Author Topic: Social Insecurity and New Parents  (Read 3829 times)

Slee_stack

  • Pencil Stache
  • ****
  • Posts: 813
Social Insecurity and New Parents
« on: August 01, 2018, 12:11:37 PM »
An opinion piece on USAToday of the Economic Security for New Parents Act:  https://www.usatoday.com/story/opinion/2018/08/01/family-parental-leave-working-parents-social-security-marco-rubio-column/871099002/

Does anybody have strong opinions one way or another?

On the surface, I tend to be for this.  I always prefer flexibility if given an option.   

At the same time, I wonder if people could get into trouble by not realizing the long term effect that taking benefits early might have.

As an aside...I'm not a parent.

lbmustache

  • Pencil Stache
  • ****
  • Posts: 935
Re: Social Insecurity and New Parents
« Reply #1 on: August 01, 2018, 12:32:06 PM »
Color me skeptical. I'm curious to hear others thoughts on this. So instead of making corporate paid family leave a thing (where would those poor corporations find find the money after that huge tax cut!), I'm just paying for my child with... essentially my own money.

On the other hand, maybe it's better to pull some of that money out now, rather than later, with the way things are going...

Kay-Ell

  • Stubble
  • **
  • Posts: 104
  • Semi-retired in 2017
Re: Social Insecurity and New Parents
« Reply #2 on: August 01, 2018, 12:38:33 PM »
Itís an interesting and idea, thatís for sure. Iíd be skeptical of how this would effect Social Security which is already under funded. But if it could be structured, as they claim, in a way that only effected the retirement age of the people utilizing the program, and only then by months or possibly one year, I think it has a lot of merit. Iíd like to see some base level participation requirements for the parents so that they really have contributed before receiving benefits. Iíd also like to see a limit placed on how many times benefits could be used over a life time, as I donít think itís reasonable for someone with 8 kids to assume delaying retirement for 8 years is a viable plan.

mozar

  • Magnum Stache
  • ******
  • Posts: 2759
Re: Social Insecurity and New Parents
« Reply #3 on: August 01, 2018, 12:49:55 PM »
I don't like that idea at all. The reality is that most people take social security as soon as possible and penalizing your future self is the opposite of a good idea. There are so many better ideas, like having the employer contribute to a fund. I also wonder why people can't access their own disability funds. People are already required to pay into SSDI you should be able to access it. Unless you become disabled you pay that money and you are never allowed to see it again.

chemistk

  • Bristles
  • ***
  • Posts: 265
Re: Social Insecurity and New Parents
« Reply #4 on: August 02, 2018, 05:21:13 AM »
I'm torn. I want to be skeptical about this, but I just can't.

In principle, I like it. It (mostly) shifts the responsibility of parental leave from society to the individual. Personal accountability and all that.

My employer rolled out a Parental Leave policy a few months before my second son was born, which included benefits for dads too (yay!). It was the best few weeks of time off they could have given me - especially for my wife's sake. After our first son, she was miserable (and likely suffering from then undiagnosed PPD) being at home alone most of the time with the newborn, not knowing what to do or having anyone to lean on. Our second was a completely different story. So, I am a massive fan of any Parental Leave policy.

But in practice, this just puts more pressure on a system that we all already know is overcapacity. From what I can tell, your delayed retirement would be equal to the value and not the time you receive. So, If I have this right, if you take 10 weeks off under this policy, and your expected SS benefit at first year of eligibility is 70% of today's benefit, then you'll be delaying retirement by 13 weeks.

I guess a few months doesn't sound all that bad, but what do those who need this the most know about retirement? Probably nothing, or they believe it is a pipe dream.

J Boogie

  • Pencil Stache
  • ****
  • Posts: 676
Re: Social Insecurity and New Parents
« Reply #5 on: August 02, 2018, 08:17:30 AM »
This is a good idea and I am in favor of it.

Forcing employers to do treat their employees really well is never the answer in my opinion. Why? Well, it works great for everyone who is a FT employee for a large company. But it doesn't work great for temps, contractors, and small business employees. It doesn't work great for the self employed. It leaves them high and dry while everyone else pats themselves on the back for being part of such a great system.

What's 3-6 months tacked on to the end of 62 or more years? Those 3-6 months post childbirth are a pivotal moment in life, while the 3-6 months continuing to work while waiting to take SS are relatively insignificant.









sneeds

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Social Insecurity and New Parents
« Reply #6 on: August 02, 2018, 12:34:18 PM »
I don't see any reason why people should have to pull from their future social security benefits to fund their parental leave. In California and other states, paid family leave is paid for through the state's short term disability fund. Employers do not pay for it. It is entirely funded by employees. As a worker, a portion of your taxes from your paycheck are already going toward short term disability insurance (SDI) anyway, whether you ever use it or not. With paid family leave, you can access short term disability benefits for up to six weeks to care for a seriously ill family member or to bond with a new child. It seems to work well in the states that have implemented this approach. Why not just make it a nation-wide policy?

J Boogie

  • Pencil Stache
  • ****
  • Posts: 676
Re: Social Insecurity and New Parents
« Reply #7 on: August 02, 2018, 01:01:47 PM »
I don't see any reason why people should have to pull from their future social security benefits to fund their parental leave. In California and other states, paid family leave is paid for through the state's short term disability fund. Employers do not pay for it. It is entirely funded by employees. As a worker, a portion of your taxes from your paycheck are already going toward short term disability insurance (SDI) anyway, whether you ever use it or not. With paid family leave, you can access short term disability benefits for up to six weeks to care for a seriously ill family member or to bond with a new child. It seems to work well in the states that have implemented this approach. Why not just make it a nation-wide policy?

