How Social Security Cheats You to Pay the Rich

MSN Money ^ | 4 February 2004 | Liz Pulliam Weston

[leadpenny]

All due respect, you are mixing apples, oranges and grapefruit. Apples as FICA, oranges as Income Taxes and grapefruit as possible benefits.

Assume for a moment that two 65 year old people die on their way to apply for SS benefits. One had always made at the cap. The other had always made at 10 times the cap. Neither one will get anything out of SS now that they are dead. One paid 12.4% FICA during their working years. The other paid 1.24%. Fair?

[Fledermaus]

I agree. In many places I worked at, we made mention of our mathcing funds to FICA to our employees!

[litany_of_lies]

Both people were entitled to the same SocSec benefit during retirement, because both people paid exactly the same amount of money into the system. That would appear to be the essence of fairness. The fact that the "rich" guy made a lot of other money, or that what he put in was a smaller percentage of his income, is irrelevant--he paid the same dollars in as the "cap" guy, he should get the same benefit.

[litany_of_lies]

Of course, my answer was based on how the system should work--as a kind of funded retirement benefit. The reality is that your and my FICA taxes are paying your and my parents' Social Security benefits--there is no trust fund, blah blah.

If you look at SocSec as a system for current workers to pay current retirees, then the means-test arguments become stronger. Before we allow that to happen, it would be nice for the government to acknowledge the reality that SocSec is nothing but an intergenerational welfare program, instead of maintaining the fiction of "accounts," etc.

[leadpenny]

You and I will just have to agree to disagree on the meaning of fairness. SS is mandatory - which makes all the difference in the world. Think about it, Bill Gates pays his FICA obligation for the year before you get up on New Year's Day. The same can be said for untold numbers of people who can swing a bat or dunk a basketball.

[anoldafvet]

Let me get this straight. By the time I am eligible for retirement, I will have worked and paid into the Social Security "Retirement" system for 48 years. If because of hard work and continually educating myself, I have a few bucks tucked away to supplement my retirement, you want to take away my S.S. because I am "Rich"? Yeah, that seems fair.

If you really want to solve the Social Security problem, get the politicians hands out of it. Put the money in a real Trust Fund to be used ONLY for Social Security and STOP paying benefits to people who never contributed (look up SSI or Supplemental Security Income sometime).

[anoldafvet]

You need to run for Congress.

[kittymyrib]

No, no...you can only have choice if it means killing babies, not if it means killing a government program. Actually, the group who is most ripped off in the Ponzi scheme of Social Security is black men. Their shorter life expectancy lets the government keep everything they paid in....because of course, the family can inherit none of their SS contributions when they die. And this is the party of the "little people"...what a joke! No wonder the dems want to keep people from choice in education, too.

[alisasny]

No matter how well I am when I retire I will take my SS check and use it for green fees. Unless of course they let me opt out and invest my own money very soon.

I dont care if I am a billionaire.

[leadpenny]

You are right about black men getting the worst deal on SS. On the other hand, white women get the most out of it because of their life expectancy.

[Puddleglum]

My solution is to turn Social Security into a WPA type program, where old people build our roads and dams and bridges and record histories and etc. You might just see an improvement in quality. Of course, you'll also have some roads that just wander on forever without getting anyplace.

[Wolfie]

Cheats me to pay the poor, too. I don't expect any changes in my lifetime.

[TaxRelief]

Remove the FICA Cap!

Yea! Tax the rich! They can afford it! < / sarcasm

[leadpenny]

You're rich, I'm middle class. We agree to run a foot race for a mile with ten pound weights on our ankles. All I know is that you get to shed your weights somewhere before the finish line. Makes sense to me. NOT!

[TaxRelief]

Remove the FICA Cap!

Remove the loopholes!

Reinstate the death tax!

Make the rich pay!

Eliminate class envy!

End the deficit!

The rich can afford it!

Make the greedy, rich people pay!

More benefits for the poor!

[TaxRelief]

Work harder.

[leadpenny]

Great comeback! You must be so very proud.

[leadpenny]

Remove the FICA Cap! ~ me
Remove the loopholes! ~ you

We agree!

[kabar]

Your are right on the mark. People don't realize also that payroll taxes (Social Security, Medicare and the like) are nearly as large as the revenue collected from income taxes (40 percent vs 44 percent). The remaining 16 percent comes primarily from excise and corporate taxes, which the consumer pays eventually. If we don't fix these entitlement systems soon, we will have very little discretionary money (Defense is considered a discretionary expense) left in the Federal budget, especially when we also have to pay for the servicing of our increasing national debt.

[kabar]

The FICA tax will eventually be raised to capture almost everyone's income. The cap is raised every year based on cost of living. Oh the wonder of compound interest.