Democratic Primaries
Related: About this forumInteresting. House and Senate members' salaries wouldn't get the new payroll tax Warren proposes
because they fall in a donut hole, above where the current payroll tax for Social Security ends, but well below the $250,000 floor for the higher payroll tax she's proposing for the highest earners.
From Vox's article on her new proposal:
https://www.vox.com/2019/9/12/20860672/elizabeth-warrens-social-security-expansion
First, she wants to impose a 14.8 percent payroll tax (split evenly between workers and employers) on salaries above $250,000 a year. This would create a slightly odd program structure where the payroll tax phases out at $132,900 and then pops back into existence at $250,000. But the goal in creating that doughnut hole structure is to target the tax increase at the top 2 percent of American earners.
Second, she wants to also impose a 14.8 percent tax on the investment income of people earning over $250,000.
Emphasis added.
If she's serious about Social Security solvency, you'd think she'd just extend the current payroll tax rate from $132,900 to $250,000, where the higher rate she's proposing will kick in.
For one thing, I can imagine some public backlash if Congress votes for a plan which leaves their comparatively high slaries in a donut hole. Even if some in Congress might be more likely to vote for Warren's plan if it exempts some of their salary.
Warren's plan would also leave $117,100 of the president's $400,000 salary exempt from any payroll tax.
I think she should get rid of that donut hole.
primary today, I would vote for: Joe Biden
DrToast
(6,414 posts)In some high cost of living areas $150,000 a year is not wealthy.
primary today, I would vote for: Joe Biden
highplainsdem
(48,731 posts)$250,000, where the higher rate kicks in?
Otherwise this is a tax break for those earning between $132,900 and $250,000, and the more they make in that range, the bigger a tax break it is.
primary today, I would vote for: Joe Biden
DrToast
(6,414 posts)Youd also be raising payroll taxes on some middle income Americans. This is why shes proposing a donut hole and not just extending the payroll tax to $250k.
What shes proposing is not unheard of. The ACA did something similar where it imposed a Medicare tax on income above $250k.
primary today, I would vote for: Joe Biden
Hoyt
(54,770 posts)And, I have a hard time forgetting how she was against the ACA's relatively small medical device tax because medical device companies are big in her state.
Obama's idea that those who benefit from our for-profit healthcare system should help fund the ACA, didn't resonate with her, I guess.
primary today, I would vote for: Joe Biden
DrToast
(6,414 posts)Warren, who has a plan for everything, wont disclose what she thinks income tax rates or capital gains taxes should be. How come?
primary today, I would vote for: Joe Biden
George II
(67,782 posts)...Why not just extend the payroll tax all the way up to $250K and THEN add the increased tax?
primary today, I would vote for: Joe Biden
DrToast
(6,414 posts)primary today, I would vote for: Joe Biden
George II
(67,782 posts)We should just remove the cap from $132 to $250, then impose the increased payroll tax.
And we have to keep in mind now it's a "payroll" tax, not an income based tax. So businesses will manipulate their "pay" and their "income" to minimize the tax they pay.
primary today, I would vote for: Joe Biden
DrToast
(6,414 posts)But $250k has been the cutoff point for Dems on raising taxes since Obama. Its been used to blunt Republicans trying to scare voters that Democrats want to raise your taxes! And honestly, I think its been pretty effective at countering that narrative.
primary today, I would vote for: Joe Biden
highplainsdem
(48,731 posts)give a large (percentage-wise) tax break to everyone with any part of their income between $132,900 and $250,000.
primary today, I would vote for: Joe Biden
highplainsdem
(48,731 posts)to pass it and automatically exempts some of their own income.
I'm amazed Warren would even consider leaving that donut hole.
primary today, I would vote for: Joe Biden
BlueMississippi
(776 posts)primary today, I would vote for: Joe Biden