Based on the fact that this only exists in 4 states, I would imagine there might not be enough support for a nation-wide policy.

I'll go further and argue that using the disability fund is inappropriate.  Relative to injury or illness, parenthood is often a choice, one that you are able to prepare for.  I'm happy to have less of my paycheck so that those who become sick or injured don't have deal with as harsh of a financial hardship. I'm happy also because that might be me or my loved ones at some point, so it gives me peace of mind. I don't see the justification, especially under this umbrella, for someone who chooses to have children.

I think it might make sense for the govt to financially incentivize having children if they are in a Japan like demographic crisis, but otherwise they should just let citizens do what they choose to do and like Rubio proposes give them the option to tap their social security early for special situations like this.

therethere

  • Pencil Stache
  • ****
  • Posts: 552
Re: Social Insecurity and New Parents
« Reply #8 on: August 02, 2018, 01:27:21 PM »
I'm happy people are finally thinking outside the box how to pay for these things. But I don't think this is the answer. People who can't think up to save some money for their 12 weeks off after having a kid are definitely not saving enough (if anything) for retirement. You'll just have to bail them out again later on in life when they realized they screwed themselves. Make up a new fund that people who want kids can pay into or something.

Having kids is a choice. And well, if you didn't think about how you were going to pay for that ahead of time.. I'd support paid or unpaid sabbatical leave that you could use as paternity/maternity leave but that's about it. Anything directly labeled as subsidized maternity/paternity leave only, and not expanded at minimum to family leave, is too one sided in my opinion.
« Last Edit: August 02, 2018, 01:29:56 PM by therethere »

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Social Insecurity and New Parents
« Reply #9 on: August 02, 2018, 01:59:50 PM »
Do not want. I suspect this was designed as a clever form of welfare for businesses that could save even more money by giving up family leave policies.

If this became law, companies would then be free to cancel family leave policies without the same backlash as if they canceled those policies today. This option would effectively be fooling workers to accept a pay cut as a benefit, and accept that it's reasonable that family leave is so horrible in the US.

It deftly sweeps an overdue cultural reckoning neatly under the rug.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Social Insecurity and New Parents
« Reply #10 on: August 02, 2018, 02:17:44 PM »
Similiar to the Canadian system. We get a year off, funded through the Employment Insurance (unemployment) program. 37 weeks can be used by the father or mother. If used by non primary care giver (typically the father) it reduces retirement benefits, essentially the same as the American proposal!

"Child-Rearing Provision
If you stopped working or received lower earnings to raise your children, you may be able to use the "child-rearing provision" to increase your CPP benefits.

Caring for young children can mean leaving the work force or working fewer hours. If your earnings stopped or were lower because you were the primary caregiver raising your children under the age of seven, you can request the child-rearing provision.

If you are deemed eligible, the child-rearing period will be excluded from the contributory period when calculating your CPP benefit amount, ensuring that you get the highest possible payment.

Notes: Primary caregiver
For the CPP, the primary caregiver is the person who was most responsible for the day-to-day needs of the children for the specified periods."

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Social Insecurity and New Parents
« Reply #11 on: August 02, 2018, 02:33:56 PM »
If I understand correctly, the Canadian system has no loss for the primary caregiver, and the American proposal does.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Social Insecurity and New Parents
« Reply #12 on: August 03, 2018, 09:54:39 AM »
If I understand correctly, the Canadian system has no loss for the primary caregiver, and the American proposal does.
Correct, the Child Rearing Provisions allows up to 7 years to be ignored for raising children (we calculate CPP on the contributions over 40 years, like SS but more obscure). It closes the Wage Gap in retirement, ask any feminist and they'll whip out graphs showing that women historically receive lower retirement benefits, a major component is the time spent raising children.

The American system is starting out where ours was many years ago. The system has evolved, it didn't start with all the bells and whistles. The largest hurdle is getting started, achieving perfection from the start is impossible. I think its better then the current mess you have, if you follow Canada it will also get better with time.

The system is funded through a payroll deduction (EI, which also funds lay offs for workers to look for new work) to share the costs between large and small companies. It has a hard cap on how much you can receive (income over $46k is ignored) and replaces 55% of your income below the cap (with several nuances), its heavily geared towards low income earners and limits the costs. Its done through EI,Canadians recognize that its better for society if mothers (and fathers) bond with children. It takes the long term view that families are important to society, we'll find out with future generations if we have a more cohesive society then America.

America/Canada are perfect case studies for each other. Our TFSA was brought in because your Roth IRA was so effective, thank you for that one. We constantly take the best policies from y'all, you should try it. I'm pointing out that in the debate you can easily look across the border to see what happened and you don't need to speculate, make your choice based upon how its working out here (yay or nay). Our societies aren't that much different, we're just better looking ;)

Mississippi Mudstache

  • Handlebar Stache
  • *****
  • Posts: 1765
  • Age: 34
  • Location: Danielsville, GA
    • A Riving Home - Ramblings of a Recusant Woodworker
Re: Social Insecurity and New Parents
« Reply #13 on: August 03, 2018, 10:37:13 AM »
100% in favor of this idea, or any idea that provides for paid parental leave. It is not designed as I would design it, but it would be better than our current situation.

I say that as a parent expecting a child literally any day now. In addition to my wife not getting paid for the 12 weeks that she's taking off, we're also having to fork over an extra $1000 bucks a month to keep our health benefits during the interlude. We can afford it, but it's a terrible screw-over for people in less fortunate circumstances. The money would be far more meaningful to us now than it will be when we're in our 60s.
« Last Edit: August 03, 2018, 10:49:00 AM by Mississippi Mudstache »

fuzzy math

  • Pencil Stache
  • ****
  • Posts: 586
  • Location: PNW ---> Midwest (for now)
Re: Social Insecurity and New Parents
« Reply #14 on: August 04, 2018, 08:39:18 AM »
I'm happy people are finally thinking outside the box how to pay for these things. But I don't think this is the answer. People who can't think up to save some money for their 12 weeks off after having a kid are definitely not saving enough (if anything) for retirement. You'll just have to bail them out again later on in life when they realized they screwed themselves. Make up a new fund that people who want kids can pay into or something.

