Lets then say I started slugging to Rosslyn, I started at $75K and now break $100K.

How much additional direct income tax would one pay. How much indirect tax, such as sales tax, increased property tax as we move up into bigger homes, new cars can one expect to pay.

I am looking to use this as the basis of a “tax revenue” argument to oppose HOT. I can show that it reduces total commuter throughput. Now I need to tie that to revenue to the Government.

Your scenerio only works for those on the leading edge of the Baby Boomer bubble and it hammers the Generation-X crowd

Sure, what about people who retire right after Social Security goes bankrupt or slashes benefits? My main contention is better to take money out of the hands of government.

As to your second question, no, I think broad market index funds such as the S&P 500 or Wilshire 5000 would be ideal. Minimal management fees, and less risk of someone blowing all their savings on podunk.com. If the government is going to forcibly take money away from us for our own good, at least get a decent return on it.

Tough call as during the Great Depression, the stock market was significantly out of favor, hence the creation of the SSA. I don’t think it would have been feasible to implement this idea during the Great Depression. It was also a younger generation. I think the ratio of workers to retirees was north of 10:1 vs 2:1 or 1:1 projected for the baby boomers. The SSA worked then because there were so many workers to support the relatively fewer number of retirees.

It may have paid for the world we live in now, but how better our world would be if our economy was 10%, 20%, or 30% bigger? You can equally argue that many of these programs created more reasons for more taxes. Compound the taxes over years, and you get a big number that would have otherwise created growth.

Goes back to the bigger pot argument. If the economy were bigger, the tax base and revenues collected would be bigger at the same tax rate. I favor less government obviously. I think if we had done something smart with Social Security, and there’s a big pot of money sitting out there, the government would find some way to spend it.

I would think it more likely to have a positive effect on traditional investors than negatively. Two good reasons:

1. More liquidity = higher growth = bigger pot. It would have similar effects of interest rate or tax cuts. The best argument against liquidity is that it encourages rampant speculation. I would argue that over a 40 year period, speculation tends to be corrected out by the market. At the same time, I think the US capital markets are large enough to handle the extra volume with minimal disruption.

2. Higher participation = higher transparency. If you compare the stock market pre-internet and post-internet, it is night and day with regards to information available and investor scrutiny. Granted there are multiple factors contributing, but when more people have a stake in something, the participation acts as a form of control.

The second point is that the money was spent on student loans, highways, and the military (among the thousands of other things the federal government does with our money). It paid for the world we’re living in now.

The third point is that if we just stopped putting the 6.2% into the general fund and into the enforced savings plan, since Congress has shown absolutely no intention of slowing the increase in spending let alone making a cut which would be required by the reduced level of revenue, either taxes would have to be raised or money borrowed. What effect would this have on the economy now?

A few more facts. Index funds only charge around 0.1% per year, even when run by the bureaucracy (see http://www.tsp.gov). SS Income is actually around $650 Billion (see http://www.ssa.gov).

A nice start, but reality is more complex.