Social Security: Did you know….? 5/17/15

The first Payroll Tax (employee plus employer contributions combined) for old age, survivors, and disability insurance (Social Security) was assessed in 1937 at a rate of 2%. Today’s OASDI tax is more than 600% higher at 12.4%.

In 1966 an additional .7% tax was added to the Payroll Tax for hospital insurance (Medicare). By 2015 that added-on rate had grown by more than 400%, to 2.9%, bringing the full Payroll Tax up to 15.3%, or more than 750% of the original rate.

The maximum income on which the Payroll Tax applied in 1937 was $3,000. In inflation adjusted dollars that would be the equivalent of $49,000 in 2015. The actual maximum income in 2015 is more than twice as high at $118,500.

Doing the math, the maximum annual Payroll Tax amount that anyone in the country would have made in 1937 was $60, or $978 in 2015 dollars. The maximum annual Payroll Tax that anyone in the country actually makes in 2015 is over $18,000.

The expected age at death of a 20 year old in 1937 was less than 70, meaning that the expected SS cost of 20 year old beginning work in 1937 was less than 5 years of payouts. By the time that person actually turned 65 in 2002, his expected age of death had risen to over 80, meaning that the expected number of years of SS payouts had more than tripled to over 15 years.

In 1940 there were nearly 160 workers paying the Payroll Tax for every 1 beneficiary of Social Security. By 1960 that ratio had dropped to 5 workers per beneficiary. By 2010 it was 2.9.

51 Responses

  1. The good news is that life expectancy is not lengthening any more.

    Right?

    Like

  2. How to devalue PTSD: By comparing hearing about events to actually experiencing them. Apparently jury duty needs a trigger warning now as well.

    http://www.theatlantic.com/politics/archive/2015/05/the-trauma-of-jury-duty/393479/

    Things like this sometimes make me think that the Islamists deserve to win.

    Like

  3. that 18,000 is just for an individual filer, right? i took a look at our return and our FICA and Medicare for both of us came in a just less than 20k.

    and i wonder where my money goes.

    Like

    • nova:

      Yes, according to the link $18k is the max that an individual filer will pay. $118k times 15.3%.

      Like

      • Four legal opinions this morning from the Supremes.

        Henderson v. US. Vacated, remanded, unanimous.  Kagan’s opinion.  Felons who give up their guns to the government can have them transferred to a third party as long as they are not getting the guns back. 

        Tibble v. Edison. Vacated/remanded, unanimous.  Breyer’s opinion. An ERISA suit about investment decisions does not have to be filed within the statutory 6 years after the initial inclusion of the investment.  IOW, trustees have continuing fiduciary duties rather than just the initial picking of funds.

        Coleman v. Tollefson. Affirmed, unanimous.  Breyer’s opinion. You can’t get around the “three strikes” rule for in forma pauperis filings by filing additional suits while one dismissal is on appeal.

        Harris v. Viegelahn.  Reversed, unanimous.  RBG’s opinion. “A debtor who converts to Chapter 7 is entitled to return of any postpetition wages not yet distributed by the Chapter 13 trustee.”

        You can tell they are legal opinions because they are unanimous.

        A 5-4 case but I think it still qualifies as a legal and not a political opinion, based on the lineup:

        Comptroller v. Wynne. Affirmed, 5-4. Alito’s opinion, Scalia dissents with Thomas, Thomas dissents with Scalia, Ginsburg dissents with Scalia and Kagan. Strange lineup. Maryland’s income tax scheme, which does not give full credits for income taxes paid in other states, is unconstitutional.

        I like the result.

        This case is amazing because the issue has never been decided before. The conflict to be resolved was the collision of two constitutional principles. 1: no state can burden interstate commerce with a tax or tariff.
        2. A state can tax all of a resident’s income wherever earned. The question has been addressed as to fictional entities. Corporations cannot get taxed on all their income everywhere in each state they do business without offset. Maryland thought it could take a different position with regard to resident’s personal income tax because of the special relationship between a state and its residents. Well, Maryland loses, taxpayers win. TADA!

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  4. What can’t go on forever, won’t.

    Like

    • More did you know, re income taxes:

      The 16th amendment was ratified in 1913. The resulting tax legislation created a progressive income tax with 7 levels of marginal taxation, the top marginal tax rate being 7% on income above $500k. The effective rate on a head of household income of $500k was 5.01%.

