Thinking Outside the Box

[GailL1]

What if there was a way to - 

• help fix the financially ailing Social Security and Medicare Trust Funds
• increase a person’s reported earnings to get a bigger benefit when they get their Social Security benefits
•  increase the money going to the government by income taxes - to reduce the debt

In one swoop, all of this could be taken care of - and it isn’t rocket science.

All we have to do is get ride of one of the biggest (maybe even the biggest) tax expenditures we have had since WWII.  

What is it, you may ask -

Start taxing employer provided health insurance coverage as compensation (like wages)  - which it is!

Thoughts?

[gs13323272]

I'm thinking way outside the box. With the coming of AI replacing peoples jobs, have the government pay SS/Medicare Ins  on those machines. It's not a matter of if but when. Flippy (google Flippy) is just one example, and if Austin, Tx now has driverless tractor trailer drivers, why can't there be driverless trash trucks? Its not just going to be white collar workers writing code that's losing their jobs but the blue collar as well and when there is a job lose, their is no funds going into SS. When a machine takes over flipping burgers, that company does not have to pay a wage, SS, health insurance not to mention ono federal taxes going into the kitty. Just my thoughts... 

[GailL1]

@gs13323272 

We are already there - The decline of workers to beneficiaries has been going on since the beginning but your are right, it is getting a lots more severe now because of technological changes.  

SSA.gov - Social Security History- Ratio of Covered Workers to Beneficiaries 1940 - 2013 

You maybe right that we have to end up taxing some forms of technology to make up for the loss of workers.  But the problem is even more severe than the Social Security Trust Funds - What are all those people gonna do when they have been replaced by some AI form?  

[LisaS961881]

   Gail,

      When I first read this suggestion in your response to the Newsweek article, it seemed like a great common sense idea…..which made me wonder why I don’t remember anyone else suggesting this.  Why hasn’t this idea been brought to the table?  The  only “push-back” that I can envision is from some of the more powerful lobbying unions.  Maybe I am mistaken in my interpretation of what you are proposing, so please let me know if I am totally off-base on this.  Your proposal would certainly solve the crisis.   (I’m just figuring - hmmm….less money in the paycheck…that will be a problem.   Sigh - and just maybe the biggest problem is that everyone wants the system reformed, but nobody wants any of their money used to do so! ). Again - what you are proposing is so logical….I just don’t get the feeling that many people today have that “Victory Garden” mentality, and that’s a simple reality, not a condemnation.

   ~ Lisa 🛶📚☀️

[GailL1]

@LisaS961881 

Of course, those who would be involved - employers and employees would be losing something - EMPLOYERS & EMPLOYEES would have to pay more into the systems - however, employees would be getting something back - higher SS benefits and a better financial stable Medicare Part A.  But sometimes seeing something so far out that it is hard to see.  Plus, Americans seems to always want somebody else to pay for something, than themselves.  

So actually we are agreeing on the dislike of the plan but actually it would work GREATLY.

I believe since the ACA was enacted that employers are suppose to report how much they pay for this employer provided coverage on each employee’s W-2 as a memo.  So it would be very easy for the employee and the employer to see how much this would cost them - 

• the added income tax an EMPLOYEE would have to pay on this benefit amount 
• the added SS and Medicare tax the EMPLOYEE would have to pay on this benefit amount
• the amount the EMPLOYER would have to pay to match the SS and Medicare tax of the employee

This proposal has been around for a very long time - it isn’t new but it is getting BIGGER. 

Bipartisan Policy Center: Paying the 2025 Tax Bill: Employer-Sponsored Health Insurance 

ESI = Employer Sponsored Health Insurance

from the link ~

As ESI premiums rise at a consistent clip—up 7% from 2023 to 2024 alone, and 24% from 2019 to 2024—so has the cost of the ESI tax exclusion. Currently, it is the third largest expenditure in the sprawling federal tax code, behind only retirement tax advantages and reduced capital gains tax rates. Large tax preferences narrow the federal income tax base and require higher tax rates to bring in sufficient revenue.

Some of the proposals have some limits - or they limit it in the interim and build to 100% coverage.  WHY?  That’s only because our legislators need that cushion period so they don’t lose their job, IMO.

They say it is because (same link)  . . . the exclusion tends to be regressive, benefiting upper-middle and high-income households more than low- and middle-income households. According to the nonpartisan Congressional Research Service (CRS) and the Department of Treasury, around 60% of the benefit of the exclusion went to households making above 400% of the federal poverty level (FPL) in 2018 (or more than $50,000 in income for a single person and $100,000 for a family of four in the same year).

But isn’t that the way it always is when we have a program based on earnings and benefits - I am of the persuasion that we should keep it simple and treat everybody the same.  Simplicity has advantages in explaining it and what everybody would get out of it or in the case of employers how much more they would have to pay.

As an aside, it would PERHAPS also be beneficial to many progressive ideas since some employers would drop ESI plans or perhaps would only provide it for those who make less in earnings.  And this would be just another step in perhaps moving to some single payer type system - what better way than to remove the reason why so many people want to keep the ESI as it is now - 

[LisaS961881]

….”the third largest expenditure in the sprawling federal tax code”.  I truly had no idea.  I also now have a better understanding why some parties might not like this idea to come to fruition, but, like you wrote, “keep it simple and treat everyone the same”.

It’s a great idea, and I don’t ever remember hearing about it until I read your post - and thank you for the link.  

While any type of added expense/less income might be initially unpopular, I feel like there’s  a tsunami coming, and I do personally feel that we have a responsibility to act.  And you are right - maybe it’s time for Americans to stop always “wanting somebody else” to pay for something.  Maybe we all need to pitch in and help.

At the risk of again sounding like a Pollyanna, I have found a certain satisfaction to being frugal.  I enjoy watching those cashback perks grow on my Platinum card - it’s free money! 😊. Plus, each and every time my grocery store has a “buy $100 in gift cards, get $20 off your next shopping order”, I always do so, then sock those cards away to add to Birthday and Christmas presents.  I cancelled my gym membership and now walk outdoors daily with a friend.  (I’m at a friend’s family cabin now swimming, canoeing and riding - not indoors in a stuffy gym.). And, most significantly, 😃 instead of buying that outrageously expensive chocolate shell coating for my ice cream, I make it myself (2 cups semi-sweet chocolate morsels mixed and microwaved with 2/3 cup refined coconut oil!) 🍨🙂‍. I’ll tighten my belt a bit more if it means that future generations can breathe a bit easier when envisioning their senior years.

As you wrote, we really need to do something.  I believe there’s been a national debt since 1929 or maybe much earlier…Revolutionary War ? …..anyway, I read somewhere that, if you stacked a Trillion dollar bills one on top of the other, the stack would be 63 stories high.  ….and that’s just ONE trillion.

~ Lisa 📚🛶🤔

[GailL1]

This proposal has been around a very long time - this was written in 2016 

SSA.gov Policy Proposal: Distributional Effects of Applying Social Security Taxes to Employer-Sponso... 

This one is a little different in that it uses both the employer and the employee part of the ESI coverage in the taxation.  

Write your Congress Critter.

Point it out to the AARP -