Having kids is a choice. And well, if you didn't think about how you were going to pay for that ahead of time.. I'd support paid or unpaid sabbatical leave that you could use as paternity/maternity leave but that's about it. Anything directly labeled as subsidized maternity/paternity leave only, and not expanded at minimum to family leave, is too one sided in my opinion.

There is already unpaid / paid (if you have the leave balances) generalized medical leave. It's called FMLA. It's not adequate for a ton of people and not accessible for others. I had my kids when I worked for a company with < 50 ppl. Guess what? No FMLA for me! I always used my paid sick leave and vacation time so I was never lacking for a paycheck, but I was also expected to go back to work when my time ran out around 6 weeks. Part of what FMLA does is assure your job. To a person who lacks the $$ but has access to FMLA, taking 12 weeks unpaid is pretty much impossible.

It's naive to state that if people can't afford their leave when they're young, that they are doomed to be leeches later in life. When I was 25 and had my first kid I still had student loans and credit card debt. Now I'm on track to FIRE by 45.

I'm not sure why so many child free people here hate on people who have children. They are the future who will grow up to be your health care providers (bank managers, lawn service people, grocery store clerks etc) when you're old, and pay the tax basis for the social security and Medicare benefits you will one day receive. I'm also not sure why so many people here have to hate on how other people will use their earned benefits. Social security is an earned benefit. If I wanna waste my money when I'm 80 on gambling and chippendales, no one is going to stop me. So why hate on a young couple using the benefit for what is going to be financially accounted for later for them?

teen persuasion

  • Handlebar Stache
  • *****
  • Posts: 1038
Re: Social Insecurity and New Parents
« Reply #15 on: August 04, 2018, 09:19:23 AM »
I don't see any reason why people should have to pull from their future social security benefits to fund their parental leave. In California and other states, paid family leave is paid for through the state's short term disability fund. Employers do not pay for it. It is entirely funded by employees. As a worker, a portion of your taxes from your paycheck are already going toward short term disability insurance (SDI) anyway, whether you ever use it or not. With paid family leave, you can access short term disability benefits for up to six weeks to care for a seriously ill family member or to bond with a new child. It seems to work well in the states that have implemented this approach. Why not just make it a nation-wide policy?

NY is rolling out a paid Family Leave program, and so far it looks good to me.  It's not dependent on employers - yay, because I work for a very small place and have zero other benefits due to cost.  This is funded thru payroll deductions, and its a rounding error in magnitude, roughly a buck per biweekly paycheck for me.  It's not just for maternity leave, it's for any family issue (me, spouse, kids, parents, etc.) and I recently heard something about funeral/bereavement leave being added.  It's ramping up over a few years, but I believe it's up to 8 weeks right now and climbs gradually up to 12 weeks in the next 2 years.  It coordinates with federal Family Leave, so there's the important job protection clause.

As long as the federal government shirks it's duty in this area, the states have to (and are beginning to) step up to fill the gap, one by one.  Hopefully more states will follow their lead, and/or eventually the federal government will craft a plan based on the best state plans.

As far as the Rubio plan - I'd prefer the NY plan where I pay in as I go, rather than borrow from my future benefits.  The NY plan also seems more broad than Rubio's maternity/paternity leave only plan, assuming the article accurately described the whole proposal.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Social Insecurity and New Parents
« Reply #16 on: August 04, 2018, 10:57:03 AM »
If I understand correctly, the Canadian system has no loss for the primary caregiver, and the American proposal does.
The American system is starting out where ours was many years ago. The system has evolved, it didn't start with all the bells and whistles. The largest hurdle is getting started, achieving perfection from the start is impossible. I think its better then the current mess you have, if you follow Canada it will also get better with time.

I get what you're saying. You may be right. But I'm less confident about incremental improvement. Incremental improvement sometimes cements weird or terrible decisions long-term, or just gets reversed every 4-8 years. Healthcare here is for rich people, and the incremental improvement got a hatchet job instead of continued improvement. Now rates and access to care are back to awful, and there's even less political will to do anything about it.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #17 on: August 04, 2018, 11:14:52 AM »
People who have kids need to plan ahead and fund things for themselves, not rely on other taxpayers, and this should not come out of SS coffers based on future benefits, either.   As a single person with no kids, I'm already paying MUCH higher taxes to subsidize families because they get big tax breaks, plus I'm paying high property taxes which mostly go towards the schools and parks, which families use, not me.  The average family of four in my area pays less property tax than me.  So, I'm not in favor of any additional funding for maternity / parental leave that comes from other workers, taxpayers, or employers.
« Last Edit: August 04, 2018, 11:26:24 AM by DreamFIRE »

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #18 on: August 04, 2018, 11:17:40 AM »
In addition to being unpaid, FLMA has this weird hole where you need to have worked for an employer for 12 months before you're eligible for unpaid leave for having a child. So if you have an unexpected accident/pleasant surprise in the first couple of months after switching employers, a woman may not be eligible for any time off (payed or unpaid) at all when delivering a child.

