Re: On Government Trust Funds


"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote

> The reason an SS surplus exists is simply because of the FICA tax
> system. There would be no such thing as an SS surplus if we got rid
> of that system and the so-called trust fund.


You're right, William. But "the system" is that way because, about the time
I started my working career, a decision was made that people in my cohort
should pay more "into Social Security" than was needed to support our
parents. The purpose was to "prepay" for our own retirement benefits.
Given the demographics of the baby boom, this was _not_ completely nuts. Us
boomers represented a _production_ bulge, during our working years, as well
as a consumption bulge in our retirement, and some attempt to smooth things
out was actually reasonable.

Of course, we boomers blew it: we kept electing people who, partly on the
strength of our "prepayments", kept our "taxes" lower than they might have
been otherwise. So we might as well not have bothered with the "prepayment"
pretense. Our children will have to support us in retirement, just as if we
had _not_ run a "SS surplus".


> If FICA taxes were also eliminated, however, there would have to be
> some change in the tax code to compensate for loss of revenue.


If FICA taxes had been called just plain taxes all along, and spending had
been exactly the same all along, the nation's financial position would be
exactly the same as it is now: publicly-held debt would still be the same,
and SS benefits for the boomers would still have to come from general tax
revenue.

Whether _spending_ might have been less exuberant if we had kept FICA
collections at the pay-as-you-go level -- well, that's another story.

-- TP


.

Relevant Pages

  • Re: On Government Trust Funds
    ... There would be no such thing as an SS surplus if we got rid ... >> If FICA taxes were also eliminated, however, there would have to be ... >> some change in the tax code to compensate for loss of revenue. ... > If FICA taxes had been called just plain taxes all along, ...
    (sci.econ)
  • Re: Solution to Soc Sec problem
    ... >> Sure the US could give tax money to retirees. ... But Social Security IS funded by FICA and that does come chiefly from the ... > The usual Blair lie, ...
    (sci.econ)
  • Re: Bush and OReilly, in denial.
    ... >> either by the IRS or by FICA will be spent this year on something. ... Because the FICA "contribution" IS a tax. ... That is, if you want to call FICA an income tax, then I expect ...
    (sci.econ)
  • Re: Soc.Sec. Were all with Bush
    ... >FICA has been too high. ... >FICA tax from the government, ... new borrowing) roughly 15% of all spendable income, and all Bush has ... It makes no sense to even consider giving a drug addict more drugs. ...
    (sci.econ)
  • Re: Soc.Sec. Were all with Bush
    ... >> FICA has been too high. ... >> President Bush and Company want to divert some of the ... >> FICA tax from the government, ...
    (sci.econ)
Quantcast