      One hundred years later, in 2013, the tax code also maintained 7 levels of marginal taxation. But the top marginal rate had increased 565% to 39.6%, while the top income on which the top marginal rate applied had actually dropped in absolute terms by 15% to $425k. In inflation adjusted terms ($500k in 1913 = $11.65 million in 2013), the top income bracket on which the highest marginal rate applied had dropped a staggering 96%. The effective tax rate on that $11.65 million of income in 2013 dollars had soared by nearly 800%, to 39.2%.

      So, in 1913 an income of $500k produced a tax bill of $25,000, or $588,000 in 21013 dollars. The equivalent income in 2013 produced a tax bill nearly 8 time the size, $4.566 million.

      But the deficit is due to a revenue, not a spending, problem, right?

      Like

  5. i see that Sotomayor didn’t wite any. she’s my sleeper pick for writing the opinion upholding the subsidies in King v. Burwell.

    conversely, Thomas hasn’t written much this term either. If he writes the opinion gutting the subsides. oh my god. the schadenfreude would be off the charts. buried the needled.

    Like

  6. “no state can burden interstate commerce with a tax or tariff”

    Yes, but that would imply that they can’t tax income earned out of state at all, not that they have to somehow have a specific credit system for another states taxes. I actually don’t like the opinion. I think it’s pretty much a pure selection of a preferred policy outcome without any actual specific constitutional basis.

    My inclination would be that the state could tax it’s own residents as it sees fit, unless the federal government chose to trump that with a federal statute limiting the taxation of income earned out of state.

    I don’t see any basis for the idea that the Commerce Clause requires some sort of specific credit against taxes already paid against out of state income.

    I’d call that one political.

    Like

    • jnc:

      Yes, but that would imply that they can’t tax income earned out of state at all, not that they have to somehow have a specific credit system for another states taxes.

      Seems to me that in addition it would also imply that a state can’t tax non-residents on their cross-border income.

      Like

      • Yes, but that would imply that they can’t tax income earned out of state at all, not that they have to somehow have a specific credit system for another states taxes.

        Seems to me that in addition it would also imply that a state can’t tax non-residents on their cross-border income.

        The idea has been developed over time to mean that a state cannot discriminate in favor of intrastate commerce over interstate commerce, or subject a corporation to double taxation. The Court simply adopted that scheme, as it has appled to corporations:

        And there is no reason the dormant Commerce Clause should treat individuals less favorably than corporations; in addition, the taxes invalidated in J. D. Adams and Gwin, White applied to the income of both individuals and corporations. Nor does the right of the individual to vote in political elections justify disparate treatment of corporate and personal income.

        Like

  7. Interesting way to get around police unions:

    “The police acknowledge that they have all but ceded these streets to crime, with murders on track to break records this year. And now, in a desperate move to regain control, city officials are planning to disband the Police Department.

    The reason, officials say, is that generous union contracts have made it financially impossible to keep enough officers on the street. So in November, Camden, which has already had substantial police layoffs, will begin terminating the remaining 273 officers and give control to a new county force. The move, officials say, will free up millions to hire a larger, nonunionized force of 400 officers to safeguard the city, which is also the nation’s poorest.”

    http://www.washingtonpost.com/news/the-watch/wp/2015/05/18/obama-moves-to-demilitarize-americas-police/

    Like

  8. Blowback is a problem apparently:

    “Multiple male legislators refuse to be alone with female staffers. That’s a big problem.
    Updated by Amanda Taub on May 18, 2015”

    http://www.vox.com/2015/5/18/8621085/male-legislator-sexism

    Like

  9. Makes me wonder about odds of a complaint or damage. For a no-dick person like me it’s probably very low to nil. For some dude with more status than me though, it’s probably a higher chance that either they’d get hit with a comaint or a rumor campaign would start. People like to fuck, gossip and pretend monogamy’s important. I don’t see any of those things ending.

    Like

  10. “You might think this policy is the result of overzealous adherence to sexual harassment policies, but you would be wrong about that. This isn’t about creating a safe working environment for female Hill staffers, as sexual harassment laws intend. Rather, National Journal found in its reporting, this policy is intended to protect male bosses from damage to their reputations if people thought they were sleeping with their staffers.

    imagine that. another unintended consequence. funny how those keep happening. it’s almost as those regulators don’t know what they are doing.

