The coming Social Security fight could be 1983 all over again

[HitchHiker71]

Aren't seniors the ones who have voted in politicians that have gotten us into this mess? Why should our children pay for our financial ineptitude?

Not if but when the government hits the wall and can no longer borrow, yes, they will accept cuts, because there's no other choice. Sure, you can print money and devalue the currency massively, but at the end of the day it's the same thing, effectively they are still taking a measurable cut due to currency devaluation via QE. Pick your poison, because when that happens, there's no get out of jail free card, we're choosing from a collection of very bad outcomes, there will be no good choices or good outcomes left to choose.

 

[TolmiePeak]

Depends on what you mean here. If the person passes away before RA/FRA then yes, they paid into something that they will never collect from, but they are eligible, so I don't think that's what you mean. At the end of the day, only people who have valid SSNs pay into SS. So tolks who only have ITIN numbers for example, no they do not pay into SS, because they do not have a SSN. There's some undocumented workers or non-residents who may have a SSN that really should not, that may pay into the system, but that's an edge case really. There are other edge cases such as certain government workers who are ineligible for SS but do pay into the system, but again, that's a really small percentage of people. By and large, those who pay into SS are eligible to collect from SS.

If people have fake social security numbers they will pay into the system but never collect.

 

[HitchHiker71]

Although I agree that digital goods and information are becoming free, people still need to eat, live somewhere decent and have healthcare. Atoms such as building materials and food cost money. Those in charge are maneuvering to gain control of assets to create scarcity. Case in point: there is actually an abundance of diamonds in the earth. The minors in control of the mine create the scarcity.

Goods cost money because the raw materials used to make those goods cost money, all primarily due to labor costs to create and process the raw materials into goods. When sourcing raw materials essentially becomes free, and the production process is free, and services such as healthcare are automated, then goods become abundant, and control mechanisms such as the diamond case will no longer be necessary when true abundance takes hold. The miners and dealers create the scarcity because of money, when money as a medium of exchange is largely no longer necessary, the entire system will change, and much more rapidly than many expect IMHO. It will be a sea change across the globe - likely within the next 50 years.

 

[HitchHiker71]

If people have fake social security numbers they will pay into the system but never collect.

Contrary to popular opinion and conspiracy theories, this really is an extreme edge case. Just ask any AI engine today.

 

[WaikikiFirst]

if you cannot pass a test demonstrating basic financial know-how - you cannot manage your forced personal retirement account

Oh, now you're oppressing the financially-educationally-challenged. Reminds me of the scene in MPHGrail, where King Arthur keeps telling the peasants to shut up and the guy starts yelling about being repressed and "the violence inherent in the system." Know what I mean? nudge. nudge. wink. wink.

 

[SmithOp]

Don't count on SS not being taxed in this big budget bill, it's smoke and mirrors, tips also.

 

[easyrider]

Everyone should have their own side business.

It's more work and costs than most want or can afford. I guess what I'm saying is most people are better off working a job that has benefits because paying the entire tax load with benefit and retirement package for self employment are just a few of many things that need constant attention.

Like Ringo said, it don't come easy, lol.

Bill

 

[TolmiePeak]

Contrary to popular opinion and conspiracy theories, this really is an extreme edge case. Just ask any AI engine today.

So what do the people who don't have legal status to work in the US do? They have to show their employer some documentation when they are hired.

 

[geist1223]

So what do the people who don't have legal status to work in the US do? They have to show their employer some documentation when they are hired.

If they do not have a Legal Work Visa or other Legal Status they might provide forged documents. Or the Employer does not care. So they will have Social Security and Taxes withheld from their Pay. But they can not file a Valid Income Tax Return without likely getting caught. So they do not. More money to the Governments. They can not ever file Legally for Social Security so more Money to support the Social Security System. Or the Employer shows on their Pay Slip that these amounts were withheld but it is not paid to the Governments but goes into the Employer's pocket.

 

[WaikikiFirst]

They have to show their employer some documentation when they are hired

They do? In what % of the places where they work is that really true? 40%. For some industries, you'd have to be a world-class PI to figure out whether they show forged docs or whether the employer forges the docs. Employers need bodies. Bodies need work. Documents? That's so 1985.

