Thursday, February 26, 2004

So Where Are Those Social Security Dollars?

Partisan Politics

Since nobody gets my quantum cat box gay marriage riff, I’ll explain something else.

Poor and middle class people in this country have been told that we need to give a large tax cut to the wealthiest 1% of people in this country.  The reason, we are told, is that this will produce expansion in the economy.  This, in turn, will create more jobs, raise the incomes of everyone, and just generally make everything turn out super.

Yesterday a one of my colleagues asked a question about taxes.  We pulled out a spreadsheet and calculated roughly how much he’s paid in social security taxes over his career of seven years (he’s not yet thirty).  We calculated that he has paid roughly $78,000 in social security taxes in that time.  Seems like quite a lot, doesn’t it?  We are including, of course, both sides of the social security puzzle—employer paid and employee paid taxes.  If the employer was not paying these taxes, they could (and would) be given to the employee as wages. 

At this point is is useful to note that the tax cuts for the wealthy are being financed by removing money from the social security surplus.  Very large parts of my everyone’s social security payments are diverted into the general fund.  The general fund is operating at a huge deficit. 

Is my colleague better off holding a promise to pay social security from the federal government, approximately valued at $0 and a promise by the GOP that the improving economy will help him out?  Or would he be better off with his $78,000?

Any potential benefit to the poor and middle class derived from ephemeral supply-side effects is dwarfed by the tax theft this country is currently engaged in. 

The social security taxes apply massive pressure against poor and middle class income mobility.  Without being able to save this money and develop some capital of their own, they are forever trapped in a paycheck to paycheck existence, and forced to be wage earners.

When we give massive tax cuts to the wealthy, we do tremendous damage to the hopes and dreams of the other 99% of Americans, who can’t save enough to make changes in their lives.

A corporation runs a pension plan for twenty years, and manages the assets in the trust fund.  The workers have contributed 15% of their paychecks to this fund, on the understanding that it will be used for their retirements.  The officers of the company “borrow” money from the trust and use it to finance general operations of the company and give themselves massive pay increases.  They leave an IOU, signed and stamped and gold-starred.

In the private world, we would prosecute.  We would call this theft.  Or at least we would have, before the GOP congress of 1998 got its hands on the IRS, prevented them from investigating corporate fraud, and told them to go after earned income tax errors instead, so they can extract dozens of dollars from maids who make $6,000 a year.


Posted by Ross on 02/26/04 at 04:32 PM
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