Social Security revisited
The Social Security Trustees have warned once again that the program is in dire straights. They project in 2041 that social security will exhaust its trust fund and will be solely dependent on payroll taxes to pay benefits. In that year they project that the US Treasury will have redeemed every last penny plus interest that was loaned.
In 2002 I attempted to raise the awareness of the problem and for the most part did that. I have been speaking to people since that time. It is a slow process that takes time. In the past month I have spoken personally to over 150 different people. Some of these have gone on to speak with others. I am finding that those in the early 50’s are very supportive of my proposal to repeal the social security act.
Is it finally sinking in? The Social Security Administration for ten years now has been sending yearly statements to those over age 25. These statements paint a dismal future for Social Security. In just 23 short years or sooner, the trust fund will be gone. Every penny paid in by boomers, generation x and y will have been for what? There are only two ways to solve this problem; raise taxes on workers or cut benefits.
Will you be sliced when it's time to cut off Social Security?
If you think American workers will always accept higher taxes to support Social Security, you are mistaken. At some point in time, taxes will hit a level from which they will rise no further.
We could be at that point now.
In this case, the only alternative is to cut benefits. As a worker, is it better for you to delay the fix, continuing to pay a high tax for low benefits, or would it be better to "take the money and run"?
A person can choose to support Social Security, knowing it is a loss from the start, or they can support repealing Social Security, allowing them the opportunity to save 10.6 percent of wages.
Saving 10.6 percent of wages in the very same investment as Social Security yields a benefit that is three times larger than Social Security can pay. To put it another way, you would have to lose 70 percent of your portfolio balance at retirement to reduce you to the level of a Social Security benefit.
You are playing hot potato with Social Security. Will it be your birth year for which those who are asked to pay your Social Security benefits say no?
My long lapse from blogging
It has been a while since I posted or participated on any blog. It is not that I have not wanted to, but rather that I have been busy focusing my attention to other matters. For nearly twenty years I have had an on going disagreement with the IRS over the interpretation of a particular Statute. The IRS interpreted the statute in a manner that required those eligible for a Social Security Account Number to apply for a SSN and to deny an identifying number to those who were eligible for a SSN.
On February 11, 2008 after long and tedious communications, the IRS capitulated without not even so much as a statement before the US Tax Court. I made a short statement before the court. When finished the Judge stated; “We take for granted a Social Security Account Number is required, but in fact it is voluntary.”
I have learned more about law than I really wanted to know, but in these past twenty years, I have read hundreds if not thousands of cases, which have opened my eyes and increased my knowledge.
I have now focused my attention on the State of Indiana in regards to the denial of state ID’s and Driver’s licenses to those who do not have and do not want a SSN and are US Citizens. The real ID act does not authorize nor require the State of Indiana to deny a State ID or Driver’s license to those who do not have a SSN. However, it does require that any ID issued by a State that does not conform to the primary documentation be so identified.
The idea of property tax reform is interesting to say the least. However, after speaking with many people, the concept of property tax reform is different for nearly each one. A person’s property tax bill is based on assessed value of the property. It is not the property assessment that is the problem, but the tax rate. A property assessment increase does not mean your property taxes will not go up and conversely a property assessment decrease does not mean your property taxes will go down.
What determines your total tax is the assessed value multiplied by the property tax rate. The property tax rate is determined each year based on the passed budget of each taxing authority divided by the total of all assessed properties within the taxing authority jurisdiction. Therefore, assessment has little to do with any increase in taxes paid. The primary culprit is the budget or proposed spending by the taxing authorities such as airport, library, schools, local government and county government. The rate of increase in these budgets actually determines how much more each of us will pay in property taxes.
If our property values increase by 20 percent this year and the government passed budgets increase by 3 percent, then the property tax rate will decrease by 14.2% but our tax bill will be 3% larger than last year. Because property values are not increasing currently, but inflation is we can expect our property tax rate to be higher next year resulting in a higher tax bill next year; unless our elected representatives restrict spending just as each of us tighten our belts in lean economic years.
The primary reason why property taxes in the past have increased so dramatically for some is that reassessment of property was not standardized nor was it always. This led many in the area not to pay their fair share of the government burden, leaving the rest to pay more. Now that there are laws requiring reassessment and standards for assessment, the property tax mess should for the most part be over. The way we control our property taxes is to control our elected representatives who spend our money. If we do not control our elected representatives, then our taxes will increase.
Eliminating Tax Financing Authorities and tax abatements will reduce the tax shifting from “special” interests to us. These “gifts” increase our cost in several ways. They require police, fire, road service, snow removal, schools to name a few services, yet do not pay taxes to help pay for the increase costs for up to twenty years leaving the rest of us to pay for their services while their abatements or TIF is used to subsidize their construction or land purchase.