 

[emeryjre]

The IRS has used several different programs over the years to allow undocumented individuals to file Tax Returns and get a return on Federal Income Tax withheld
The number was known generically as a Taxpayer Identification Number
There is quite a bit of confusion about TINs because a Taxpayer Identification Number can refer to several different situations
But it did allow someone to file an income tax return

 

[WaikikiFirst]

Just ask any AI engine today.

Oh my word. Using a meta-version of disinformation to make a point. Any expert in any area can ask any AI engine many questions and instantly see the misinformation being parroted. AI responses are plain-old W-R-O-N-G plenty of the time. What keeps them from not being W-R-O-N-G more often is when they refuse to answer a question by incorrectly claiming the facts don't exist.
AI engines are cool when they come up with creative new stuff, but they don't really know the difference between creative and being factual and being exhaustive.

 

[emeryjre]

They do? In what % of the places where they work is that really true? 40%. For some industries, you'd have to be a world-class PI to figure out whether they show forged docs or whether the employer forges the docs. Employers need bodies. Bodies need work. Documents? That's so 1985.

Under federal law, the employers are required to check documentation before hiring an individual
The law is not evenly applied
But the requirement is there
I know it was in place in 1995
I know it is still there in 2025

 

[WaikikiFirst]

Under federal law, the employers are required to check documentation before hiring an individual

LOL. People flouting laws? Companies flouting laws? Politicians flouting laws? Never heard of any such thing. ymmv
Laws are made to be ignored as long as you think anyone "in charge" may not care or may even not "like" the law. Welcome to America.

 

[emeryjre]

LOL. People flouting laws? Companies flouting laws? Politicians flouting laws? Never heard of any such thing. ymmv
Laws are made to be ignored as long as you think anyone "in charge" may not care or may even not "like" the law. Welcome to America.

Thanks for your insights
Your explanation has created clarity where before was confusion

 

[jp10558]

Although I agree that digital goods and information are becoming free, people still need to eat, live somewhere decent and have healthcare. Atoms such as building materials and food cost money. Those in charge are maneuvering to gain control of assets to create scarcity. Case in point: there is actually an abundance of diamonds in the earth. The minors in control of the mine create the scarcity.

It's worth pointing out that for people who don't want ... the ... cachet??? of saying it's a mined diamond, and just want a sparkly stone have already moved on to mossonite and those who really want a diamond get lab grown ones that are exactly the same as the mined ones, just way cheaper and better quality usually. At this point, diamond (or jewelry in general) are only "fake scarce" like Gucci bags - it's basically invented. Costume Jewelry, lab grown, better stones like mossonite, cheaper access etc have led to brands like Stauer and many many more that are even cheaper.

 

[easyrider]

Contrary to popular opinion and conspiracy theories, this really is an extreme edge case. Just ask any AI engine today.

A common thing for an illegal transient worker is to use or make up a number so they can get paid. They skip around from employer to employer frequently to avoid being found out often following crops or construction. All of the SS they paid in is just a cost of working in the USA. They never get any of it back. It was estimated that these types of workers paid in over $25 billion last year.

They do this because without education or skills they earn around $2 per hour in Mexico versus between $15- $25 per hour in the USA .

Bill

 

[jp10558]

Your comment that the top 10% has 98% of income is not the case. The top 10% earned approx 38% of all income, yet paid 72% of all taxes. While 30% is certainly a large percentage, it half of the percent of tax they pay.

Everyone should pay more taxes, however I have lost any faith in our gov't to balance their books or to do the right thing. They only care about being re-elected and will do whatever it takes - including giving away money and building debt.

SO, as my money is just wasted - mostly redistributed - I just want to pay the least and keep the most. I will do my best to game the system and pay as little as possible. I will encourage my children to get any public benefits they can get and help them in ways that will not affect their eligibility for such benefits.

I think you missed my point - Let's say you have 2 people paying taxes, one earns $100,000, one earns $10,000. You have the same tax rate for both, 7%. 7% of the first is $7,000 - 7% of the second is $700. Total taxes is $7,700 for the year. The lower earner paid 700/7700 = ~9% of the taxes, and the higher earner paid 91% of the taxes. Would you say this meant the flat 7% is unfair?

So I'd expect to see the higher percentage pay higher than 72% of taxes, just based on math (depending on what percentages we're talking about).

