Thursday, February 03, 2005

Bush's Clawback Tax

I said earlier that Bush's plan for gutting Social Security contained a new tax on the earnings that people might earn with their private accounts. I learn from this DailyKOS post that it is even worse:

I see from the early comments that people find this hard to believe. And it is astonishing -- but completely true. The policy wonks call this the "clawback" provision -- the government 'claws back' most of what you make to fund the system. In fact, they claw back the principal plus the assumed 3% annual gain EVEN FOR A WORKER WHO EARNED LESS THAN 3%, so you could earn 2% a year and lose $$$ on the deal! As for why they do it: because if they didn't, they would basically have to wipe out the guaranteed benefit entirely to make the numbers add up.

That's right! Bush is proposing a new tax that could be equal to 150+% of your earnings on your private accounts!

And don't you just love the imagery of the term "clawback"?


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