First, that tax comes out on first dollar. There ain't no deductions.
If your employer has an HSA payroll deduction option, that is a deduction before Social Security taxes.
And if you are self-employed, well you pay the total amount, not half, like workers do.
Do you want them to get the same benefit for half the contribution?
And it is the working class that pay the bulk of the premiums, while it is the wealthy that derive the bulk of the benefits.
Wrong.
As to the later. Yes, the working class pay the bulk of premiums. I mean the income subject to the tax is capped, but what percentage of workers exceed that cap? It is pretty small, so that small percentage is not the "bulk of the taxes paid". It is intuitive. And yes, those high income workers get the most benefit. Run the numbers, I have. For every dollar a worker puts in, they get back more than two from Social Security, of course, that is on the average. So those high income workers, they are paying more dollars in, per person, not total, and therefore getting more dollars out. Again, it is intuitive. Then there is life expectancy. Poor people die before they ever collect, rich people hang around damn near forever, all the time collecting that higher monthly social security check. It is a total scam.
But the HSA, well no shit Sherlock. Same for a 401K, health insurance premiums, or even an FSA. But that is just another example of how the working man is getting fucked. You go ahead, fund that HSA, stay healthy, save on the tax bill, temporarily. Invest the excess, it grows tax-deferred, not tax free. But when you sell those investments at a profit, it is not a capital gain, it is income, and yes, subject to the Social Security tax and the income tax. It is a fool's play.
Wealthy person. First, they probably running with a hundred thousand dollar deductible on the health insurance. Corporations kind of do the same thing when they claim they are self-insured. They are, to a point, but they pay an administrator that also acts as a reinsurer against losses that exceed a certain level, usually in the millions of dollars. They don't have an HSA. They have a Roth, funded to the maximum level. Then they have an investment account, a hundred grand set aside in bonds to pay that deductible, investing the rest.
Within the Roth, well gains are none yah, that is what I call them, none yah government's business. No taxes, of any kind. But within the investment account. Those gains are capital gains. No Social Security tax. And damn, probably paying a lower tax rate than income on the long term capital gains.
Two people doing exactly the same damn thing. Buying low, selling high, period. The same damn thing. One person, well they made that investment with "Qualified" money, it hasn't been taxed yet. The other paid the taxes and "invested" the money. When the one with the qualified money takes profits, well he pays Social Security tax, Medicare tax, and his normal personal income tax rate, on the proceeds. The other person, well for what he has in the Roth, he doesn't pay jackshit to anyone. And just a side note here, half my kids are maximizing their Roth contributions every year. Two out of the three are under 30. One company actually matches a Roth contribution, and pays the taxes.
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But even within the investment account, that other person only pays capital gains taxes, and a Medicare tax, which is actually rather recent. I think Obama did it in his first two years. Just going by memory here. I mean come on. The whole system needs to be torched and rebuilt from scratch. And if there ever was a canary falling over dead in a coal mine, well when Trump starts calling "tariffs" the most beautiful word, damn skippy, the canary that is the working man, Joe Sixpack, just fell over dead.
I am happy that Trump is jumping out like a freight train about to careen off the rails. Courts are at full-stop, but it makes no never mind. It was all anticipated, doesn't matter. Trump is all about, "make them stop me". And I am not even going to argue with the efficiency and the results. I can give credit.
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But it is a short-term thing hoss. It really is. It is almost like Trump and his supporters feel like a wedding crasher. I mean they are feasting at the buffet, they know they are going to get busted, but damn, they is hungry.