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  11. I love the broad’s statement that the behavior on Capital Hill is illegal. I’d bet money that Congress is exempt from the law. Can’t believe a chick missed an opportunity to be pissed about that!

    Like

  12. Who’s the more aggrieved here?

    http://thehill.com/policy/finance/trade/242363-warren-disputes-obamas-promises-on-trade-deal

    I’m leaning towards the fake Indian / woman.

    I’m open to argument though.

    Like

    • More evidence that Ruth Bader Ginsburg is a politician by nature, not a judge:

      http://www.nytimes.com/politics/first-draft/2015/05/18/presiding-at-same-sex-wedding-ruth-bader-ginsburg-emphasizes-a-key-word/

      Wearing her black robe with her signature white lace collar, Justice Ruth Bader Ginsburg presided over the marriage on Sunday afternoon of Michael Kahn, the longtime artistic director of the Shakespeare Theater Company in Washington, and Charles Mitchem, who works at an architecture firm in New York.

      The gilded setting was elegant: Anderson House in the Embassy Row neighborhood, the headquarters in Washington of the Society of the Cincinnati, a club for the descendants of the French and American soldiers who fought in the Revolutionary War. During the ceremony, the couple slipped black and gold Harry Winston rings onto each other’s fingers.

      But the most glittering moment for the crowd came during the ceremony. With a sly look and special emphasis on the word “Constitution,” Justice Ginsburg said that she was pronouncing the two men married by the powers vested in her by the Constitution of the United States.

      The legal power to preside over a marriage ceremony derives from state legislation, not the federal constitution.

      Like

      • It depends on where the wedding was performed, to some extent. A Supreme Court Justice can only preside over a wedding within a state by the grace of state law – NY does not recognize federal judges for wedding ceremonies.

        But in DC, AND IN SOME STATES, I am guessing that federal judges can be officiants by ordinance. She is a Supreme Court Justice, a position created by the Constitution, so she can back into her statement by s-t-r-e-t-c-h-i-n-g.

        No amount of stretching will suffice to save the statement from its banality.

        If she is in a federal jurisdiction or on a military base, the power is accurately described as coming from the United States of America. If she is in a state, even one that recognizes fed judges as officiants, the power comes from the state.

        Like

        • Mark:

          It depends on where the wedding was performed

          It was DC.

          …so she can back into her statement by s-t-r-e-t-c-h-i-n-g.

          The Constitution doesn’t change depending on where you happen to be sitting when you read it. DC law, not the Constitution, vests the power to preside over a wedding in a federal judge. No matter how much she stretches, her claim is just plain incorrect.

          Like

        • Obviously I agree.

          Like

        • NoVA, Sotomayor-Alito-Kennedy-Roberts, was a consistent alignment on all 6 cases decided.

          I didn’t mention Sheehan, the 6th case, because i know nothing about it – on the face of it, Scalia’s position made the most sense – but the case seems like a big nothing.

          Like

  13. You will be made to care.

    All within the state, nothing outside the state, nothing against the state.

    Like

    • It’s crap like that which shows that the likes of Ginsburg do not really take the constitution seriously, or at least not with regard to politically contentious issues. Like most progressives, she equates “constitutional” with “outcomes that I desire”.

      Like

  14. come on Scott. rule of law is so trite. this is 2015!

    Like

  15. “ScottC, on May 18, 2015 at 1:53 pm said:

    jnc:

    Yes, but that would imply that they can’t tax income earned out of state at all, not that they have to somehow have a specific credit system for another states taxes.

    Seems to me that in addition it would also imply that a state can’t tax non-residents on their cross-border income.”

    Sure, but to have constitutionality hinge on appropriate level of credit given to state income taxes paid elsewhere strikes me as a political policy choice, not a legal analysis.

    Scalia & Thomas have it right, Thomas moreso.

    Like

    • jnc:

      Sure, but to have constitutionality hinge on appropriate level of credit given to state taxes income paid elsewhere strikes me as a political choice, not a legal analysis.

      Agreed. If Congress wants to pass a statue to that effect under the guise of regulating interstate commerce, it can. But for the Court to impose that on states in the absence of congressional legislation seems to me to be a misreading.

