Three hot off the presses money issues about millionaires, Social Security and Medicare
By Dian Vujovich
Three just got’em today reports show that times sure are a changin’ when it comes to the number of millionaires roaming around and the status of Medicare and Social Security.
Let’s start with the good, but not so current, news about millionaires.
It was The Tax Reform Act of 1976 that required the IRS to begin publishing the number of individual tax returns with incomes over $200,000. Mind you, 200,000 dollars was a lot of hay back then but doesn’t have the cache in once did. Even so, over the past nearly 40 years it’s still the threshold used.
Oh well, go figure. And figuring is something these federal employees really seem to relish in.
Not only do they count the number of tax returns with incomes over that amount, they also futz with the numbers and come up with other tables based upon that 200,000 threshold. Like tables, charts and figures showing the number of individuals with long-term capital gains income, nontaxable incomes, etc., etc.,etc.
If you’ve ever thought that getting a simple straight answer about how many millionaires there are in America is an easy figure to come by, please read through the just released 2013 issue of the Statistics of Income Bulletin published by the IRS. You will find it at: http://cmgpbdnpalmbeachmoney.files.wordpress.com/2013/05/13insprbulhignincome.pdf
You will also find that the figures reported are not of those relating to 2012 or 2011, but 2010.
To cut to the chase, and keep things as simple as possible, according the data in the spring report, in 2010 there were about 4.3 million people who had adjusted gross incomes of $200,000 or more. That’s about 3 percent of all filers.
Not to worry though: When the 2013 figures come out three years from now, I’m sure there will be many more millionaires in the report.
Something to worry about, however, is the status of two terrific U.S. programs: Social Security and Medicare.
This afternoon, (5/31/13), TheHill.com reported that in 13 short years—as in by 2026—Medicare will become insolvent. And another seven years after that, in 2033, Social Security won’t be able to pay full benefits to retirees. They’ll only be able to get three-quarters of their benefits.
Well, that’s ugly. But both are totally fixable. In one case the fix is challenging. In the other, a relative no-brainer.
If given a chance to work, provided it had the support of all 50 states, Obamacare could make a positive dent in the insanely high costs of our current Medicare cost mess.
To do so would require a Congress and every state in the Union to take up what too may consider the dreaded C-word: Cooperation. And that’s where the challenge to fixing Medicare begins and ends.
As for Social Security’s no-brainer fix: Take away the SS payroll tax cap altogether and reports show that 70 to 80 percent of the insolvency problem would be eliminated. Currently, an individual doesn’t have to pay any more Social Security tax in one given year once their income is over $113,700. The rest of the shortfall could be made up in the markets.
And when you think about it, it makes no logical sense that only those earning $113,700 or less are required to pay into the Social Security coffers when everyone–no matter if they make $30,000 a year or $300 million—may collect a monthly check later in life provided they meet certain requirements.
To read more articles, please visit the column archive.