Tod is a resident of Iowa, a Democrat, and a staunch questioner of Hillary Clinton -- specifically, on Social Security, and more specifically, with her "considering" changes to the current cap on the amount of income that can be taxed for Social Security.
You see, he doesn't think it's fair.
Afterward Bowman approached Clinton so he could pose for a photo with her, introduce her to his children and discuss the issue further.
She told him she didn't want to put an additional tax burden on the middle class but would consider a "gap," with no Social Security taxes on income from $97,500 to around $200,000. Anything above that could be taxed.
An Associated Press reporter overheard the conversation and discussed it with Bowman. He said he didn't agree with Clinton and felt that as someone who makes under $97,500 he pays an unfair share.
"I understand that in her world $97,000 is the middle class, but here in Iowa $97,000 doesn't qualify as the middle class," Bowman said.
Well, Mr. Bowman, you're right; you probably are paying an "unfair share".
But not quite in the way you think.
You see, Social Security taxes are collected in a very simple fashion; for every dollar of income you make, you pay 6.2 cents to the government and your employer pays 6.2 cents to the government, all the way up to the income cap. As your income rises, you pay more.
But when it comes to calculating your benefit, the math is significantly different.
Basically put:
-- You get 90 cents of benefit for each dollar you make up to $680 per month ($8,160/year)
-- You get 32 cents of benefit for each dollar you make between $680 and $4,100 per month (up to $49,200/year)
-- You get a princely 15 cents of benefit for each dollar you make over $4,100 per month (over $49,200/year
Meanwhile, the government is still charging you and your employer a total of 12.4 cents for each dollar of your income, even as your benefit amount shrinks. In short, you are paying more and getting proportionately far, far less.
Keeping that formula in mind, let's analyze the benefit for an individual who makes at the taxable maximum of $97,500 per year ($8,125/month):
-- 90 cents for each dollar up to $680 = $680 x .90 = $612
-- 32 cents for each dollar between $680 and $4,100 = $3,420 x .32 = $1,094
-- 15 cents for each dollar between $4,100 and $8,125 = $4,025 x .15 = $604
-- Sum of the benefits = $612 + $1,094 + $604 = $2,310/month x 12 months = $27,720
-- Total Social Security taxes collected = $97,500 x 12.4 cents per dollar = $12,090
This person receives $2.30 in benefits for each $1 of tax they pay in ($27,720/$12,090), and they are provided a benefit equal to 28.5% of their pre-retirement income ($27,720/$97,500).
Meanwhile, let's assume Mr. Bowman makes $49,200 per year ($4,100 per month).
-- 90 cents for each dollar up to $680 = $680 x .90 = $612
-- 32 cents for each dollar between $680 and $4,100 = $3,420 x .32 = $1,094
-- Sum of the benefits = $612 + $1,094 = $1,706/month x 12 months = $20,472
-- Total Social Security taxes collected = $49,200 * 12.4 cents per dollar = $6,101
Mr. Bowman receives $3.36 in benefits for each $1 of tax he pays in, and is provided a benefit equal to 42% of his pre-retirement income.
So, as we can see, Tod Bowman pays less in and gets proportionately more back than a person with a higher income -- and the difference is exacerbated the higher the person's income goes. Furthermore, since Social Security benefits are capped (this year, at $2,116 per month, or $25,392 per year), the belief that eliminating the taxation limit on income would somehow be more "fair" belies the fact that it would force people and their employers to pay money into Social Security that they could ultimately never collect in benefits.
It's kind of surprising that a high school government teacher doesn't know that.
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