Q&A: The great Social Security debate

[Catchawave]

http://story.news.yahoo.com/news?tmpl=story&cid=2352&ncid=2352&e=8&u=/csm/20050303/ts_csm/abrief

The Monitor examines eight frequently asked questions on this hot-button issue.

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Q: Speaking of private accounts, would they solve Social Security's woes?
A:No. President Bush is pushing for private retirement accounts within Social Security as a means to sweeten the system for younger workers, and not as a fix for any looming financial crisis.

Theoretically these accounts would not affect Social Security's long-range finances. True, workers would be paying less in payroll taxes into the traditional system, but they would get correspondingly smaller benefits when they retire. The difference - plus something extra, according to proponents - would be made up by the superior investment gains of private accounts.

But in the short run, private accounts would make Social Security's cash flow problem worse. Social Security depends on the contributions of younger workers to pay today's retirees; if some of that money were held back for individual private accounts, the government would somehow have to make up the difference. Most likely, that would mean more borrowing - 1 trillion or more over the next 10 years.

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[Warren Stupidity]

1. misinformation right here"

" As virtually every worker in the US learned when they read their first pay stub, and were shocked at the sums deducted for taxes of various sorts, Social Security is financed by a 12.4 percent payroll tax levied on the first $90,000 of annual wages."

Well I guess I'm one of the non-virtual workers who thinks that my FICA tax is 6.2% of the first 90,000, not 12.4%. Lie after lie after lie.

[FloridaPat]

2. You're employer pays the other half. Now if you believe that they

are doing that out of generosity and still giving you as much pay as you deserve, then that's OK. But raising the cap from $40,000 to $90,000 has taken a ton of money out of corporate America, which is one of several reasons so many jobs have been outsourced. They save 12.4% on every job they outsource, along with unemployment taxes, health care, and they pay is less.

The total paid on you each payday is 12.4%. Medicare is the same way. The employer pays half. So total is around 19% each payday. Add income tax to that. Sales tax, state tax, property taxes and you're around 35-50% goes to Uncle Sam who lies to you.

[Warren Stupidity]

3. Yes that's right.

But that is not what the article said. The article indicated that the FICA tax taken out of your paycheck is 12.4% and that is misinformation. The deduction from your paycheck is 6.2%. That is a fact.

Ask yourself the following question: suppose tomorrow that SS was abolished and the FICA tax, both employer and employee sides, was eliminated, would your paycheck increase by the 12.4% total tax?

I doubt it.

[FloridaPat]

4. Now I see what you were saying. Here's something intersting -

I would really like to know where they are getting the elderly numbers for 2050. I went to the SS site and tried to do some math. I need to find out. In 50 years half the baby boomers will be over 100. I wonder if they are assuming everyone will live until 120.