PRESIDENT BUSH NEEDS TO BITE THE BULLET AND TAX THE RICH

While the president pretends that solving the social security funding crisis is the essence of his domestic policy, he ignores the real issues involved in the debate. Social Security taxes are one of the most regressive taxes possible. Even the poorest workers are taxed at the same rate as the highest income earners. But, after their earnings exceed approximately $90,000 annually, taxpayers are exempt from additional social security taxes. This means that a person earning $20 million dollars a year is paying the same amount of social security taxes as the mid-management person earning a decent living of $90,000 but having nowhere near the resources and disposable income of the super rich.

What the president ignores is the much more immediate crisis in funding the federal government's medicare responsibilities. Medicare is predicted to be bankrupt long before the Social Security reserves are depleted.

The president claims to be very eager to help solve the social security crisis. Of course he has no interest in solving Medicare’s much more immediate crisis. President Bush has only accelerated Medicare’s solvency crisis with his boondoggle plan to provide Medicare pharmaceutical benefits. To try to solve Medicare’s crisis would only spotlight the huge payoff that his prescription drug plan provides for the profits of the pharmaceutical companies. Congress and the Bush administration have conspired to provide a generous payback to the industry that has the largest lobbying budget in Washington, dominates television advertising and accounts for 40% of every healthcare dollar spent in the United States.

The obvious solution to both the social security crisis and Medicare crisis is to remove the income cap on which social security withholdings are taxed. In the 2004 election, California voters were told that by taxing individual income of over $1,000,000/yr by just 1% that an additional $600-$800 million a year would be raised from California residents. This same formula means that if individuals with more than a million dollars a year in income in California were taxed 12.4% of their income (6.2% from the individual, 6.2% from the employer) that an additional $7-$10 Billion would go into the Social Security trust fund from wealthy Californians each year. Imagine what the figure would be if all those individuals earning more than $90,000/yr. and less than $1,000,000 were also taxed 12,4% of their income for Social Security.

The Republicans and Democrats pretend that if we raise taxes on the rich that people will not want to be rich anymore. That’s the least of my concerns. (When the maximum tax rate approached 98 percent on the last dollar of earnings in the fifties, American corporations had no problem finding leadership for their businesses.) Does anyone really believe that higher taxes curb greed? And if they did, would'nt that be a good thing?

Why does a rich person have any less interest in wanting old people to be secure and not live in poverty than me? There is no guarantee in social security; it’s an insurance program to prevent poverty among old people. We don’t need private investment accounts for social security those needs are taken care of with 401 K’s and IRAs.

What the president needs to do is stop talking about private investment accounts in social security and talk about where we need to raise the cap level to solve social security’s long term problems. It’s a simple mathematical formula; it is not a political decision.

The interesting thing is we don’t talk more about the solvency of the corporate retirement plans of major fortune 500 companies. United Airlines was able to dodge their pension liabilities in bankruptcy court this week. Many of these plans are severely under funded and face bankruptcy yet the president seems to be taking no concrete steps into resolving these issues which are guaranteed by the Pension Benefit Guaranty Corp.(similar to FDIC or FSLIC) that already is operating at a more than $23 billion deficit.

Bill Bronner