The other part is life isn't fair, and neither is government. I'd argue that what's important is to decide what we want as a country to be like. The idea that people who earn more pay more isn't that crazy. At least to me, I tend to think that it's fine to kick in more towards the common good if it hurts me less - i.e. if you make $100,000 kicking in a thousand more a year is a lot less of a real ask than asking someone who makes $10,000. It also seems to me that there are diminishing returns on money for each individual person that higher taxes in a progressive manner works well, and did work well in the past. I think "game the system and pay as little as possible" is what humans would do, but certainly isn't much of a moral stance to me - yes, let's mooch the most and contribute the least possible. Of course, I don't think redistribution is inherently wasteful - like someone else posited, you want velocity of money, money in a modern money bank doesn't actually help the society very much because it doesn't accomplish anything.

 

[jp10558]

That's what VAT/tariffs taxes are in reality - and it seems like there's quite a few folks who are against tariff taxes, just not for good reasons really. Basically - we need to shift away from income based taxes, toward production based taxes as automation takes hold.

I think the argument is just that shifting the tax burden to lower class people through regressive taxation is bad, and for the supposed goals of lowering prices or bringing back jobs to the US, tariffs won't do that. We could also shift to a wealth tax - i.e. pull money out of places it's just sitting there not helping anyone and also break the inheritance growth of basically richer and richer families. IDK if I agree with either tariffs or that, but I don't think production based taxes are the obvious solution either.

 

[jp10558]

Not if but when the government hits the wall and can no longer borrow, yes, they will accept cuts, because there's no other choice. Sure, you can print money and devalue the currency massively, but at the end of the day it's the same thing, effectively they are still taking a measurable cut due to currency devaluation via QE. Pick your poison, because when that happens, there's no get out of jail free card, we're choosing from a collection of very bad outcomes, there will be no good choices or good outcomes left to choose.

We may have to cut things, but it's certainly not required that it be social security - we could IDK cut the military by 2/3 and probably make a dent in our issues too. The other question is instead of tying to individual accounts which have a problem that many would still need to be subsidized to match what social security provides today and sort of the reason for social security -could it just invest for the whole populace at once? I.e. one problem is SS takes in money and immediately pays it out right? Would taking in money and investing it in a mix of rolling securitys or the like grow enough to pay for it. If it won't, why would it work if individuals do it? Or are we back to saying that we're going to just take more destitute seniors with extra steps?

 

[HitchHiker71]

So what do the people who don't have legal status to work in the US do? They have to show their employer some documentation when they are hired.

They get an ITIN number. Undocumented immigrants have ITIN numbers for the most part, greater than 50% according to reputable sources at least as of 2022. This is basically required for businesses to pay them unless it’s under the table.


Sent from my iPhone using Tapatalk

 

[HitchHiker71]

Oh my word. Using a meta-version of disinformation to make a point. Any expert in any area can ask any AI engine many questions and instantly see the misinformation being parroted. AI responses are plain-old W-R-O-N-G plenty of the time. What keeps them from not being W-R-O-N-G more often is when they refuse to answer a question by incorrectly claiming the facts don't exist.
AI engines are cool when they come up with creative new stuff, but they don't really know the difference between creative and being factual and being exhaustive.

Grok is the most accurate IME and is right far more than it is wrong and does a very good job of referencing source data directly and providing clarity when the guidance is based on less than reputable sources. Glad to know there are folks like you who buy into the conspiracy theories though, thanks for playing!

One example: https://x.com/i/grok/share/5cFHyZ4TfSSQ6rTimZ7uWzcFI

Sent from my iPhone using Tapatalk

 

[HitchHiker71]

We may have to cut things, but it's certainly not required that it be social security - we could IDK cut the military by 2/3 and probably make a dent in our issues too. The other question is instead of tying to individual accounts which have a problem that many would still need to be subsidized to match what social security provides today and sort of the reason for social security -could it just invest for the whole populace at once? I.e. one problem is SS takes in money and immediately pays it out right? Would taking in money and investing it in a mix of rolling securitys or the like grow enough to pay for it. If it won't, why would it work if individuals do it? Or are we back to saying that we're going to just take more destitute seniors with extra steps?

Anyone who has actually run the numbers using basic mathematics on ROI knows that, even using conservative RoR assumptions over a 40+ year working time period, the payout is easily 2-3 times what they receive from the current SS system. This is factual given the current system provides zero RoR, zero compound returns, etc., because the current system is only a redistribution mechanism, and the underlying requirements of the existing system are a growing population with a positive ratio of workers vs retirees. Given the US and most other national retirement programs worldwide depend upon key demographic growth assumptions, and the majority of 1st world nations have been and continue to be under the minimum birth death ratio of 2.1 - these systems are unsustainable- it’s simply a matter of how long until they fail. Why not change the system now to become sustainable?

