There are two things wrong in the quote above. 1. Annuities offered by insurance companies are "...put together something like Social Security..."; yet no one is clamoring to have the professionals that put together these insurance-company-offered annuities thrown in jail. And 2. Social Security is not a Ponzi Scheme.
Reforming the US tax code
- Thread starter J-Law
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There are two things wrong in the quote above. 1. Annuities offered by insurance companies are "...put together something like Social Security..."; yet no one is clamoring to have the professionals that put together these insurance-company-offered annuities thrown in jail. And 2. Social Security is not a Ponzi Scheme.
Annuity providers are regulated by the state insurance bureaus and have to show adequate capital to pay out all contracted benefits. Who regulates Social Security? Also, you have a legal right to your annuity benefits and even if the annuity provider goes bankrupt (which one has not since the 1980's, as I recall) that right does not cease to exist, although you may only get paid a portion of the entire benefit. If Congress decides to change the benefit formula for Social Security, you are SOL. If Congress decides that you are part of a group which deserves benefit termination, you are SOL.
http://www.ssa.gov/history/nestor.html
Your only "rights" with regard to Social Security are, in the Social Security Administration's own words, "political and moral", which is to say, you have no rights at all with regard to Social Security, since the only real, actionable rights are "legal" rights. Why people delude themselves about this is a question for the psychiatric profession.
The important distinction here, of course and obviously and any other adjective one can use to describe something which ought to be visible to anyone with a brain, is the one between government as overseer of benefit providers and government as benefit provider. A sane society would limit government to the former role and demand it not participate in the latter role, due to the inherent conflict of interest between being a referee in a game and playing in that same game. That ship sailed a long time ago, though.
wrong. many lehman annuity holders were ruined.
I'm curious. Can you think of any specific example of a former government activity that has been completely privatized and the total cost after privatizing was less than the total cost before privatizing --omitting hedonics? I tried, and in every example I could think of the cost increased after privatizing.
I'm not a proponent one way or the other -- and I recognize that hedonics might be an important factor -- but I wonder if this common cost argument has ever been proven in practice.
Have people read the tax codes? They are created by donors to politicians. There are tens of thousands of them that are crafted to exempt certain businesses from paying income tax. We could pass a law that tax codes could not be amended. That would stop that terrible practice. Another terrible practice is the horrible invasion of privacy that goes on at income tax reporting time. A consumption tax, collected by point of sale terminals, would eliminate that entirely.
You are correct. Since Congress makes law, they can also change the laws. Thank you so much for not spouting nonsense as I so often read in these forums. And too, thank you for recognizing that annuities offered by insurance companies are low risk, but not zero risk. The risk may, of course, be somewhat greater for a annuity like product offered by an entity not so well regulated as the insurance industry.
I consider the risk of default on the special Treasury bonds held in the S.S. Trust to be nearly equivalent to the risk of default on other Treasury obligations. It seems to me the greater risk with regard to S.S. is that of uncompensated inflation. Now that the Trust will start redeeming its bonds the Treasury will have to borrow the money to redeem them, and that can't be good!
I disagree, and I also live in a no income tax state, probably the same one as you. The reason high property taxes are preferable to high income taxes to me is that high property taxes preserve choice - I don't have to own or rent an expensive piece of property.
The other part of it is state sales tax is high and again, I prefer this because in combo with the property taxes it manages to get tax revenue out of black and gray market economic activity as well. For example, illegal immigrants will pay both taxes either directly in the case of sales tax or indirectly through rent in the case of property taxes. Heavy income tax states miss this revenue and in fact cost shift it onto other tax payers via tax credits and exemptions for low (reported) income individuals.
and what happens if you think things are going fine and you want a nice house. as soon as you buy that house you lose your source of income through no fault of your own?
in a property tax state you are in big trouble and your property and probably your life savings that you have invested in that property are subject to seizure by the government.
if you live in an income tax state you are fine because the government has no claim against you until you are again able to generate income.
Most states' total tax take is similar. They have Sales tax, Property tax, and Income tax. Some states have all 3, some only 2... but the 2 they have are higher than that of the states with all 3.
You can help yourself out a bit by choosing a state with the 2 which are better for you.