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Pastimes : Let's Talk About Our Feelings!!! -- Ignore unavailable to you. Want to Upgrade?

To: Michael M who wrote (71899)	1/10/2000 4:03:00 PM
From: Zoltan!	Respond to of 108807

Thank you FDR: Social Security 'Under-Performing' for Postwar Americans Most Detailed Academic Analysis Ever Reveals Massive 'Hidden Tax' Imposed by The System NEW YORK, April 15 /PRNewswire/ -- As Americans today file their 1997 income taxes, a groundbreaking study conducted by leading academic experts and commissioned by Merrill Lynch reveals that the U.S. Social Security system levies a lifetime ''hidden tax'' of more than $500,000 on middle-class American workers born since the mid-1950s. Relying on the most detailed and comprehensive analysis ever conducted of the way Social Security impacts individuals of different ages, incomes and life experiences, the researchers demonstrate that Social Security is a far worse ''investment'' for Baby Boomers and Generation X-ers than previously imagined. Indeed, individuals born since the early-1960s will receive less than a 1% real rate of return on their contributions. Most startling, the analysis also reveals that Social Security's ''hidden tax'' strikes middle-class Americans hardest of all. Middle-income Americans born in the early 1960s, for example, face implicit lifetime tax levels imposed by the Social Security system that are 75% to 90% higher than those facing low-income or wealthy individuals of the same age. Announcing the findings, Merrill Lynch Vice Chairman John L. Steffens said: ''Social Security has been extraordinarily successful over the past 60 years. Make no mistake, however, decades of changes to the program -- including increased payroll taxes, higher retirement ages and greater taxes on benefits -- have transformed it into an under-performing asset for Americans, especially those younger workers who are entering their first jobs. This study is the most serious attempt ever to understand Social Security's impact across our society.'' The new analysis, entitled ''Social Security's Treatment of Postwar Americans,'' was conducted by Boston University economists Laurence J. Kotlikoff and Alla Gantman; Cornell University sociologists Steven Caldwell, Melissa Favreault and Thomas Johnson; and Federal Reserve Bank of Cleveland economist Jagadeesh Gokhale. Their findings are based on a massive and highly complex micro-simulation designed to track the life experiences of expected Social Security beneficiaries and determine how much beneficiaries in different age groups can expect to pay in OASI taxes and receive in benefits. The study offers four important new insights into the current status and future prospects of the U.S. Social Security system: -- Funding crisis more severe than publicly acknowledged. By considering unpublished estimates by Social Security's actuaries, the authors discovered it would require an immediate and permanent 4.7 percentage point increase in the current 12.4% OASDI tax rate to pay for benefits on an ongoing basis. This 38% tax increase is more than twice as large as the increase the Social Security Trustees Report says is needed to achieve long-term actuarial balance, and it would represent an annual tax increase of almost $1,900 for a family earning $40,000 per year. -- Social Security "under-performs" for American workers. The authors estimate the Social Security system now offers a real rate of return of only 2.4% for individuals born immediately after World War II; about a 1% return for those born in the 1960s; and a return of essentially zero for those born at the end of this decade. These returns fall far below the roughly 3.8% "risk-free" rate of return that can now be earned on inflation-indexed U.S. Treasury Bonds. -- Middle-class Americans hit the hardest. Perhaps the study's most striking finding is that Social Security now represents a lifetime net tax -- rather than a net benefit -- for all Americans born after 1945, and the middle class faces the highest lifetime tax rates. Among individuals born in the early-1960s, the lowest and highest wage earners face 4.3% and 4.7% lifetime net tax rates, respectively, due to Social Security; middle-class Americans of the same age will bear an 8.3% lifetime net tax rate. -- Social Security represents an enormous "hidden tax" on wealth. The authors calculate that, by participating in the Social Security system, post-war Americans will forfeit enormous amounts of potential wealth. For example, middle-class individuals born in the early 1960s would be roughly $565,000 better off had they not participated in Social Security and had instead saved their contributions in accounts earning a 5% real annual rate of return. Addressing the ongoing debate regarding Social Security reform, Mr. Steffens added: ''In all honesty, no one currently has a perfect solution to Social Security's problems, but this new analysis makes it abundantly clear the status quo simply cannot stand. Our nation's economic future depends on our ability to continue a rational and informed debate about Social Security reform, and this study is a tangible demonstration of Merrill Lynch's commitment to participating actively in this vital discussion.'' For copies of the complete study by Kotlikoff et al., please contact Merrill Lynch at the telephone number listed below. Merrill Lynch is one of the world's leading financial management and advisory companies with offices in 40 countries and total Private Client assets of $1.3 trillion. As an investment bank, it is the top global underwriter and market maker of debt and equity securities and a leading strategic advisor to corporations, governments, institutions, and individuals worldwide. Through Merrill Lynch Asset Management, a wholly owned subsidiary, Merrill Lynch operates one of the world's largest mutual fund groups. SOURCE: Merrill Lynch & Co., Inc.

To: Michael M who wrote (71899)	1/10/2000 6:37:00 PM
From: Lizzie Tudor	Read Replies (4) \| Respond to of 108807

My bottom line on means testing SS is that you can then call the whole damn mess a welfare system. I thought we were trying to move away from that. I can certainly see why YOU would want to move away from calling a SS a welfare system (for the wealthy), because that would be beneficial for you. I have no desire to do that, and no, I am not trying to "move away from that". I believe in calling a spade a spade, or a tax a tax. I also think that by pandering to the elderly for so many years, and by removing any stigma that SS is a welfare system, we have created a "welfare state" for a huge number of americans that somehow have convinced themselves that they deserve these 1000% payouts. Means testing will fix the problem, and insure that we are covering the elderly poor which everyone seems to be so concerned about. The fact that there is so much resistance to means testing makes me think the poor is not the issue.