What you are talking about with regard to investing for the whole populace would be a national pension system, or perhaps a sovereign wealth fund of sorts. The problem any national pension system is that it has the same core dependency that SS has - it requires more workers paying into the pension system than retirees depleting the system. Given the reality of shrinking demographics long term, this approach is unsustainable. It matter how big or small the system is, if the underlying requirement for sustainability is compromised. Personal retirement accounts don’t have this problem however, since it’s tied to the individual, and can be included in wills and estates and passed along to future generations to help generate long term wealth for everyone.

Sent from my iPhone using Tapatalk

 

[SmithOp]

Having an ITIN only allows a person to file taxes, but it doesn't guarantee tax breaks; here are some tax breaks denied to ITIN holders:

Federal Tax Credits:
Earned Income Tax Credit (EITC): Taxpayers and their spouses (if filing jointly) cannot claim the EITC if they have an ITIN instead of a Social Security Number (SSN).
Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC): For tax years 2018 through 2025, children with an ITIN cannot be claimed as qualifying children for the CTC and ACTC.

Other Denied Benefits:
Social Security Benefits: An ITIN does not qualify you for Social Security benefits.
Work Authorization in the U.S.: An ITIN does not authorize you to work legally in the U.S.

Important Notes:
ITINs are for federal tax purposes only and do not provide or change immigration status.
Some states offer state-level EITCs that ITIN holders may be eligible for, even if they don't qualify for the federal EITC.
ITIN holders may be eligible for other federal tax credits if they meet all eligibility requirements, such as the Child and Dependent Care Tax Credit (CDCTC), American Opportunity Tax Credit (AOTC), and Credit for Other Dependents (ODC).

How to tell it's an ITIN? Begins with a 9.

 

[jp10558]

What you are talking about with regard to investing for the whole populace would be a national pension system, or perhaps a sovereign wealth fund of sorts. The problem any national pension system is that it has the same core dependency that SS has - it requires more workers paying into the pension system than retirees depleting the system. Given the reality of shrinking demographics long term, this approach is unsustainable. It matter how big or small the system is, if the underlying requirement for sustainability is compromised. Personal retirement accounts don’t have this problem however, since it’s tied to the individual,

What I fundamentally don't understand is how if everyone puts in $x to a personal retirement account why that would be different to everyone putting in $x to a group retirement account? If I don't need more than one person paying into an individual account, why would I need more than one person paying into a pooled account? And as the number of people goes down, there's a bigger slice of the pooled account available per person over time.

and can be included in wills and estates and passed along to future generations to help generate long term wealth for everyone.

Personally I don't think government programs should build wealth for anyone. The idea of SS is a defined benefit / defined pension. The problem with all the retirement accounts is they are basically random where you end up with based on the dates you switch over from "growth" to "distribution". Many people's retirement accounts get dropped by 50% when there's a market correction like in 2008. Mine's been basically flat since 2020, the only growth has been my contributions. Most people can't actually save enough at an effective 0% interest rate to support themselves in retirement. Of course, there are winners too, people who "get out" at market peaks - but that seems like not really providing a benefit, it's providing a lottery ticket.

That said - if the Government could get a set of strong insurance companies(or the government themselves) to provide a guaranteed 7% return on my social security taxes in an account linked to me, (or whatever the optimistic rate of return is for all the rosy 401k ads out there) I agree that would be a solution. And in my mind a potentially workable one - everyone gives the insurance companies the returns over 7% and gets made up for on the times there's anemic returns - and everyone doesn't have to become a financial and investment expert. It really ought to be very clear by now expecting everyone to make good investments or pick good mutual funds or whatever is a stupid idea as it will not happen.

Of course I also wonder if the "investments" in the market like how retirement funds do it really magically come up with more money than the government "could" do via taxes - i.e. I don't really see why there's "magic money" in stock market accounts aside from inflation generally. And I also think that the government would still need to backstop this stuff just like housing loans or whatever. That said, I do see the appeal of moving to individual accounts (but by default managed in a way with pretty guaranteed returns) as both being more understandable and more resilient to future political games - at least until various taxes are changed.