      Of course the best solution is to simply do away with income taxation altogether and avoid such questions.

      Like

  16. “imagine that. another unintended consequence. funny how those keep happening. it’s almost as those regulators don’t know what they are doing.”

    Because no one paid attention to this story at the time:

    “For McCain, Self-Confidence on Ethics Poses Its Own Risk
    By JIM RUTENBERG, MARILYN W. THOMPSON, DAVID D. KIRKPATRICK and STEPHEN LABATON
    Published: February 21, 2008

    WASHINGTON — Early in Senator John McCain’s first run for the White House eight years ago, waves of anxiety swept through his small circle of advisers.

    A female lobbyist had been turning up with him at fund-raisers, visiting his offices and accompanying him on a client’s corporate jet. Convinced the relationship had become romantic, some of his top advisers intervened to protect the candidate from himself — instructing staff members to block the woman’s access, privately warning her away and repeatedly confronting him, several people involved in the campaign said on the condition of anonymity.

    When news organizations reported that Mr. McCain had written letters to government regulators on behalf of the lobbyist’s client, the former campaign associates said, some aides feared for a time that attention would fall on her involvement.

    Mr. McCain, 71, and the lobbyist, Vicki Iseman, 40, both say they never had a romantic relationship. But to his advisers, even the appearance of a close bond with a lobbyist whose clients often had business before the Senate committee Mr. McCain led threatened the story of redemption and rectitude that defined his political identity.”

    Like

  17. Everything that’s wrong with progressivism in one sentence:

    “Because of our egalitarian norms and the real wealth and income differences between blacks and whites, it’s easy to conclude that white preference for white neighborhoods is a kind of class discrimination, which we can fix through active, interventionist policy.”

    http://www.slate.com/articles/news_and_politics/politics/2015/05/whites_prefer_to_live_with_whites_why_integrating_america_s_neighborhoods.html

    Like

  18. J, I saw that Bouie article the other day and that exact quote really stood out to me as well.

    Like

  19. Everything that’s wrong with progressivism in one sentence:
    “Because of our egalitarian norms and the real wealth and income differences between blacks and whites, it’s easy to conclude that white preference for white neighborhoods is a kind of class discrimination, which we can fix through active, interventionist policy.”

    Not everything. Need to add “…and raising taxes” to the end. I know it can be implied by “interventionist policy”, but taxes always need to be made explicit. Otherwise someone might forget to raise them while intervening.

    Like

  20. I think we need a Department of Fairness In Residential Housing Location that controls how many people of a given race are allowed to purchase in any area.

    Also, the “white preference for white neighborhoods” suggests a modern reality that is not borne out in my experience. I moved to a nice suburban neighborhood 11 years ago that was very mixed at the time, and became more mixed over time. More African Americans were moved into the neighborhood over the years, and the couple we sold our house to was AA. Yet it was the same house I loved (and improved upon, leaving it better when we sold than it was when we bought it, back in the days when there were more white people in the neighborhood). So I’m not sure how the transition of my neighborhood to the same-or-largely-better residences, but more African American house owners in the neighborhood, works with the idea that racial preferences in neighborhoods is a form of discrimination that requires intervention. Are we defining the quality of neighborhood as being automatically lower because there are more black people than white people in it? Is the only thing that makes a neighborhood “high quality” is the number of caucasians that live in it?

    When we finally moved, we moved to a newer suburb in a nicer area with more expensive houses. I haven’t done a count but it seems to be about half-and-half African American/Caucasian. A few other races in there, too. It’s a nice neighborhood. I love my house. Is the quality of the neighborhood going to automatically decline when more African Americans move in, as if by magic? That seems to be what the assertion that “white preference for white neighborhoods is a kind of class discrimination” would be suggesting. Maybe I’m just missing the hidden wisdom.

    Like

    • In Austin, wealthy and middle class neighborhoods are integrated, rather apparently. But poor neighborhoods are segregated, rather apparently. Poor white trailer camps seem to have no black, brown, or Asian lineage people.

