Big Money, Big Prizes!

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So I'm on record as telling my siblings and Dad to put money into
investments, and to put it into some riskier stock-based funds like the
Vanguard 500 for longterm money (5+ years). So maybe you might think
I'd be in support of privatizing Social Security.

There's been pressure for a while to "do something" about SS. It's
certain to run dry by 2030 or so. But realize this: whichever
company/companies get access to "managing" the SS funds will get a HUGE
windfall in *fees*. Even 0.5% a year (like many mutual funds) the
trillions in SS would put a huge bonus on any bank's bottom line. The
politicians get credit for "doing something" - again any big problems
don't show up for many years - and the corps get big bucks. Everybody's
happy - except the actual employees, who again have paperwork hassles,
an even more complex tax system, yet another thing to keep track of, and
ultimately less money in their account.

My cynicism comes from trying to use the "Flexible Savings Account",
which I'm sure was passed by Congress under the name of giving a tax
benefit to the middle class. You put in up to $4000 a year, tax-free,
and then you can withdraw it to pay for medical costs that insurance
doesn't cover. If you don't use the money by the end of the year, they
keep the money. Great eh? But the catch is this: you have to file a
form for each and every receipt. Every little parking receipt. And
they deny almost every claim. Even if it has the letterhead of your
doctor or dentist. I put in $2000, so the tax benefit is theoretically
about $600. But it's going to be hard to get even $1000 back from them,
for things that are explicitly covered, and the extreme hassle has made
it not worth it at all.

SS is insurance for the poor and elderly and handicapped. We pay
it so that we don't have to see our grandmothers begging on the street
for spare change. Getting retirement benefits out of it as well is a
nice treat, and if we want to keep it there are several easy ways to do
it : for example, just remove the cap - you only pay SS tax on the first
$87,000 of income. Just change the rules so they pay SS on all their
income, same as the rest of us do who don't make six figures.

I find it ironic that some people resist the idea of taxes that only go
to welfare or SS, calling them "entitlements" and thinking of that money
as being wasted on people who don't want to work. The (admittedly
despicable) fraud by a few bugs them so much they want to destroy the
system keeping many other needy people afloat. I used to feel that way,
and here's how I changed my mind : I started realizing I DO get a
benefit out of those taxes : it keeps me from having to deal with the
poor and homeless every day - it keeps my streets safe(r) and clean(er)
of criminals. As a metaphor, when I see a fakir with nice shoes
begging for change on a street corner, I don't suddenly stop giving
money to the church to provide free sandwiches to the truly homeless.

Anyway - don't sign up for FSA. It suxor. :)

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Sara said:

Ditto. We had a sort of FSA through my work. I'm lucky I didn't put any money there (since before I got pregnant I NEVER went to the doctor anyway), b/c everyone I talk to loses money every year. And if you put in a safe enough amount (my friend put in $400 for acupuncture), then it's not really a tax break.

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This page contains a single entry by Doug Treder published on December 27, 2004 1:40 PM.

Lies, Damn Lies, and Statistics was the previous entry in this blog.

Another reason to homeschool is the next entry in this blog.

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