What is Just
It is my understanding that, all things being equal, if Social Security were completely blown up, the people that would be hurt the most would be . . . the very rich. That's because Social Security takes 7.5% of your annual income up until $200,000. So everyone earning less than $200,000 is 7.5% lighter in the wallet when they get their paycheck. But if you earn more than $200,000 a year, you're only paying 7.5% of $200,000. 7.5% of $200,000 is $15,000. So if you make $200,000 a year, Uncle Sam takes $15,000 for Social Security, or 7.5% of your gross pay. If you make $20 million a year, Uncles Sam takes . . . $15,000 for Social Security, or 0.075% of your gross pay. (This is what is known as a regressive tax: it is unfairly borne more heavily the poorer you are.) In other words, relatively speaking, those of us who make less than $200,000 a year have the most to gain from Social Security going away.
It is also my understanding that, all things being equal, full market valuation of property will benefit people living in poor, stagnant neighborhoods at the expense of rich, booming neighborhoods. That's because long lags in property assessment mean that rich, booming neighborhoods are severely undervalued, leading to lower real property tax rates; while poor, stagnant neighborhoods are more correctly valued, leading to relatively higher real property tax rates. Valuing properties more frequently and more closely to market levels would almost certainly lead to lower tax bills for the poor and higher tax bills for the rich. (This assumes a revenue neutral implementation, in which the municipality intends to generate the same amount of property tax revenue, it just wants to re-allocate where that revenue is coming from.)
So how is it that we tell the poor to fear the elimination of Social Security and the adoption of full market valuation? Are we misinformed? Or are we satisfied with the status quo because it benefits us at the expense of others who are powerless on their own to change the status quo? It is unjust for the very rich to pay a lower percentage into Social Security than the poor, and it is unjust for poor, stagnant neighborhoods to pay a higher percentage into a municipality's property tax revenue bucket than rich, booming neighborhoods. Should we not, then, who are seeking justice for the poor and marginalized desire to reform these two situations?
I am all for do-gooders seeking justice for the poor and marginalized. I just want to make sure that what is being advocated is in fact justice, and not actually the very opposite.
It is also my understanding that, all things being equal, full market valuation of property will benefit people living in poor, stagnant neighborhoods at the expense of rich, booming neighborhoods. That's because long lags in property assessment mean that rich, booming neighborhoods are severely undervalued, leading to lower real property tax rates; while poor, stagnant neighborhoods are more correctly valued, leading to relatively higher real property tax rates. Valuing properties more frequently and more closely to market levels would almost certainly lead to lower tax bills for the poor and higher tax bills for the rich. (This assumes a revenue neutral implementation, in which the municipality intends to generate the same amount of property tax revenue, it just wants to re-allocate where that revenue is coming from.)
So how is it that we tell the poor to fear the elimination of Social Security and the adoption of full market valuation? Are we misinformed? Or are we satisfied with the status quo because it benefits us at the expense of others who are powerless on their own to change the status quo? It is unjust for the very rich to pay a lower percentage into Social Security than the poor, and it is unjust for poor, stagnant neighborhoods to pay a higher percentage into a municipality's property tax revenue bucket than rich, booming neighborhoods. Should we not, then, who are seeking justice for the poor and marginalized desire to reform these two situations?
I am all for do-gooders seeking justice for the poor and marginalized. I just want to make sure that what is being advocated is in fact justice, and not actually the very opposite.
Comments
So despite the cost to them today, the big picture says that abolishing SS is, in fact, worse for the poor than the rich. (Assuming, of course, that SS can stay afloat and actually meet its obligations--not a foregone conclusion!)
Finally (and this is admittedly a political point and not an economic one), I grant you rich folk have more sophisticated savings mechanisms than poor folk. But I'm not sure the federal government is the best alternative mechanism.
All that being said, check out something I posted a couple of years back (on January 31, 2005): http://leehuang.blogspot.com/2005/01/why-im-against-bushs-social-security.html. As a safety net, I agree that Social Security has its merits. But as a savings vehicle, it's a raw deal economically for the poor and an unnecessary intrusion by the federal government.