Anyway the proposal seems reasonable. I like that it treats new fathers and mothers evenhandedly, and that the benefit would still accessible to families where only one person works to begin with. I don't have strong feelings either way on whether the money comes from raising the retirement ages slightly for the parents of the new child, or from slightly raising payroll taxes/slightly raising retirement ages/slightly cutting benefits across the whole SS program. If the former makes it easier to pass than the latter, then then go for it.

Much Fishing to Do

  • Bristles
  • ***
  • Posts: 350
Re: Social Insecurity and New Parents
« Reply #19 on: August 04, 2018, 11:20:56 AM »
I like the idea, but given its more of a voluntary thing than something like disability I don't see the reason to limit it just to someone who just had a child.  Maybe everyone could have up to 12-24 months of this available (after they have in a certain minimum amount of credits) over the course of their lifetime to use at whatever time they decide they want to (govt sabbatical pay....) .  I'm sure there would be a lot of complexities in figuring out the cost of the cash flow though.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #20 on: August 04, 2018, 11:23:49 AM »
I'm not sure why so many child free people here hate on people who have children.

How much of this is people on the MMM forums in general and how much is specifically DreamFire?

I don't hang out in a lot of the childrearing threads/discussions so there may well be a strong undercurrent of this that I don't see, but I've also noticed in various online forums and dicussions that a single person repeating the same idea over and over again can start to feel like a crowd, especially since I don't always check user account names when reading through a thread.

Regardless, as someone who doesn't have kids and seems less and less likely to have the chance to, I do appreciate that you and all the other folks who put so much time, energy, and money into raising the next generation that'll keep civilization running.


DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #21 on: August 04, 2018, 11:41:19 AM »
I'm not sure why so many child free people here hate on people who have children.

How much of this is people on the MMM forums in general and how much is specifically DreamFire?

I don't hate them.  I merely point out that I'm subsidizing them.  I don't mind doing some of that, as I've mentioned before, but it's excessive.  I've provided some relevant math in some previous threads.

Plenty of people prefer not to have kids and don't regret not having them, but it doesn't mean they hate them or the parents.
https://forum.mrmoneymustache.com/welcome-to-the-forum/older-childless-mustachians-what-do-you-regret/

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Social Insecurity and New Parents
« Reply #22 on: August 04, 2018, 12:14:28 PM »
That term "subsidizing" is a little... ugly? Incomplete?

You pay taxes to support your society because it's better for the whole society, which is the sum of all the kids people had over time, not just "what's happening today."

You "subsidize" because you were subsidized - you didn't agree to it, got to enjoy it anyway, and on to the next round.

No one was born in a log cabin they built themselves.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #23 on: August 04, 2018, 01:28:27 PM »
That term "subsidizing" is a little... ugly? Incomplete?

I would call it appropriate, and accurate, as the math shows.  As far as being incomplete, I have expanded on this in length in some of the previous threads on the topic.

Quote
You pay taxes to support your society because it's better for the whole society, which is the sum of all the kids people had over time, not just "what's happening today."

You "subsidize" because you were subsidized - you didn't agree to it, got to enjoy it anyway, and on to the next round.

No one was born in a log cabin they built themselves.

Nice spin, but that totally misses the point I was making, that single people are being burdened with an unfair amount of the tax burden, and then it makes it even worse when you factor in that a single person uses far LESS public resources than a family of four.  For a household income of $70K/yr, I showed using a 2018 tax calculator that the federal income tax paid per household member was approximately 30X higher for the single person.  Feel free to run the numbers yourself if you don't believe me.  Property tax is just more salt on the wound that pays mostly for schools and parks.  Taxpayer funded maternity leave I've heard people advocate for is just piling on.  Having kids shouldn't get you out of paying your fair share of taxes or for paying to support your own kids that you chose to have.

Again, I don't hate parents or kids, but I think there should be more fairness in the tax system and for people taking responsibility for their own kids.
« Last Edit: August 04, 2018, 01:34:32 PM by DreamFIRE »

fuzzy math

  • Pencil Stache
  • ****
  • Posts: 586
  • Location: PNW ---> Midwest (for now)
Re: Social Insecurity and New Parents
« Reply #24 on: August 04, 2018, 01:42:16 PM »
In addition to being unpaid, FLMA ... (cut)

FMLA is not inherently unpaid, if you have sick time or PTO you are allowed to use it.


Sent from my iPhone using Tapatalk

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #25 on: August 04, 2018, 01:50:58 PM »
The law only requires unpaid leave. Employers can elect to allow employees to (or require them to) use accumulated paid leave/sick leave if the employer offers either of those benefits.

Since it's "elect" presumably an employer is not under a legal obligation to do so, no? But this is not my area of expertise.

golden1

  • Handlebar Stache
  • *****
  • Posts: 1521
  • Location: MA
Re: Social Insecurity and New Parents
« Reply #26 on: August 04, 2018, 02:55:13 PM »
I donít love it, but it isnít a terrible idea psychologically in the sense that people who donít have children wonít be resentful of those that do, which I see all the time in my workplace.

Itís too bad that people canít be less petty and realize that people having children is good for everyone in the long run.  I feel like having children used to be more of a community responsibility and now is considered an individual choice.  Childless folks get the indirect benefits of those who do have kids and increasingly want to opt out of any responsibility. 

fuzzy math

  • Pencil Stache
  • ****
  • Posts: 586
  • Location: PNW ---> Midwest (for now)
Re: Social Insecurity and New Parents
« Reply #27 on: August 04, 2018, 06:11:16 PM »
People who have kids need to plan ahead and fund things for themselves, not rely on other taxpayers, and this should not come out of SS coffers based on future benefits, either.   As a single person with no kids, I'm already paying MUCH higher taxes to subsidize families because they get big tax breaks, plus I'm paying high property taxes which mostly go towards the schools and parks, which families use, not me.  The average family of four in my area pays less property tax than me.  So, I'm not in favor of any additional funding for maternity / parental leave that comes from other workers, taxpayers, or employers.