      Poor black neighborhoods and poor brown neighborhoods seem exclusive, too. But my neighborhood elementary school, in the middle of a high tech area, is 36% non-hispanic white, 26% Asian/or Pacific Island heritage, 25% Hispanic, 6% non-hispanic black, and 7% native American or multiracial or “other”. My immediate neghborhood breaks down like this, by sight, as well. However, the school Asian pop seems more east Asian than south Asian while my immediate neighborhood seems more south Asian than east Asian. My conclusion is that more south Asian kids are attending private and parochial schools than east Asian kids, FWIW.

      Like

  21. @troll: “Sea ice in Antarctica- Vox is on it!”

    Indeed. Of course, if there wasn’t a seriously mountable argument that human beings are causing catastrophic climate change, the exact same things would be happening (or not happening), and no one would care. And the end of the day, it’s all about political power (and, of course, fundraising).

    Like

  22. @ScottC1: “But the deficit is due to a revenue, not a spending, problem, right?”

    It’s always the way. Most people end up making much more later in life than when the first start out, yet somehow seem to acquire enough necessities and must-have purchases and expenses that they spend 110% of their income, every year. No reason to think the government is any different. Ergo, if the US Government doubled it’s revenues, within a few years “necessary” expenses of the government would have tripled. Because it’s people! Government is people!

    Like

  23. @gbowden4: “People like to fuck, gossip and pretend monogamy’s important. I don’t see any of those things ending.”

    We just haven’t reached the necessary level of political enlightenment yet. Once we have a black lesbian president and a top marginal tax rate of 100%, I think we’ll be there. Everyone will love each other, there will be no gossip, and people will choose pursuits of the mind rather than carnal activities, everyone of which will be normal and acceptable, we just won’t do them because we’ve become brain creatures who spend our time crafting utopian legislation with our minds, rather than wasting precious energy on bumping uglies.

    Like

  24. Funny.

    Like

  25. “I knew their defense counsel in the late 60s, Foscue Swearingen”

    You really need to write an autobiography.

    Like

  26. “Vox.com (!) asks why Corning, led mostly by Republican executives, paid Hillary a $225K honorarium.”

    Because they have way too much money?

    Like

  27. @jnc4p: “You really need to write an autobiography.”

    Concur. Would read. Or at least listen to the audiobook as read by the author.

    Like

  28. The Maryland tax case was interesting to me because I pay the county surtaxes which were a rude awakening when I moved here. The nominal state rate is 6% and is nearly flat. On top of that, the state collects on behalf of individual counties and additional tax which varies by county but is roughly 50% of the state total bill, thus making the effective income tax rate about 9%. That number is almost never used in comparisons of income taxes by state.

    It was this surtax which was the basis of the legal dispute. I wonder if the counties collected the tax themselves rather than funneling it through the state collection system if the SC decision might have been different. I think some municipalities such as New York City tax income even on residents who live outside the city but I have no experience with the details of that.

    I wonder how the vote on that decision went based on state of residence of the justices.

    Like

    • yello:

      I think some municipalities such as New York City tax income even on residents who live outside the city but I have no experience with the details of that.

      I think that used to be the case, but not anymore. The tax applies only to residents except for non-residents who work FOR the city. If you live outside of NYC but work for the city government, you still have to pay the city income tax.

      http://www1.nyc.gov/nyc-resources/service/3010/new-york-city-personal-income-tax

      Like

      • If you live outside of NYC but work for the city government, you still have to pay the city income tax.

        That’s an interesting policy. I see what they are trying to do there, but I can also see where living outside the city limits could be enough of a lower living cost to justify having to pay the municipal employee tax.

        Like

        • yello:

          That’s an interesting policy. I see what they are trying to do there, but I can also see where living outside the city limits could be enough of a lower living cost to justify having to pay the municipal employee tax.

          Perhaps the thinking is that if you are making a living off of taxpayer money, you ought to at least be one of the taxpayers.

          Like

        • McWing:

          He didn’t have it, and apparently confessed that he hadn’t used any of the study’s grant money to conduct any of the surveys. “Michael LaCour’s failure to produce the raw data coupled with the other concerns noted above undermines the credibility of the findings,” Green wrote.

          Understatement of the year. Seems to me that a faulty calculation or a questionable methodology might be said to “undermine the credibility of the findings”. When the data has been made up out of whole cloth, I’m not sure “undermining the credibility of the findings” quite captures the situation.

          Like

  29. The caveats are necessary due to the subject purportedly studied.

    Like

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