Is the Social Security Tax in The United States Unfair to the Masses?
According to the Social Security Administration after you have earned $110,100 in a single tax year, you no longer pay Social Security tax for the remainder of the year. So basically, Albert Puljos of the L.A. Angels pays social security tax for less than 2 games work in 2012 while the majority of Americans pay all year long. Is this fair considering it is proposed we raise retirement age every year to keep SS afloat? Why or why not?
http://ssa-custhelp.ssa.gov/app/answers … e-earnings
First, to acknowledge your fallacy. Yes, if I make $50,000 a year, I pay social security all year. But considering it's a flat 4.2% right now, I would still only pay $2,100 to the maximum of $4624.20. Is it fair that the rest of the income goes untaxed? That's debatable, but it doesn't make fiscal sense to allow that exemption to continue, considering how far in the hole the entire Social Security/Medicare/Medicaid systems are.
Ideally, I'd like to see that system eliminated entirely. If people are unwilling to prepare for retirement and the health care costs associated with aging, why am I forced to subsidize their poor planning? Of course, very few politicians, if any, are willing to say they want to eliminate the programs entirely.
With that said, at the bare minimum we need to rapidly increase the age of eligibility. It would need to be staggered so someone at age 64 right now expecting benefits at 65 doesn't suddenly have to wait 5 more years. When these programs were instated, the average human life expectancy was of course much lower. This needs to be adjusted - something has to give!
Or if nothing else, I feel like I am owed an "opt-out" option. I am responsible enough to plan for my retirement and health care needs, I do not need the government to take a flat percent of my life's wages, mismanage the money, and then give me a crappy return when I am eligible to receive benefits. If I die at age 55, that money will likely go to someone else. If I am allowed to invest it myself, I can at least pass along my investments to my family.
The entire system is unfair, and I hate being involved in a giant ponzi scheme with no way to get out.
Hender, I voted up your response because it was well thought out and you stated your case well. This being said, there is nothing in my question that is, as fallacy is defined as follows according to the freedictionary.com:
1. A false notion.
2. A statement or an argument based on a false or invalid inference.
3. Incorrectness of reasoning or belief; erroneousness.
4. The quality of being deceptive.
None of these four definitions of fallacy accurately portray my clearly "leaded" question.
I am however happy that the question got your attention and although i disagree with almost everything that you said (except for your math). I hope our differing viewpoints draw in others for discussion.
The Social Security Tax is more "unfair", though I don't like that word, from the stand point that the money collected is spent on other things, it is not a "trust Account" and if you die at 50 or 60 -- your family and children do not receive the money if your kids are grown. If a man and woman are married and one spouse dies the surviving spouse is able to choose the ONE of the "highest" social securities between each spouse, while the other social security benefit goes to the federal government.
It is a wonderful Ponzi Scheme. Imagine a private investment company or a bank "keeping" your money after you die and are able to do so by law. In fact Americans themselves DEMAND the government keep their money, because I hear no American complaining about this system.
There are hundreds of thousands of Americans that die between 50 and 65 that die before receiving benefits each year. So in all actuality Americans work every year Jan - May for the government and then receive no benefit...so essentially the federal government is enforced servitude because there is no "opt-out".
The "return on investment" the government generates is less than 2%, which actually is less than inflation. Therefore, the government social security system guarantees recipients lose money every single year. Even with the market down turns in 2000 thru 2002 and 2008 thru 2010 the fact is that investors would have 3 to 4 times as much monthly income as a social security recipient currently receives.
Think about receiving $3,000 per month instead of $1,000 per month under a private social security plan instead of relying on the government -- what would you prefer? Since when does the federal government own the right to your money when you die?
An insurance company annuity can guarantee returns and secure investors from market down turns. Also, placing part of an individual's assets into gold, silver and other essential commodities places a hedge. For example, had investors placed 20 percent of their investments in gold in 2000 the market fluctuations in the decade of 2000 thru 2010 would not have had any impact on an investor's portfolio. And when a person dies their heirs receive their hard earned money and NOT the federal government.
The Social Security withholding from paychecks ("FICA") IS fair insofar as it WAS TO HAVE BEEN a "directed" tax which funded one's "retirement." That there is a ceiling on the amount subject to that withholding is a reflection that few (if any) people MADE the large (incomes) at the upper end.... and that, if one had income beyond that, they would CERTAINLY be using their excess "earned income" to save for their future retirement means......
Note, that one's WITHDRAWALS from "Social Security" are tied to the amounts which he/she contributed.... so nobody "gets" more than they contributed.....
For the USofA to TAX "income" under the guise of "FICA" then not return that "tax" to the payer - in the form of still more "retirement income" - is a great bastardization of what "Social Security" was designed to be.... AND is an egregious form of unjustifiably taxing people who have large incomes ....
No. The Social Security tax is not fair because it bears more heavily on lower income earners than it does on high income people. For eaxmple someone who earns the $110,100 cap pays 4.2% or $4,624. The individual who earns $1 million also pays $4,624 but that's only .462% of his income. George Romney's income is $20 million per year, and he pays only $4,624 and his SS tax rate is only .023 if my arithmetic is correct.
Therefore, in my opinion, the SS tax would be fairer if the cap were removed entirely or raised substantially and indexed. This would be enough to put the SS fund on a sound footing for the foreseeable future without cutting benefits or raising the retirement age.
Some of the previous comments are not accurate. Someone who retires at the normal age or whatever age and who is not married and dies the next day does not collect any of his contributions. Conversely, someone who retires at the normal retirement age and lives until age 90 collects significantly more than he or she contributed. That's why SS is sometimes called a "social insurance" program.
It's true that the Congress has borrowed from the SS Trust Fund to pay for other programs. But it replaces the money it borrows with special treasury bonds which will assure that benefits are paid to everyone who is eligible.
The intention of the program is to make sure that everyone contributes enough toward his own retirement to assure that he or she has enough to feed themself when they are too old to work. Without SS, we would have bread lines and soup kitchens and/or we would be tripping over beggars on the sidewalks as is the case in parts of Mumbai or Bangladesh. .
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