Among the puzzling aspects of the crusade against Social Security is the zeal that animates its enemies, as if the present and future recipients of those monthly checks were somehow fattening themselves at the expense of future generations. Whatever drives these well fed but poorly informed commentators, it isn't the facts.
First, let's remember that Social Security actually provides support at a very modest level. Last year, the average retirement benefit was $1,170 a month, or about $14,000 a year, with the average disabled worker or widow receiving slightly less. (It would be wonderfully educational for the cable talkers and newspaper editorialists to live on that amount for a few months—they would not only lose weight, but also gain empathy.)
Remember, too, that despite our status as the largest and most productive economy in the world, Social Security is among the least generous retirement programs among all the developed nations. As a percentage of the average worker's pre-retirement wages, the benefit has been declining for years and will continue to fall without any further cutbacks.
The check that used to replace 39% of work-life income will replace only 31% by 2031. Compare that with the average wage replacement in the nations belonging to the Organization for Economic Cooperation and Development (OECD)—which was roughly 61% last year, according to the nonpartisan Center on Budget and Policy Priorities.
Don’t Fall for Deceptive Rhetoric
More important than those comparative statistics is
the fact that the great majority of Social Security beneficiaries have no other
cushion for their retirement—not because they were lazy or improvident, but
because their wages were simply too low to permit much savings, let alone
investment.
The foes of Social Security insist that they have no
desire to force the elderly to eat cat food or go homeless—as they did in the
years before the program existed. But we must cut drastically, they cry,
because we can simply no longer afford the "entitlements" that we
have bestowed so lavishly upon the old and the poor.
Whenever someone starts to talk about
"entitlements," keep in mind that they are either trying to bamboozle
or they've been bamboozled themselves. Under that category, most commentators
mix up Medicaid and Medicare—two programs that are indeed endangered by rising
health care costs—with Social Security, which will be solvent until at least
2037 and can easily be made solvent for decades to come with minor changes. This
is a rhetorical deception perpetrated countless times every day in nearly every
media outlet.
The actuarial experts whose job is to monitor Social
Security's fortunes have long assured us that small and gradual rises in the
tax revenues that support Social Security, accompanied by small and gradual
shifts in benefits over the coming years, will solve whatever fiscal challenges
the program may eventually confront. There is no reason to panic, and there is
certainly no reason to consider wholesale changes in benefits.
Well, there is a reason, but only if your real aim
is to destroy the system and replace it with something less useful but more
profitable. Wall Street and its servants on Capitol Hill have lusted after
Social Security's revenues for many years. And they regard the current uproar
over the budget as a fresh opportunity to get their hands on a trillion-dollar
bonanza. Given their record in recent years, it is all too easy to imagine how
badly that would work out for everybody—except them, of course.
2011 Creators.com.
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Wow, it's the 18th and I am commenting on an article dated 3 days from now!
Bamboozled or not, the loudest talkers are talking loud because they are caught up in a hate-ridden class war. One of either middle-class privilege, suburb privilege, or simply white privilege. Fear that too much of their highly deserved share is going to the undeserving "others".
Sure, Wall Street would love to have that huge safe trust fund pumped into their members only stock exchanges, especially if it was the unsophisticated peasant masses whose payroll was taxed for that money is calling the shots of how to invest it. Fresh meat for the sharks, what a feeding frenzy.
It's really too bad that this FICA payroll tax is partly a "flat" tax, and partly a regressive tax, there's simply nothing progressive about it! That would explain why the USA SS benefit is so paltry compared to those "socialized" countries. And people think that "flat tax" is an equitable way to "redistribute wealth"?
With a progresive tax, the wealthier folk, who already have a larger share of the sum total of all wealth, also pay a larger percentage as tax. The wealthier folk are in a higher tax bracket.
In a regressive system, the people at the bottom are the ones in the highest tax bracket, even higher than the rich. Under FICA, the lower ranks pay that high percentage on every dollar they earn. It's why it's called a "payroll" tax, not an "income" tax.
Now take the rich. Under FICA, the rich pay this "flat" tax only on the first 100,000 (approx) they earn. They pay zero FICA tax on each of the next 100,000 they make. And they sure don't pay any FICA tax at all if the spendible, take-home money is from savings interest on a huge trust fund, no FICA tax on dividends or capaital gains, either.
Now, is it clear why the US pays only 1/3 and falling, whereas the "socialist" countries are paying almost twice as much?
My accountant showed me years ago that FICA was a suckers tax. You are better off taking the 15% and putting the money into something with a higher ROI, return on investment. Its like you have to pay 6% plus, your business pays 6% plus, and medicare is about 2% or so. All in all over 15%, but at least they stop at about $106,000. After that you are home free. If you have a small business, such as managing rental properties, you are better off paying yourself a small salary avoiding the high FICA taxes. Someone who makes $10k a year will get a bigger Socical Security check based on their contribution compared so someone making $106k per year. Sure the $106k guy will get a bigger Social Security check but really not much more than the $10k guy. So pay yourself a small salary, take the rest as a Schedule K distribtuion, invest the excess in higher yield tax free municipals, real estate, or even precious metals like gold. I was just thinking of a married couple, each making $106k a year working for "the man", oh dude thats like $30k plus a year they and their employer are tossing into the Social Security pot. Yikes!!! And if you die, its gone. Will not be part of your estate. I'm telling you, get on the 1099 plan. Less taxes, more money for you, bigger estate for your kids. Social Security is a sucker investment.