Social Security - a bust

"When Social Security was implemented in 1935, the amount of earnings subject to tax was $3,000. The tax rate was 1%. As the Exhibit indicates, in 1966 the Medicare tax rate was split from the Old Age, Survivor, and Disability (OASDI) rate. By 2005 the OASDI rate is 6.2% for both employer and employee on earnings up to $90,000; the Medicare rate is 1.45% with no cap on earnings." Quote taken from an article in the CPA Journal. I recommend reading the entire article; it's a non-biased analysis of the major changes in Social Security over the years.

Apparently, when FDR instituted Social Security, it was meant to be an insurance program for working Americans to pay into to protect against disability and old age. As noted above, it was only a 1% tax on the first $3,000 of income! Through about 20 different changes, today we're at a 6.2% withholding up to $106,800 ($66,000 more than the average American income) plus a 6.2% contribution from the employer. No longer is Social Security an insurance program; it is now a social welfare program. The more you make, the more both you and your employer pay and the more it's spread around to all beneficiaries. (Withholding & employer taxes are 7.5% each including Medicare - a whopping 15%!!)

When the CPA Journal article was written in 2006, it was projected that Social Security would be up-side-down by 2018. SURPRISE! We're already there! The United States Social Security program will be $28 billion in the red by September 2010 (end of fiscal year). With rising unemployment, falling wages and increasing retirement, it's no wonder that the Social Security system is failing. But that's not the only reason it's failing...

Since its inception, our government has been using SS money to fund other projects. All that's left in the coffers are worthless IOUs and interest notes. Social Security has been mis-handled since the beginning 70 years ago. It's another tax that makes no sense because it literally thwarts workers from achieving their full potential. If Americans could keep their entire paycheck, maybe they would invest more money! Maybe they could plan their own retirement! If employers could scrap payroll taxes, maybe they would raise wages, lower the cost of goods, offer more benefits or expand their businesses.

The idea of Social Security insurance was a good thought. But anything handled by politicians working for power - not the people - has a short life before corruption takes over. Social Security welfare is another example of why we need to scrap our current income tax system and enact the FairTax. Let's fund our programs through prosperity rather than income theft and make taxation transparent. www.FairTax.org