quinta-feira, 13 de agosto de 2020

Version 2.101

Last weekend, President Trump decided that he would play politics with Social Security by announcing that employers could defer payment of social security taxes for the last three months of 2020, but since only Congress has the power to lower Social Security taxes, whatever gets deferred will have to be paid back at some point, supposedly during 2021 and 2022. Then Mr. Trump decided to kick it up a notch by saying that if he were victorious come Nov 3, he would pardon said taxes, which makes no sense, as he does not have the power to cut these taxes.

A couple of days ago, I had an argument with one of my friends who is a Trump supporter. She likes Mr. Trump because she and her husband got a tax refund after he became President. Of course, I do not know their particular circumstances, but after the Trump tax magic a couple of years ago, many people lost part of their deductions, as the state and local tax deduction got capped at $10K, but where we live SALT are low. However, many folks got mad because the first year the new tax system got implemented, not enough taxes were withheld, so instead of a tax refund, they still owed taxes. So last year, more taxes were withheld from their paychecks, so that more people could get tax refunds this year. Thus the source of her satisfaction with Mr. Trump.  

So my friend was asking me if I did not get upset that the government wastes my hard earned money and wouldn't I spend it more wisely. Then she mentioned the Social Security Fund which is under assault. I replied that the Social Security Fund was fine until the 2000 election -- that's when President Bush decided to cut Social Security taxes because President Clinton had accumulated a surplus --, but I got a feeling that she did not understand what I said because I kept the politics out of it.  

Then she said that Social Security was set up to take care of widows after their husbands died, at a time when people would live about 65 years. It is a good thing that I sometimes am a slow thinker, or I would have said "But your mother is a widow and she's very much alive and well above 65, what do you propose we do, starve her because Social Security was not meant to keep her alive this long?" Like I said, fortunately, I am not that witty a person. Anyway, I am not planning on Social Security being around when I retire, but I am planning on having enough savings accumulated to live comfortably. 

But what I should have said is that I don't really think the U.S. is that wasteful with my tax dollars. I am sure that there is some waste, but it is in no way more wasteful than other countries. Full disclosure: my first job out of graduate school was funded with U.S. taxpayer dollars and my current job in the private sector is analyzing data that the U.S. government collects around the world for the benefit of the private sector. 

Plus, Americans get a big bang for their buck. For example, although we pay less in taxes than Europeans, the U.S. implemented a policy response to the pandemic that was a lot more effective than the Eurozone. If you look at the loss in GDP so far, the U.S., in constant terms, at the end of Q2 was at the level it was in 2015; meanwhile, Eurozone GDP went back to below 2008 levels. And it's not like Europeans saved that many people from dying or do not have people going hungry.  

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