I don't understand what?
Sorry, I don't have that much time, so let's limit the discussion of what you don't understand to the difference between pension contributions and taxes.
It's really pretty simple. The portion of what is generally referred to as "payroll taxes" that is really your and your employer's social security contributions goes into a "trust" to be "invested" - in the case of SS it can only be invested in treasury securities - and then used to pay your retirement benefits. Like any traditional private pension plan, you future benefits are determined without regard to the performance of the trust fund - they are based primarily on the amount of money you pay into it before you retire and are paid out at that predetermined rate until you die (and some amount longer if your spouse survives you), hence the term "define benefit plan." So, you and your employer pay money into this pension plan and you, assuming it doesn't goes bankrupt, get your benefits from the assets that build up in the trust.
A tax, OTOH, is money you pay to the government so the government can operate and provide the services you and your countrymen demand of it through your representatives. Taxes do not go to fund social security and once you pay them, you have no future claim on them. Your taxes produce no FUTURE defined benefit pension payment and no assets accumulate in a trust - they fund current spending of the government.
Social security benefits are NOT "welfare for the elderly", a transfer of wealth from the young to the old or rich to poor, and contributions are NOT a tax. And the fact that you don't have the option to not participate is irrelevant. That doesn't make it a tax - it only makes SS a mandatory participation plan (for non-federal employers/employees, anyway).
Are you with me so far? ... Well, read it again and try to catch back up.
Now, anyone who doesn't participate in this plan, either because they don't work and contribute or because they work in a job that is exempt from participation (like Congress), gets - guess, CC, how much do they get when they retire? Nothing, that's how much. Now guess how much the CEO making seven figures gets relative to the worker who just reaches the annual maximum for contributions (currently a little over 87k, BTW). The same, that's how much. The fact that contributions are capped each year does NOT make SS a regressive tax - it is simply the result of the fact that the benefits are capped.
Keeping up? OK, take your time.
Lastly, yes, Reagan did raise the rates on employee and employer contributions to social security. I never said he didn't. Do you know why?
He did it because without higher contributions over the last twenty years, social security would already be bankrupt. It's really no different than making GM or Ford increase the amounts of their pension plan contributions to fund their unfunded pension obligations. In this case, however, it was only a partial fix and there have been other partial fixes since - the trust WILL STILL run out of money with huge obligations owed to most of today's workers.
Will, that is, unless it gets fixed.
You in the dippy left clearly want to "fix" it by stripping the trust fund of its assets, stripping better off contributors of their benefits and forcing them to pay more anyway so you can redistribute their earnings, and making the whole thing a "pay as you go" program of "welfare for the elderly", funded from general income taxes. Ain't gonna happen - that is NOT a fix, the American people are smart enough to know that, and the dwarfs won't get the chance. |
