Improving the Solvency of Social Security: A Proposal (at Least for a Starting Place)

It appears that at least some people have come to the realization that economics is the allocation of SCARCE resources. Given the present budget deficit and the potential for the Social Security "Trust" Fund to go broke in the next 30 years, I propose the following: [1] Raising the base for payment of Social Security taxes to $200,000 (base adjusted for inflation starting 2013); [2] Raising the age to collect "full" benefits as follows: increase one month for those born 1952-54; two months 1955-57; three months 1958-60 (disclosure: I was born during one of these periods) until 24 months around 2021 for age 70); [3] raise age for "reduced" benefits as follows: one month if born 1981-84, two months if born 1985-88, etc. to twelve months (new age 63) if born 2025 or after; [4] eliminate the token death benefit to reduce administrative costs; [5] while 40 covered quarters still qualifies for benefits, raise the required covered quarters for minimum benefits to 80 covered quarters.

This may not be sufficient and I'm sure that some will be unhappy with a facet or facets of the proposal. I wish I had similar proposals for Medicare and Medicaid, but simply do not know medical costs well enough to comment.

CPAs in Congress? Who Knew?

Brad Sherman (D-CA) and Michael Conaway (R-TX) announced the founding of the Bipartisan Congressional CPA Caucus in the US House of Representatives. Sherman and Conaway will co-chair the caucus, which also includes five other Republicans (three of whom are newbees) and Democrat Collin Peterson of Minnesota (wow, at least eight CPAs in Congress). The caucus, which will be informal, will attempt to discuss and promote a CPA perspective on tax administration, accounting and auditing standards and budget issues.

I congratulate and commend the CPA caucus and hope that they can influence both parties towards fairer tax administration, balanced accounting standard-setting and more reasonable spending budgets.

Businesses looking at a higher base to pay unemployment taxes on--I think

The Obama administration has proposed new rules that will subject employers to paying state unemployment taxes on the first $16,000 of earnings per employee per year. The standard amount per employee per state at present is $7,000, although an increasing number of states have gone to a higher base in the last few years to deal with high claims for unemployment insurance as well as state budget deficits. The plan does defer certain interest on state borrowings from the Federal Government on unemployment benefits until 2014 and an increase in the Federal unemployment tax rate until the end of next year.

Do not be surprised to see not only an adjustment in salary subject to unemployment taxes but a proposal to increase the maximum amount of salary subject to the old age (6.2%) portion of FICA. Conventional political wisdom is that expanding the tax base tends to be less controversial than increasing the tax rate.

Timidly returning the toes to the blogging waters

While not SURE that I am fully ready to return, I am ready to come back on a limited basis. Expected about one substantative post per week between now and May 10, with some weeks getting two or even three while others get none. With this being tax season, I will probably do mostly tax blogging, but definitely some of the posts will be of an accounting/auditing nature. Who knows, there might even be a personal finance post or (considerably less likely) two.