Marcel, you wrote:
"The entire issue of privatisation is simple. Today the SSi tax is 7.5% of
the payroll up to 84k (i think thats the cut off). The employer pays another
7.5%. thats 15% of incomes goes to ssi. If a person makes 40,000 that means
that 6,000 per year is placed "in trust"; for that persons retirement income
(theoretically). "
Well, I do not have time to reply to your post in full - I will do so later.
For now, I will say
1. The entire issue is far from simple. It is extremely complex.
2. The SS tax is 6.2% for employers and employees (total of 12.4%) up to
$80,400. An additional 1.45% each (2.90% in total) goes to Medicare, but that
is a separate program. The total FICA (Federal Insurance Contributions Act)
tax is thus 7.65% + 7.65% for a total of 15.30 %.
3. The entire tax is not place in trust for a person's retirement. It
never was intended or designed to do that. SS is not an advance-funded
program by its nature (unlike private pension plans sponsored by corporations
and state pension schemes, which are advance funded - which means that they
are designed or required by law to be funded by contributions during the
working years of each participant so that funds are there to pay for their
retirement). On the contrary, it is a "pay as you go" system. The only reason
there is a trust fund at all is that the demographic projections show that
there will be fewer workers per retiree in the future - so, in order to keep
projected tax rates level, a trust fund has emerged because current taxes
exceed current benefit payments, whereas in future years taxes will be less
than benefit payments, so we will have to tap into the trust fund.
There is much, much more to this explanation, which I will try to explain
later. For now, I trust you can see from your initial misimpressions above
that it is not as simple as you might think. That is perhaps the biggest
problem with dealing with this issue - there is an issue, but it may be too
tough for the American people. It should not be, but as usual political
rhetoric ( half truths ? Lies ? damned lies ? statistics ?) will probably
block a clear and honest discussion. Not on this list, though !!!!
Bob S
