If there’s no reform of the system, get ready for either a 50% increase in payroll taxes or an automatic 29% cut in benefits. The government simply cannot squeeze any more revenue out of the already high 12.4% payroll tax rate, up from the original rate of 1%.
Is this what FDR had in mind when he signed the law 70 years ago, that all workers would have over 12% of their income stripped away? I rather doubt it. (HT: Social Security Choice)
1 comment:
No, he just thought very few people would survive to collect it, and those that did wouldn't collect it for too many years. Now that people live 10 to 20 years beyond retirement, it means people need to either tuck away 1/4 to 1/3 of the income in an account that keeps up with inflation to pay for retirement. Or they need to get a higher rate of return.
Regardless increasing payroll taxes is not the solution. Raising them will only make the US uncompetitive, because you are increasing production costs for the employee and employer. I think the best solution is to pay for current benefits through a consumption tax, and encourage/mandate workers to save and invest more of their own income. The simple fact of the matter is that we will need a drastic improvement in productivity to maintain our lifestyles in the future as the population becomes increasing grey, and the only way we are going to improve productivity is to invest wisely.
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