Single people need to plan ahead and get married so they won't spend their entire life whining about relative tax burdens.

fuzzy math

  • Pencil Stache
  • ****
  • Posts: 586
  • Location: PNW ---> Midwest (for now)
Re: Social Insecurity and New Parents
« Reply #28 on: August 04, 2018, 06:14:22 PM »
I'm not sure why so many child free people here hate on people who have children.

How much of this is people on the MMM forums in general and how much is specifically DreamFire?



therethere and J Boogie were doing a decent job before DreamFire showed up!!

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Social Insecurity and New Parents
« Reply #29 on: August 04, 2018, 10:00:47 PM »
Nice spin, but that totally misses the point I was making, that single people are being burdened with an unfair amount of the tax burden, and then it makes it even worse when you factor in that a single person uses far LESS public resources than a family of four.  For a household income of $70K/yr, I showed using a 2018 tax calculator that the federal income tax paid per household member was approximately 30X higher for the single person.

A family of four, with two children, has a low per-person-level of taxes paid? /pokerface

There's work to maintain a society. It includes children. You're not doing any of it, so you don't get the tax breaks. The calculation you're doing reveals a big scale because having kids in our society is very expensive - the "unfair amount" is not a point I missed, it's a point I disagreed with. Could the scale be smaller? I don't know, maybe - I wouldn't vote for it. Parenting is hard, single parenting is extremely hard, and I have no problem not getting big tax breaks for my no kids.

Have you calculated how much you pay in road maintenance? You could have a formula for how far anyone is allowed to drive (unfortunately, we're going to get rid of all the roads in, say, Montana, because those deadbeats don't pay anywhere near enough for those long, empty roads). Let's scrap any federal assistance - doesn't make sense for New York and California to pay for something in Mississippi. Doctors? I haven't gone to a doctor lately - med school subsidies will have to go. Disability is -out-. Someone inclined to do your math backwards may also point out we should double tax breaks for single parents, so they don't pay an unfair share compared to those takers in the two-earner households...

Wait, hmmm...

jpdx

  • Stubble
  • **
  • Posts: 193
Re: Social Insecurity and New Parents
« Reply #30 on: August 05, 2018, 12:06:47 AM »
The US needs a national paid parental leave and universal preschool, but the Rubio proposal is just bad policy. Unlike readers of this forum, most Americans do not save sufficiently for retirement. This proposal would only exacerbate the retirement crisis.

On the other hand, our social security and medicare programs transfer a huge amount of wealth from the young to the old. In an ideal society, you'd do the opposite and invest in the future generations.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Social Insecurity and New Parents
« Reply #31 on: August 05, 2018, 01:38:43 AM »
A national 401k would alleviate a lot of this stuff. Unfortunately, the financial lobby is hard against it. We don't have healthcare solutions that don't threaten businesses, and we don't have retirement solutions that don't threaten businesses. It's awfully hard to do something politically right now that can get painted as "anti-business" even if it's "pro-little-guy."

IIRC, California tried to do a state 401k system without the likes of the Edward Joneses, which is obviously really bad for the Edward Joneses, and it failed. That's the danger of "incremental improvement" I'm afraid of, really.

I'm more optimistic, though, for the next 10 years, because Schwab and Fidelity have been working on competing with Vanguard, so a better answer for a more comprehensive 401k system doesn't seem impossible. Just a little more down the road, if the fiduciary rules survive, we could eventually wind up with something like a reasonable 401k system, but Rubio's proposal for parents walks us a step away from a really good parental leave/retirement policy.

If only there were a Vanguard in the cable/internet arena!
« Last Edit: August 05, 2018, 01:40:22 AM by Hargrove »

Adam Zapple

  • Stubble
  • **
  • Posts: 246
Re: Social Insecurity and New Parents
« Reply #32 on: August 05, 2018, 05:14:19 AM »
Do not want. I suspect this was designed as a clever form of welfare for businesses that could save even more money by giving up family leave policies.

If this became law, companies would then be free to cancel family leave policies without the same backlash as if they canceled those policies today. This option would effectively be fooling workers to accept a pay cut as a benefit, and accept that it's reasonable that family leave is so horrible in the US.

It deftly sweeps an overdue cultural reckoning neatly under the rug.

This is a great point that I did not think of.  Like any law, the devil is in the details, and without protections against this type of practice by employers, this is absolutely what will happen.  Also important is the "penalty" associated with using your SS benefit early.  My guess is this is a way to cut SS benefits incrementally, which is probably needed (in combination with increased contributions from somewhere) to shore up SS anyway.

mm1970

  • Walrus Stache
  • *******
  • Posts: 5799
Re: Social Insecurity and New Parents
« Reply #33 on: August 05, 2018, 05:26:54 PM »
That term "subsidizing" is a little... ugly? Incomplete?

I would call it appropriate, and accurate, as the math shows.  As far as being incomplete, I have expanded on this in length in some of the previous threads on the topic.

Quote
You pay taxes to support your society because it's better for the whole society, which is the sum of all the kids people had over time, not just "what's happening today."

You "subsidize" because you were subsidized - you didn't agree to it, got to enjoy it anyway, and on to the next round.

No one was born in a log cabin they built themselves.

Nice spin, but that totally misses the point I was making, that single people are being burdened with an unfair amount of the tax burden, and then it makes it even worse when you factor in that a single person uses far LESS public resources than a family of four.  For a household income of $70K/yr, I showed using a 2018 tax calculator that the federal income tax paid per household member was approximately 30X higher for the single person.  Feel free to run the numbers yourself if you don't believe me.  Property tax is just more salt on the wound that pays mostly for schools and parks.  Taxpayer funded maternity leave I've heard people advocate for is just piling on.  Having kids shouldn't get you out of paying your fair share of taxes or for paying to support your own kids that you chose to have.

