To: Kenneth E. Phillipps who wrote (4078 ) 2/25/2004 12:09:31 PM From: DizzyG Read Replies (1) | Respond to With respect to Social Security, Kenneth...Payroll Taxes and the Redistribution of Income Social Security benefits are paid according to a progressive formula that gives low-wage workers a better rate of return on their contributions than it gives high-wage workers. The progressivity of the benefit formula outweighs the disproportionate burden imposed by the tax. As a result, low-wage workers can expect to receive benefits that exceed the sum of their and their employers' payroll tax contributions. Middle- and high-wage workers, on the other hand, can expect to pay substantially more into the system than they will receive in benefits. Thus the Social Security system redistributes income from middle- and high-wage workers to low-wage workers. In addition, many low-wage workers recoup some or all of their payroll tax contributions in the short run through the Earned Income Tax Credit (EITC). Overall, middle- and high-wage workers subsidize the income and payroll tax liabilities of low-wage workers, leaving most low-wage workers with net negative tax liabilities throughout their lifetimes.... house.gov
