Doug wrote:
>>For one thing, lifting the $87k wage cap on social security tax and
>>treating stock options as taxable wages would go a really long way in
>>"saving" social security.
>>
>>
>>
>I never checked this out myself, but someone (reliable) told me that
>during the initial Congressional debate over SS it was made very
>explicit that the system should be funded by taxes on labor, not
>capital - thus the salary cap and the exemptions of nonwage income.
>
>
>
exercised options received as compensation ARE income not capital. in
part, much of the heightened scrutiny of unrecognized corporate
expenses post-enron is focused on declaring & valuing these exec perks.
also, whatever the history of the debate in congress on SS, there is no reason not to consider raising the cap from $87. of course the major issue would be how liability would then be adjusted (e.g. "if i pay SS on $1MM per year income shouldn't i be entitled to a larger post-retirement benefit?") thus, this kind of solution would provide a short term push in funding but would likely compound the long term obligation of the fund.
alternatively (and bemusedly), i've often thought of trying to build a grass roots movement for total elimination of income taxes and replacing it with a severe inheritance tax (with no gifting loopholes). basically every estate would be taxed at 99.9999% of assets greater than say $1MM. this would force the proponents of the theory that the US is a meritocracy to put up or shut up - the self-made millionaire would truly enjoy the fruits of his/her labor and the lazy-ass sons/daughters of the leisure class would be forced to scratch for a living like the rest of us. a pure inheritance tax funding system would also have the added "benefit" of quick fixes for deficit situations: whenever the budget became unbalanced the bill gateses and warren buffetts of the world would mysteriously meet a tragic end....
michael catolico