I draw your attention to the blog's new masthead quotation. Unlike previous ones, which often dated from centuries and even millennia ago, this one is brand-spanking new, coming as it does from Paul Volcker, in my opinion the Fed's most respected and successful chairman ever (though he wasn't even made a KBE..). His speech, here.
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Today's entry is in response to a request made by a Seeking Alpha reader (this blog is cross-posted there) who wanted to know how FICA tax receipts are doing. To those who do not have the pleasure of knowledge by way of pay-check deduction, FICA is the Federal Insurance Contributions Act tax, i.e. the Social Security payroll tax which funds pensions, disability insurance and Medicare.
Here is the relevant chart (click to enlarge):
Social Security Income
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Today's entry is in response to a request made by a Seeking Alpha reader (this blog is cross-posted there) who wanted to know how FICA tax receipts are doing. To those who do not have the pleasure of knowledge by way of pay-check deduction, FICA is the Federal Insurance Contributions Act tax, i.e. the Social Security payroll tax which funds pensions, disability insurance and Medicare.
Here is the relevant chart (click to enlarge):
Social Security Income Data: Social Security Administration
Income is now officially estimated to be flat (+0.6%) for the fiscal year 2009 ended September 30, 2009, but down -5.5% from what was originally budgeted. This may not sound like a lot, but please keep in mind that the income cut-off point for the application of such tax was raised for FY 2009 from $102,000/yr to $106,800/yr, an increase of +4.7% This action alone should have raised FICA receipts considerably, all other things being equal.
But all other things are not equal, are they..?
But all other things are not equal, are they..?
Thanks for this post. Where do you find the data for FICA?
ReplyDeleteI think that someone in the government ought to realize that without an increase in the CPI they cannot create inflation--so many wages and salaries are tied, directly or indirectly, to the COLA promulgated by the Feds. It's ironic, really, that the monkeyed-up methods used to depress the CPI are, in fact, depressing the CPI precisely when an increase in the measure could do some good--giving Americans a nominal raise and increasing tax receipts in nominal terms so that we can inflate away the deficit as we have done in the past.
How about a new Boskin commission which could be shocked, shocked to discover that the OER and hedonic adjustments have been understating inflation all these years. . .
Astute observation, I assumed it would be lower. In my opinion the older heads feel CPI should be flat.
ReplyDeleteI remember in the spring the ivory tower economist wanted 2 percent cpi per year and where refuted by the old school as Volkner conveyed the goal should be zero. Stealth tax by inflation is dishonest to say the least and maybe more citizens needs to press the white house to insist on getting the cpi to stay as close to zero as possible. Some in the administration may be listening but i would not want to stray that far given we have so far to go. As for understating the hedonic adjustments I suggest yes indeed but inclusive to regional realities.
God, how I hate acronyms.
ReplyDeleteThey make a lot of people feel really confident that they know what they are talking about, all the while ensuring that OTHERS don't know what they're talking about.
These comments are way over my head...
KBE: Knight of British Empire, so it's SIR Alan to you, if you please. He was knighted a couple of years prior to leaving the Fed.
ReplyDeleteFY: Fiscal Year
H.
oh, and..
ReplyDeleteCOLA: Cost Of Living Adjustment
CPI: Consumer Price Index, also short for inflation.
OER: Owner Equivalent Rent, what a homeowner "pays" in rent.
i'm daft.
ReplyDeletehow would raising the (income) cut-off for tax assessment increase receipts?
Thank you, Hell.
ReplyDeleteI wasn't pointing my finger at you, but at the people making the comments...
Ahhh... the good old effects of specialization...
About the raising the cut-off:
ReplyDeleteFICA is a flat payroll tax, subject to an income ceiling. This means that the same percentage is deducted at the source from all paychecks, up to the cut off point.
Hypothetical Example:
10% is deducted from a paycheck of,say, $150,000 but only up to the $100,000 cut-off, producing $10,000 of revenue for Social Security. Any income above $100,000 was tax free.
If the ceiling is raised to $110,000 then the revenue increases to $11,000.
Best,
H.
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ReplyDelete