The Real Wealth Gap--The 'death tax' for the other 98 percent of us - Social Security

techcentralstation ^ | 02/19/2003 | David Boaz

[hobbes1]

No, Joe, the Apt name would be "Socialist Security"

[hobbes1]

Supposing, as is usually the case, his children are over 18.....I would think he would care about 1/8 th of the labor of his 50 or so adult years not being left to his offspring....

[Southack]

Live and learn, child.

What's the SS Tax cutoff this year (it goes up each year, remember), $75,000 or so? The combined FICA contribution for each employee (matched by me, the employer, of course), is 15.4%, or up to $11,250 per year in SS contributions per employee. 2% of that figure is $225, less for those earning under $75k per year, of course (and keep in mind that this figure keeps increasing each year under current law).

Now, $225 per year for 30 years of work (presuming NO increases in SS or salary, a pretty CONSERVATIVE estimate), would add up to $50,000.00 in cash (at 3.5% interest rates - i.e. below government issued treasury note guaranteed returns).

Now, even though the average employee earns less than $75k per year today, those calculations above are fixed for all 3 decades, and in 30 years the average will be much higher than $75k per year, meaning far larger actual returns that the $50k that I'm talking about even for workers earning less than that today.

So President Bush's plan to privatize up to 2% of SS would mean that the average worker in America will be able to leave at least $50,000 in stock equity to her heirs, in addition to getting all of her promised SS monthly payments.

So privatizing 2% of SS really means a $50,000.00 bonus to each and every worker over and above what they will currently be able to leave their heirs with today's tax laws.

[lodwick]

Start taking the payments at 62 instead of waiting.

[HHFi]

My father was a hard-working carpenter in rural Texas who barely stayed above the poverty line and had to kill a deer every year just to put meat on the family table. Yet he had to scrape together a huge part of his income (the double-hit self-employed people have to pay) for 40 years and send it off to Washington for Social Security, which he cursed every day.

He died of cancer at 66, having collected a whopping$680 a month for 12 months. The government, of course, kept all the rest of the money he sent them. So please spare me any talk of the "sacred compact" that is Social Security. To our family, it was a giant rip-off that kept my dad poor and struggling for 40 years.

[Pagey]

When a worker retires after paying 12.4 percent of wages for years, he gets a monthly Social Security check. The return isn't very good, but at least there's a check (so far). But look what happens when the worker dies: After paying in for all those years, the worker owns nothing. He can't leave anything to his children. In short, Social Security imposes a 100 percent death tax on every working American. The money he "saved" all those years disappears.

BTTT