Monday, May 16, 2011

Saving Social Security

There has been a lot of rhetoric lately to the effect that our Social Security system is going broke, and that benefits need to be sharply cut for future beneficiaries.

If someone were to ask me what to do, I would say raise the top level of the portion of income subject to payroll taxes.   Remember, the present  level of $106,800 was set in 1983, and if the level had been set to grow with inflation, it would now be over $250,000.  My recommendation would be to look at raising the top level beyond which social security taxes are not paid to the level set in the Reagan years, but adjusted for inflation to today's dollars, together with an ongoing commitment to raise the cap to keep pace with inflation.

Among those who wish to preserve Social Security rather than gut it, some say remove the cap entirely, others that the rate could be raised. To me the current rate of about 13%* (or the rate of about 15% that obtained until this year) seems plenty high enough, and I believe raising the cap as I propose would keep Social Security solvent for a long time, although Robert Reich is proposing a $500,00 upper limit.  I leave it to those more expert in actuarial prediction to make the calculations. 

As to eliminating the cap entirely, I oppose it for the following reason:  I believe we will need to raise income tax rates considerably to bring our national finances under control. Robert Reich has proposed income tax bracket rates that would top out at 70% for incomes over $15 million (along with lower rates for incomes below $250,000).  If those paying 70% in income taxes were also paying social security taxes, their rate would around  83%, which does seem excessive.  Yes, I know that in the Eisenhower years the top marginal rate was around 90%, but still....  And yes, I know there's little chance of Reich's proposals being enacted, but this is a blog on what I would say if asked!

* I'm including both employer and employee contribution, which is also the self-employment tax rate for the self-employed.

Monday, May 9, 2011

How To Pay For News

I've been thinking about how internet news sites could monetize their services to provide income to meet the expense of news gathering.

Paywalls are one way - monthly subscriptions,  just like print newspapers.  But what if I don't want to pay a fairly substantial annual amount for a lot of content (sports, etc) I'm not interested in?  I would prefer to pay for just those posts I really want to read.

The obvious answer is micropayments - paying a small sum, perhaps even just one or two cents per click.  I would be willing to pay for my news and commentary if it were so priced.  But what would be the billing mechanism for such small sums?

I think of how I pay to cross toll bridges here in the San Francisco area.  I buy a Fastrak for $30 with a credit card account. Every time I cross a bridge, the toll is deducted from my Fastrak balance, and when the balance gets low, my Fastrak account is automatically topped up from my credit card.

I visit  many websites in search of information.  I wouldn't want to be setting up multiple "FastrakNews" accounts, particularly when the incremental deductions from each account would be so small.  I am thinking that news and opinion websites could form a payment consortium:  I could buy website clicks ahead of time from the group operation, and for each click I made on a website, the owner of the site would be credited with the click fee, and it would be deducted from my balance.  As my balance got close to zero, my balance could be topped up from my credit card.  That way, I'd be paying only for what I wanted to read, it wouldn't be a burdensome expense, and the news organizations would be getting an income.  Perhaps not as much per reader as they would through a paywall, but with more readers, the micro payments could add up to approximate the paywall income.

Just a thought...

Update 5/2/2017

I now have a  Clipper Card - one card prepaid (and automatically refilled from my credit card) that I can use to pay for my travel on twenty different SF Bay Area transit systems. A much better analogy for an online news micropayment account with multiple participating news organizations.