs associated with the imposition of a new payroll tax, whether nominally imposed on the employer or the employee.  Obviously, the employee is much more likely to respond to a tax imposed on him or her, because that's clear, and the indirect economic costs of a tax nominally imposed on the employer not so clear.  As such, an employee is much less likely to effectively respond to the reduction in future compensation caused by the wedge effect of a new tax (a "wedge" because the employer sees higher costs while the employee sees the same, or lower, compensation - the differential being the tax that goes to the government).

However, assuming arguendo that we have employees who understand the difference between the nominal incidence and economic incidence of a payroll tax, those employees will find it much harder to respond in a way that maintains their net after-tax income that they were earning before the imposition of the tax.  An employee who remains with the current employer and is salaried has no means of increasing his/her income other than by exceeding the higher productivity levels that employer will demand and competing more agressively with other employees for a share in the smaller pool of money available for raises.  That can be difficult for an employee to do, particularly if it means working longer hours and spending less time with family and friends.  An hourly employee faces a similar quandry and while he/she could increase his/her income by working more hours, the employer might not permit that employee to do so if it means having to pay overtime for those hours.  In both instances, the employee has a much harder time adjusting to the economic costs of a payroll tax than does the employer.

Similarly, for the employee who realizes the above, the course of action available is to look for another position with another employer that pays more than what he/she currently earns.  However, because employers are likely to have cut back on hiring plans, such an employee is going to have to compete much more aggressively with other job-seekers for the smaller number of available positions.  Further, such an employee is not going to have a strong position when it comes to negotiating compensation with a new employer, in no small part because the employer knows full well that there is a bigger pool of potential new hires available to it and will therefore be more inclined to play one off the other and to offer compensation packages that are smaller than those the same employer would have offered before the imposition of that new tax.  In that circumstance, the employer will sooner rather than later find an acceptable candidate who is willing to take the compensation offered; and those who didn't get hired will realize that they will have to accomodate themselves to smaller compensation offers than those that were made in the past.  Again, the employer can much more readily respond to the imposition of a new payroll tax than can the employee who tries to respond by finding higher-paid work.

As a result, particularly in the case of new hires, the employer will be able to shift the economic cost of the new payroll tax onto the employee, even if the tax is nominally imposed - i.e., the statute requires the employer to pay the tax out of its own pocket - on the employer.

Of course, with fewer employees expected to produce more than they're accustomed to producing, the employer's profits will also drop somewhat, so the employer does in fact bear some of the economic cost of the tax, it just doesn't bear anything even close to the tax that was nominally imposed on it.


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