(Disclosure: I receive both Medi-Care and Social Security)
Under the Johnson years in the white House, government took money from Social Security and spent it for his war effort and socialist programs. In return he gave the Social Security folks IOU’s—of course he never repaid and 55 years later still have not repaid. Then Congress did the same and put the IOU’s in a “lockbox”. Of course no one can find that box today. In a few years, thanks to a President and Congress stealing that money, both Medi-Care and Social Security will go broke. To raise rates means to make workers poorer.
“ Ask almost any liberal, especially a liberal in the Democratic Party, what he thinks of a flat-rate income tax and the likely response is that such a tax is unfair.
If there were a flat-rate tax of 20 percent of income per year, many liberals might ask: “Why should a billionaire like Bill Gates pay 20 percent while an iron-worker earning $70,000 a year also pay 20 percent?”
Yet Gates and a grocery clerk pay the same Social Security and FICA (Medi-Care) rates. Is that fair.
SOCIAL SECURITY HAS BEEN FOOLING LIBERALS
By Richard Colman, Exclusive to the California Political News and Views, 2/10/23
Ask almost any liberal, especially a liberal in the Democratic Party, what he thinks of a flat-rate income tax and the likely response is that such a tax is unfair.
If there were a flat-rate tax of 20 percent of income per year, many liberals might ask: “Why should a billionaire like Bill Gates pay 20 percent while an iron-worker earning $70,000 a year also pay 20 percent?”
Liberals will argue that a flat-rate tax is regressive, meaning that such a tax bears down most heavily on the lowest earners.
Liberals are strong proponents of Social Security. Do these liberals know that Social Security involves a flat-rate tax?
Signed into law in August 1935 by President Franklin Roosevelt, Social Security, as originally designed, put a one percent tax on a worker’s wages. The boss had to match that one percent. After wages reached $3,000, no further contribution –- by the worker or the boss –- was needed.
The Social Security tax only applies to wage income, not to income derived from interest, rent, or stock-market profits.
According to figures from the internet, Social Security, from 1937 to 1949, took one percent of wage income. From 1937 to 1950, the wage ceiling was $3,000.
By 1963, the Social Security tax rate on wages went to 3.625 percent. From 1959 to 1965, the wage ceiling went to $4,800.
In 1970, the Social Security tax rate was 4.2 percent, and the wage ceiling was $7,800.
Beginning in 1990 and beyond, the tax rate jumped to 6.2 percent. In 1990, the wage ceiling became $51,300.
As of Jan. 1, 2023, the tax rate has remained at 6.2 percent, but the wage ceiling has gone to $160,200. Remember, the boss has to equal the worker’s contribution to Social Security. About 90 percent of wage-earners, fail to reach the ceiling of $160,200.
A worker earning $160,200 in 2023 will pay $9,932.40 in Social Security taxes, and the boss will have to pay an equal amount, bringing the total collection of money to $19,864.80.
No one is quite sure of the exact date, but by 2035 Social Security will probably dispense more money than it takes in. In effect, Social Security is going broke.
At first, as noted previously, Social Security took one percent of a workers income (up to $3,000 in wages), and the boss had to match that one percent (again, up to $3,000 in wages).
To save Social Security, once it becomes insolvent, may mean that the Social Security system will face several choices.
One choice is to raise Social Security’s tax rate as well as raise the tax ceiling.
Another choice is to cut benefits.
A third choice is to have some or all of Social Security’s tax income go into real estate, the stock market, or another entity that will produce income.
A fourth choice is to collect Social Security taxes on non-wage income.
The liberal community may have to adapt to changes to save Social Security.
Perhaps the liberal community will have to oppose Social Security’s flat-rate tax and accept a more progressive system of taxation, meaning that the tax rate will bear down more heavily as a worker’s income rises.
When Social Security was signed into law in 1935, most wage-earners did not live long enough to receive much money in benefits. Now, with Americans living longer, Social Security has larger obligations.
Today, the big question is this: Can Social Security be saved once the money runs out?
As owner and sole employee of a small business, I sometimes had to borrow money to pay both the employer and employee Social Security taxes. Fortunately I also invested in an IRA.
I’m outliving this investment’s proceeds. but I would be on Easy Street if the s/s taxes had been mine to invest.
Does anyone anymore expose young people just entering the job market to the economic benefits of savings and investment? Or do they just trust Big Gov forced tax and handouts?