Again, I don't hate parents or kids, but I think there should be more fairness in the tax system and for people taking responsibility for their own kids.

Sigh, I used to be you.

1.  People with children were single once too.  And they paid more taxes when they were single.
2.  You are repaying society, in some respect, for your own childhood.  I had a friend of mine talk about how she should get a break on her prop taxes for not having children, and I laughed!  a. you went to the school in my neighborhood - you are repaying society for your own education and b. you already get a prop 13 discount.  (I didn't even have to get INTO the fact that it's good for society.  Which.  Duh.)
3.  OMFG people pay to raise their own fucking kids.  Do you want me to do the math for you?  While you are off in your $70k land enjoying what's left after taxes, let me tell ya about daycare, after school care, braces, summer camp, diapers, clothing, health insurance...and the list goes on.
4.  You are NOT doing your fair share by not having children.  This economy of ours thrives on having more people working more and paying more taxes.  How ya gonna collect social security if there aren't any workers to pay it?  You aren't. 

Anyway, our total federal tax bill last year was...hell, I dunno, $50k?  suck it.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #34 on: August 05, 2018, 06:00:49 PM »
Single people need to plan ahead and get married so they won't spend their entire life whining about relative tax burdens.

Or better yet, the government shouldn't be dictating choices by rewarding some and penalizing others.

There are some other things I would prefer to spend my money on, but instead of a tax break, I actually just end up paying even more taxes!

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #35 on: August 05, 2018, 06:04:42 PM »
I donít love it, but it isnít a terrible idea psychologically in the sense that people who donít have children wonít be resentful of those that do, which I see all the time in my workplace.

Yes, it's pretty common for other reasons than the unfair taxation on those that don't have kids (and never will).  Personally, I don't feel resentful or hate to them at all, I just don't think those of us with no kids should have to subsidize them.  That's the difference.

Quote
Itís too bad that people canít be less petty and realize that people having children is good for everyone in the long run.  I feel like having children used to be more of a community responsibility and now is considered an individual choice.  Childless folks get the indirect benefits of those who do have kids and increasingly want to opt out of any responsibility.

It definitely is an individual's choice to have children, and if I wanted that responsibility I would have opted into it by having kids.  I have plenty of expenses unrelated to having kids, but I'm not asking anyone to subsidize those costs.

Paul der Krake

  • Magnum Stache
  • ******
  • Posts: 4311
  • Age: 10
  • Location: USA
Re: Social Insecurity and New Parents
« Reply #36 on: August 05, 2018, 06:06:45 PM »
DreamFIRE: seriously, quit whining and get a hobby. Federal government spending per capita is already above your federal tax burden. Your income isn't high enough to complain about subsidizing others, in terms of usefulness to the republic you're probably just in the the neutral zone, maybe a smidge above.

There are people on these boards who pay more in federal taxes than you earn, yet we don't hear them complain about subsidizing the rest of us who chose to be underachievers.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #37 on: August 05, 2018, 06:23:55 PM »
Nice spin, but that totally misses the point I was making, that single people are being burdened with an unfair amount of the tax burden, and then it makes it even worse when you factor in that a single person uses far LESS public resources than a family of four.  For a household income of $70K/yr, I showed using a 2018 tax calculator that the federal income tax paid per household member was approximately 30X higher for the single person.

A family of four, with two children, has a low per-person-level of taxes paid? /pokerface


Yes, the single woman with no kids pays over 30X as much per household member.  I have posted the math elsewhere.

Quote
You're not doing any of it, so you don't get the tax breaks.

By not getting a tax break, it means I'm paying a lot more (such as the >30X amount in the example), therefore highly subsidizing others.  I have no argument that raising kids is expensive, but having kids is a choice, and if someone can't afford to raise their kids at their own cost, or at least pay their fair share of taxes, they shouldn't be having them.

Just because someone makes choices that are expensive shouldn't entitle them to bailouts by other taxpayers.  There are plenty of expensive things I could spend my money on, but rather than getting a bailout, I would just have to pay even more taxes.

Comments about road maintenance are unrelated to having kids.  But since you mentioned it, I would expect a family of four travels more miles on public roads in a given year than a single person, plus they use more of other public resources, such as the parks and schools I pay dearly for, despite never having kids.

Quote
Someone inclined to do your math backwards may also point out we should double tax breaks for single parents, so they don't pay an unfair share compared to those takers in the two-earner households...

That's another issue.  A two earner household, or even a single earner household of a married couple, while MFJ, not only gets double the standard deduction of a single filer, the couple also pays taxes at a lower percentage up to a much higher income where the single person's tax increases to the next tax bracket at a much lower threshold.  So, there's a double benefit that.  Having kids on top of it really brings the tax burden down for MFJ.  So this extra tax burden is put on single people without kids the most.  Of course, if you give tax breaks to everyone, you need to increase taxes overall, so a better alternative might be to eliminate the tax code which benefits those making a particular choice.  It reminds me of tariffs that pick winners and losers.  Just give everyone the same tax treatment, not based on their choices as to whether they got married or had kids.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #38 on: August 05, 2018, 06:35:50 PM »
While you are off in your $70k land enjoying what's left after taxes

DreamFIRE: seriously, quit whining and get a hobby. Federal government spending per capita is already above your federal tax burden. Your income isn't high enough to complain about subsidizing others, in terms of usefulness to the republic you're probably just in the the neutral zone, maybe a smidge above.

