Seventy Sins of Social Security #1: Rate Expectations
How coincidental that my "Seventy Sins" series should begin on 6/6/06.
Do you know what the original Social Security tax rate was when it took effect on January 1, 1937?
It was a 1% payroll tax taken out of workers' paychecks, with a matching 1% employer contribution. (Or, if you prefer, employer "contribution".) From the government's point of view, it was a 2% tax.
Now without checking a pay stub, what is the Social Security tax rate today? Since 1990, the tax has been 6.2% on the worker, or 12.4% combined.
Part of that, roughly 1.8%, goes toward Social Security Disability. The rest, 10.6%, is for Social Security Old-Age and Survivors Insurance (OASI). That's the part I'm most concerned with.
So in its first 70 years, the Social Security tax has grown to more than five times its original rate. At least 2% to 10.6%. And even after quintupling, it's still not enough money, causing some to suggest that it be raised further still.
Now an open-ended question: has there ever been a tax that was increased this much, and still proved insufficient to cover its debts? Is such a tax worth saving?
Do you know what the original Social Security tax rate was when it took effect on January 1, 1937?
It was a 1% payroll tax taken out of workers' paychecks, with a matching 1% employer contribution. (Or, if you prefer, employer "contribution".) From the government's point of view, it was a 2% tax.
Now without checking a pay stub, what is the Social Security tax rate today? Since 1990, the tax has been 6.2% on the worker, or 12.4% combined.
Part of that, roughly 1.8%, goes toward Social Security Disability. The rest, 10.6%, is for Social Security Old-Age and Survivors Insurance (OASI). That's the part I'm most concerned with.
So in its first 70 years, the Social Security tax has grown to more than five times its original rate. At least 2% to 10.6%. And even after quintupling, it's still not enough money, causing some to suggest that it be raised further still.
Now an open-ended question: has there ever been a tax that was increased this much, and still proved insufficient to cover its debts? Is such a tax worth saving?
