Monday, March 14, 2005
George Will and now Jonah Goldberg endorse raising the Social Security wage base in order to get the Democrats to agree to personal accounts...
LET ME REPEAT: WHAT A RIDICULOUS IDEA!!!
First, the Democrats will never agree to personal accounts. Second, it's a lousy precedent - agreeing to tax hikes for future promises - for the GOP to set (having raised the issue, as the old saying goes, we're now only discussing the price). But even were this not the case, it is still a lousy idea.
It's a lousy investment - raise your hand if you think that paying a multi-thousand dollar load (which the higher taxes represents the equivalent of) is worth being able to invest in one of Bush's personal accounts? Investors who pay loads almost NEVER get a high enough return to compare favorably with the no-load options out there. The personal accounts would (almost guaranteed) by taxed at ordinary income rates, just as Social Security payments and 401(k) withdrawals are taxed now - compare that to the 15% capital gains tax rate one pays now. The investment options available in these personal accounts would be extremely restrictive - making it even less likely that an investor could make a high enough return to cover the load.
Nor does it make sense on a macro-level. Giving $50,000 a year Joe Taxpayer the option of putting a couple points of his Social Security taxes into a personal account won't do anything to shift the electoral dynamic. So Joe puts $1,500 a year into his new personal account - he's supposed to start voting Republican all of a sudden? There is no correlation between holding equity and voting Republican - there are plenty of high-income/high net worth Democrats who certainly don't vote GOP. Heck, although it's not exactly the same thing, there are billions and billions and billions in 401(k) plans and I haven't noticed a surge in pro-business sentiment.