There are people on these boards who pay more in federal taxes than you earn, yet we don't hear them complain about subsidizing the rest of us who chose to be underachievers.

Responding to those who have responded to me is not whining.  Duh.  And this is one of my hobbies.

You two seem to be confused and are making false assumptions.  The $70K/yr example I used was for a hypothetical woman vs. a hypothetical family of four.  I am neither.  I picked that income because both households actually paid taxes, so the numbers were all positive, and it made for a good comparison.

Personally, I have made six figures for years paying federal income taxes as a single person with no kids (check the tax tables), more than my fair share, well above the median, plus I live in a high property tax area paying several thousand dollars in property taxes per year for just me.  I wouldn't bother mentioning it, but just to set you straight on the false assumptions.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #39 on: August 05, 2018, 06:39:03 PM »
That's another issue.  A two earner household, or even a single earner household of a married couple, while MFJ, not only gets double the standard deduction of a single filer, the couple also pays taxes at a lower percentage up to a much higher income where the single person's tax increases to the next tax bracket at a much lower threshold.  So, there's a double benefit that.  Having kids on top of it really brings the tax burden down for MFJ.

Depending on the income level used in the simulation, marrying an able bodied but unemployed spouse gives people a much LARGER decrease in their taxes than supporting even 2-3 children. If your problem is specifically with people having children, wouldn't it be more accurate to compare either a single person to a single parent, or a married couple without children to a married couple with children?

If, alternatively, your main concern is just that some people pay less federal income tax than you while receiving the same household pretax income, then the main consolation I can offer is that in another ten years or less,* you'll be able to draw social security and income from qualified dividends and capital gains and pay dramatically lower federal income tax rates than the folks who are still working with the same pre-tax household income level as you yet paying a great deal more in income and payroll taxes to subsidize your retirement.

Some days you eat the bear and some days the bear eats you. It's not worth losing sleep over (or posting about over and over again in multiple forum threads).

*I don't know your exact age obviously, but I do know you have been very insistent in multiple threads that the full retirement age of social security be raised, but only for those more than ten years away from retirement, so I'm taking an educated guess.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #40 on: August 05, 2018, 06:42:54 PM »
Paying several thousand dollars a year in property taxes is nothing particularly exceptional for someone who owns a home. I own only a small house in a relatively low cost of living part of the country and even I can honestly claim to pay several thousand dollars a year in property taxes.

Also, I neither have children nor am I currently a child, yet I find I still visit and enjoy both city and state parks on a regular basis. I thus reject your assertion that the portion of my property taxes which go to maintain these amenities is a subsidy only for families with children.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #41 on: August 05, 2018, 07:16:07 PM »
That's another issue.  A two earner household, or even a single earner household of a married couple, while MFJ, not only gets double the standard deduction of a single filer, the couple also pays taxes at a lower percentage up to a much higher income where the single person's tax increases to the next tax bracket at a much lower threshold.  So, there's a double benefit that.  Having kids on top of it really brings the tax burden down for MFJ.

Depending on the income level used in the simulation, marrying an able bodied but unemployed spouse gives people a much LARGER decrease in their taxes than supporting even 2-3 children.

Yes, as expected based on the standard deduction and tax tables with double the threshold to the next bracket.

Quote
If your problem is specifically with people having children, wouldn't it be more accurate to compare either a single person to a single parent, or a married couple without children to a married couple with children?

I keep trying to make this clear, but I don't have a problem with people having children.  I'm just making some comments here about the fairness, or lack there-of, of the tax system in regards to families vs. single people.  That's why I compared those specifically.  I think the difference is most remarkable with that comparison as well.  If I look around, it's mostly married couples that have kids, not to say that there aren't many singles who have them as well.  I could post more comparisons for taxes paid in different scenarios, such as 1 vs. 2 kids, married vs. single parents, etc. but I'm trying to keep it brief.  It also gets more complicated when you start looking at lower incomes and EIC as well, which is why I chose the $70K figure.

Quote
then the main consolation I can offer is that in another ten years or less,* you'll be able to draw social security and income from qualified dividends and capital gains and pay dramatically lower federal income tax rates than the folks who are still working with the same pre-tax household income level as you yet paying a great deal more in income and payroll taxes to subsidize your retirement.

Just checked my FIRE planning spreadsheet, and it's 2034 for my SS, just over 16 years away for me.  I have mentioned that before, but after paying into it all these years, it's only fair that I get a distribution from the system when I'm eligible.  There will likely be cuts to benefits by then, but hopefully they won't be too excessive, and it helps secure a solid 100% in cFireSim and Rich, Broke, or Dead.  However, during the first 15 years of FIRE, I'm planning for $24/yr MAGI.  So, I'll actually still be paying more federal income tax than the family or couple making the same pre-tax household income as me, not that I'm complaining, at least I won't be paying so much myself at that point.

Quote
It's not worth losing sleep over (or posting about over and over again in multiple forum threads).

I can assure you that I'm not losing sleep over this.  I had a cup of coffee late this afternoon, so I might be affected by that.  I've had my whole life to adjust to this tax concept.  When I've brought it up, the traditional response is, "kids are expensive."  Yeah, a lot of things are expensive.  I bought an expensive house, and I ended up just paying more taxes!

I only bring this up in threads where it's relevant.  This thread was right on topic prior to me posting.  Most people aren't aware of the massive difference in tax burden between different households with the same income.
« Last Edit: August 05, 2018, 07:18:38 PM by DreamFIRE »

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #42 on: August 05, 2018, 07:25:47 PM »
So just to clarify on the above comment, am I correct in my new understanding that you're okay with a significant raise in the FRA for SS prior to your eligibility? Because if so, good for you, I just want to avoid any chance at misunderstanding.

