Clarification on Senator Obama's Social Security plans
We've heard from the Obama campaign about our blog post on Senator Obama's Social Security tax increase on people earning more than $250,000. The campaign clarified that the threshold would be $250,000, but Senator Obama has not specified what the rate would be, when it would take effect, whether it would apply to employers, employees, or both, or what the tax base would be.
I did some googling and found this from a November 11, 2007, interview by Tim Russert on Meet the Press. Senator Obama: “Well, it—you know, I have not specified exactly how we would structure it. Conceivably, you might have the equivalent of a doughnut hole, although this one would be a good one, as opposed to the bad doughnut hole that Bush set up for, for prescription drugs where you have a gap between people who are of middle income and very wealthy people.”
After some bobbing and weaving, Mr. Russert pressed, “A tax increase for some?” Senator Obama replied, “Well, tax increase for people like myself, probably.”
Apparently, the Senator has consistently avoided getting much more specific than that.
I'd just note that if the rate is lower than 6.2 percent, the economic cost would be smaller, but the proposal would do less to extend Social Security solvency assuming the tax base is earnings. If the tax base is broader, the rate might be lowered without sacrificing revenues, although raising the tax burden on capital income raises other issues.
And I already miss Tim Russert.