The rates you posted are accurate when accounting for exactly half of the price paid by every working person in the US. The current rate is 15.3% for employment taxes.
The fact these rates have been,largely,held in check the last ten years is questionable considering so much heated discussion is spent on the inevitable and expected 'baby boomer' consumption depletion rate moving forward.
There is a theoretical limit as to how much the rate could be raised from here without putting people out of work. 15.3% is a pretty steep percentage considering the regressive nature of employment taxes. For some lower income workers it is the only Federal tax they will ever pay over their lifetimes, although with the earned income credit they do get some of it back, as the earned income credit acts like a negative income tax. Raising the rate further would have the same result that raising the minimum wage would, it would result in pushing the marginally employable out of the workforce. Their production wouldn't be able to pay for the increase needed in their salaries to make up the difference in what goes to them and what goes to taxes.
The problem with the system is that it was set up as a transfer payment system. Ponzi schemes are transfer systems. They rely on an exponentially larger number of people entering on the bottom of the pyramid in order to pay off those at the top. The cost of a transfer system is that money that is simply transferred from one person to another and used to pay for living expenses, the money paid in is consumed rather than invested in a productive asset. Productive assets have the ability to be worth more in the future, as they produce future income streams which may be worth a large multiple of the original investment. Investments also benefit from the time value of money.
As for those,lucky and fortunate enough to forge their own way in life and not find themselves in need of our entitlement program-good for them,but leave the check at the door anyway.
The old age portion of SS is not a means tested system. Everyone is sent a check based on what they paid in regardless of need. Medicare is also not means tested, everyone past a certain age is eligible regardless of the ability to pay for their own healthcare. The disability portion and survivor benefits of SS are based on disability and death, not need.
The social programs which are needs based are the Title 19 programs like SSI and Medicaid, the programs set up that are like SS and Medicare but are for those who never paid in. The Title 19 programs are not financed from employment tax, they are financed from the general fund, which is financed with income taxes and borrowing. An interesting fact is that the surplus from SS which is exchanged for special bonds is of such an amount that it almost equals the amount that is needed to fund those programs. One has to wonder, considering the growth in Medicaid and SSI how the government will pay for them as the surplus slowly disappears in the next 13 years.
Left to their own discord some would simply choose not to save at all and run the risk of have nothing available to draw on in later years. That would have a much larger impact on society and our financial system.
So the decision to compel everyone to pay into a system doomed to failure is based on distrust. Here's a fact for you. Before SS about 50% of the nations elderly lived out their old age below the official poverty line. Today, after the institution of SS, half the elderly have no other income other than SS which pretty much guarantees that they will live out their lives below the poverty line. What happened to the incomes that they were able to manage to eek out before SS? SS had the effect of seriously lowering lifetime savings for the lowest income earners. It is not surprising they weren't able to put anything away considering how much of their income was taken away from them before they even saw it. |