Most people aren't aware of the massive difference in tax burden between different households with the same income.

I find this statement implausible (at least among members of this forum).

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #43 on: August 05, 2018, 07:27:48 PM »
Paying several thousand dollars a year in property taxes is nothing particularly exceptional for someone who owns a home. I own only a small house in a relatively low cost of living part of the country and even I can honestly claim to pay several thousand dollars a year in property taxes.

The ironic thing is that I live in a LCOL area as far as home prices, but the property taxes are among the highest compared to the home value, which makes it a little more exceptional.  But the other point to the property tax comment is that a family of four living in my home would pay the same property tax.  It's not just about the parks, a large amount goes toward the schools as well.  Divide the property tax per home resident, and factor in who takes advantage of those taxpayer funded resources that most, and you should see where I'm coming from.  I'm not saying I shouldn't pay any property taxes, but this was just one piece of the total tax pie.

EDIT:  Corrected "owner" to "resident".
« Last Edit: August 05, 2018, 07:32:36 PM by DreamFIRE »

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #44 on: August 05, 2018, 07:33:46 PM »
...plus I'm paying high property taxes which mostly go towards the schools and parks, which families use, not me. 

I wasn't arguing with the school bit, but with the parks (which you specifically mentioned in a previous comment, as quoted above).

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #45 on: August 05, 2018, 07:37:51 PM »
...plus I'm paying high property taxes which mostly go towards the schools and parks, which families use, not me. 

I wasn't arguing with the school bit, but with the parks (which you specifically mentioned in a previous comment, as quoted above).

Yes, but since I am the one who brought it up in the first place, schools were part of my original point, and I wasn't going to drop it.  Well great, I'm glad you use your parks, but this isn't just about parks.  My original point and comments stand.

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #46 on: August 05, 2018, 07:47:59 PM »
My main point here is that you you keep complaining specifically about tax breaks for kids, and then when we scratch the surface you're just lumping in tax breaks for anything that you don't qualify for (for example being married to a non-working spouse) and government expenditure on anything you don't personally take advantage of (for example city and state parks).

That's certainly a position you can take if you like. And you wouldn't be the only one to do so. But it is misleading to other readers of the thread to lump in all sorts of non-child related tax breaks and government spending together and present it as a single number that you claim supports your position that "people with kids get too many tax breaks."

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #47 on: August 05, 2018, 07:48:11 PM »
So just to clarify on the above comment, am I correct in my new understanding that you're okay with a significant raise in the FRA for SS prior to your eligibility? Because if so, good for you, I just want to avoid any chance at misunderstanding.

I support increasing the FRA only as part of a comprehensive approach, which includes not cutting benefit payments (although they are actually already being cut indirectly through the increased taxation over time, which should be addressed).  I think increasing the FRA a year per decade would be reasonable, but I wouldn't support it if that was the only change made.  I've also stated several times in the past that I wouldn't mind paying higher payroll taxes to help shore up SS and Medicare.  I've actually posted quite a few different ways SS could be shored up in the "social security won't go bankrupt" thread.

Most people aren't aware of the massive difference in tax burden between different households with the same income.

Quote
I find this statement implausible (at least among members of this forum).

Even >30X per household member comparing the two households in the example with $70K/yr income??  I find it very plausible, even among forum members who didn't specifically do the math or see it posted previously.
« Last Edit: August 05, 2018, 07:50:11 PM by DreamFIRE »

maizeman

  • Magnum Stache
  • ******
  • Posts: 2821
Re: Social Insecurity and New Parents
« Reply #48 on: August 05, 2018, 07:53:33 PM »
I find this statement implausible (at least among members of this forum).

Even >30X per household member comparing the two households in the example with $70K/yr income??  I find it very plausible, even among forum members who didn't specifically do the math or see it posted previously.

Well if you are correct, wouldn't you expect many people who be horrified and outraged when you present them with this number? How many supportive/surprised responses have you gotten in all the places you've posted your implausible math* around the forum?

*Using "taxes paid per household member" as your metric implies that you think the default fair breakdown is for a family of four to pay 4x as much income as a single person with the same income. Given that I am a single person and pay north of 25% of my total income in taxes, this would imply a family of four with the same income as me to pay >100% of their total income in taxes to meet the default "fair" metric that in inherent in the way you are comparing the numbers.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Social Insecurity and New Parents
« Reply #49 on: August 05, 2018, 07:59:34 PM »
My main point here is that you you keep complaining specifically about tax breaks for kids, and then when we scratch the surface you're just lumping in tax breaks for anything that you don't qualify for (for example being married to a non-working spouse)

Actually, someone else brought the married couple having kids vs. a single parent.  I had never mentioned the single parent prior to that.  Only after that person mentioned it did  I state that was "another" problem.  That doesn't discount my original point based on the example I gave.

Quote
and government expenditure on anything you don't personally take advantage of (for example city and state parks).

But if you put it into context, I included schools in that as well.  Plus, even for a single person who might use a park, it's very unlikely they will use it as much as a family of four, but their property tax will be just as high as the family of four.  And the single childless person won't be using the school at all, while again paying the full property tax that a family of four would pay on the same house.  Also remember, that was regarding the piling on of the property tax, which is well worth mentioning in this discussion, but you don't even have to include that in the discussion to see my original point about federal income tax burden between singles and families.

There's nothing misleading about that.  It might seem like it if you take one thing out of context, but if you factor in everything as whole, it's pretty clear.

By the way, simply making comments about the unfairness doesn't mean I'm complaining or will lose sleep over it.  I wouldn't be posting much on this if I wasn't for all of the replies I got, especially those that needed some clarification due to incorrect assumptions that had been made from others.