Let’s hear the direction you’d like the economy to go in, meaning do we lower taxes to grow the economy? Raise taxes? Spend less to cut off inflation? Spend more to grow the economy? What are the timing factors as you see them? Meaning we just came off a lot of monetary stimulus. Prior we came off a lot of fiscal stimulus.
What is best as fiscal and monetary policy going forward? What you prescribe how will affect the US economy?
I am not asking who is to blame for inflation or a possible recession. I am not asking if the FED needs to take the blame.
I am asking how does the US economy do better going forward?
Current interest rates are still relatively low compared to historic rates. Raise interest rates to at least match the inflation rate.
Change Social Security COLA to much more closely approximate the actual increases incurred by seniors and the disabled each year. The current COLA is based on urban workers, not seniors/disabled.
Taxes are currently too low for the upper earners (i.e. they get a paycheck).
Change taxation on the non-working wealthy because their income is primarily from investments, which are taxed at very low rates–and they are strongly protected by federal and/or state tax laws. Those tax benefits are not available to the vast majority of the public because most people do not receive an income sufficient to take advantage of them.
One possible method could be to remove all classes of income AND deductions. Call it all earned income. All business income and expenses is deemed “sent to the owners” every year–on which the owners pay income taxes every year. One tax rate established for essentially all people. This gets rid of most tax laws, accountants, lawyers, and tax prep businesses. Do your return on one page online, and done.
Suddenly, there is a lot more money going to Social Security because there is currently a lot of income that is shifted to a (Social Security) non-taxable source of revenue/income.
Initially, nothing. Recessions happen when many assets become massively over-valued relative to buyers’ incomes, which means buyers no longer have the resources to buy. The cause can be loss (or substantial reduction) of income by a wide range of potential buyers, or assets (such as houses, etc) losing their cachet within the market–thus eliminating a means to justify a significantly higher price for it. Another possibility is other costs (i.e. food, clothing, gas, transportation, and so on) have suddenly become a lot more expensive for potential buyers, thus reducing the amount of free cash that can be allocated to housing or other purchases/investments.
The only areas that “grow” in a recession are federal govt services and the programs they support. This is because the federal govt is not required to have a balanced budget, and it can thus incur more debt than income and still remain (relatively) solvent. The US federal debt was due to be “paid off” by 2010 but that was killed with the two wars (Iran, Afghanistan) and tax cuts that spent it all AND incurred additional debt as well–all during a long-term relative recession (low employment rates over an extended time period AND essentially falling incomes relative to prices).
FYI – the only people whose Social Security is non-taxable are those who don’t have any other income, such as investment income.
You did not understand the point being made.
EARNED income is taxable for Social Security purposes up to some amount ($147k for 2022). However, if that $147k income is NOT EARNED, it is not subject to Social Security taxation at any level, thus saving 12+%.
“I am asking how does the US economy do better going forward?”
I have not posted on this Board before but I follow the discussions here quite often to take decisions on my investments.
The inflation is most visible on the price of gasoline and food. Will a peace treaty between Ukraine and Russia, with necessary assurances/guarantees by the US and European countries, help to stop the rise in prices of these items by allowing free flow from Ukraine and Russia of these items? Since President Biden recently talked about Ukraine not listening to his advice before the war started, perhaps he may consider this as a possible way to control inflation and thus help the US economy.
There is no way for the west to guarantee the peace between Russia and Ukraine. We will never commit the troops to do that or the air power etc…
Ukraine has to win this war. Putin either way needs to be slaughtered by his own people or it is another war another day.
The Russian fossil fuels would not come back into western markets just because the war stopped. We are making fundamental changes in how we operate our economies west v east again. That will be long standing as China unleashed would be far worse than Russia.
If we must talk in other threads of being preemptive lets cut our ties to China. The writing is on the wall.
EARNED income is taxable for Social Security purposes up to some amount ($147k for 2022). However, if that $147k income is NOT EARNED, it is not subject to Social Security taxation at any level, thus saving 12+%.
Does it count for social security benefits? If not, why would you tax it for social security benefits???
Does it count for social security benefits? If not, why would you tax it for social security benefits???
Social Security is based on EARNED income, not passive income. Thus, only EARNED income (up to $147k) is subject to Social Security withholding. Social Security is insurance. No premiums paid (FICA) = no coverage.
There are two key missing factors.
First: Social Security was supposed to cover ~90% of the income of all workers earning income in the US economy. Currently, it only covers ~80% of all workers. Thus there are too few workers incomes covered by Social Security, particularly at the top end.
Second: The maximum income subject to Social Security is currently $147k. In order to reach the 90% level, the income subject to withholding needs to be raised to (?) $300k to maybe $350k.