Senator Warrens Plan Shows the True Nature of Social Security by Laurence M. Vance!
(2019-09-26 at 21:48:05 )

Senator Warrens Plan Shows the True Nature of Social Security by Laurence M. Vance

Sen. Elizabeth Warren has a plan. Although her plan is about expanding Social Security, it is a strange coincidence that she released her plan on the very day she would be appearing onstage at a Democratic presidential debate alongside two other Democratic candidates near the top of the pack: the former vice president and senator Joe Biden and the current senator Bernie Sanders. It was her first time appearing onstage with the two of them.

I think rather that Senator Warren has a plan to win the Democratic nomination for president, and calling for the expansion of Social Security is just part of it. Nevertheless, her plan shows the true nature of Social Security.

There are two parts to Social Security (OASDI). The Old-Age and Survivors Insurance (OASI) program provides monthly benefits to retired workers, families of retired workers, and survivors of deceased workers. The Disability Insurance (DI) program provides monthly benefits to disabled workers and families of disabled workers.

According to the latest annual report by the Social Security Board of Trustees ("The 2019 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds"),

-At the end of 2018, the OASDI program was providing benefit payments to about 63 million people: 47 million retired workers and dependents of retired workers, 6 million survivors of deceased workers, and 10 million disabled workers and dependents of disabled workers.

During the year, an estimated 176 million people had earnings covered by Social Security and paid payroll taxes on those earnings. The total cost of the program in 2018 was $1,000 billion.

The Social Security program has always been funded by payroll tax deductions, unlike the income tax, which was not withheld from paychecks until the passage of the Current Tax Payment Act of 1943.

Social Security is funded by a 12.4 percent (10.03 percent OASI and 2.37 percent DI) payroll tax (split equally between employers and employees) on the first $132,900 of an employees income. That means that the maximum amount of Social Security taxes that anyone will pay in 2019 is $8,239.80. Self-employed persons pay the full 12.4 percent, but receive a deduction toward their income tax equal to 50 percent of the amount of the Social Security tax they pay. One must pay Social Security taxes for a minimum of 40 quarters to be eligible for benefits. Social Security benefits are figured on the basis of ones Primary Insurance Amount (PIA), the average of a workers 35 highest years of earnings (up to a particular years wage base), adjusted for inflation. For those born after 1959, the retirement age to receive full benefits is 67. Reduced benefits are available for those who have reached the age of 62; increased benefits are available for those who wait until age 70 to retire.

Senator Warren has a lengthy post at Medium detailing her plan to expand Social Security.

Because -

"Social Security has become the main source of retirement income for most seniors."

"Social Security benefits today are quite small."

"Congress has not increased Social Security benefits in nearly fifty years."

Ms Warren concludes that "we should be increasing Social Security benefits and asking the richest Americans to contribute their fair share to the program."

Her plan "to provide the biggest and most progressive increase in Social Security benefits in nearly half a century" consists of three planks:

-Increase Social Security benefits immediately by $200 a month - $2,400 a year - for every current and future Social Security beneficiary in America.

-Update outdated rules to further increase benefits for lower-income families, women, people with disabilities, public-sector workers, and people of color.

-Finance these changes and extend the solvency of Social Security by nearly two decades by asking the top 2 percent of families to contribute their "fair share" to the program.

And regarding the third plank more specifically, Ms Warren says,

-First, my plan imposes a 14.8 percent Social Security contribution requirement on individual wages above $250,000 - affecting less than the top 2 percent of earners - split equally between employees and employers at 7.4 percent each.

-Second, my plan establishes a new 14.8 percent Social Security contribution requirement on net investment income that applies only to the top 2 percent - individuals making more than $250,000 in annual income or families making more than $400,000 in annual income.

So then, how does Senator Warrens plan show the true nature of Social Security

It shows definitively that there is no connection between the taxes one pays to the Social Security system and the benefits that one receives from the Social Security system. Most United States of Americans think the opposite. They think they are entitled to Social Security because they have earned it by paying into the system their entire working lives.

Under Ms Warrens plan, every Social Security recipient gets a raise, but only "the rich" will pay more in Social Security taxes. Ms Warrens potential Social Security tax increase - like the actual lowering of the employee share of Social Security taxes from 6.2 to 4.2 percent for two years (2011-2012) - will have absolutely no effect on the Social Security benefits that any United States of American receives when he retires.

Social Security benefits have never been based on the amount of Social Security taxes paid. They have always been based on ones income earned from wages during his life. And actually, just the 35 highest years of earnings. The benefits are calculated with some arbitrary formula that the United States Congress can change at any time.

Social Security is a welfare program just like Medicaid, TANF, food stamps, WIC, Section 8 housing vouchers, SSI, free school lunches, and refundable tax credits.

The only reason that United States of Americans can possibly think otherwise is that a portion of their taxes is called Social Security taxes.

Reprinted here with the permission of Mr. Laurence M. Vance and the Future of Freedom Foundation!! Please visit "Mr. Vances blog" at Lewrockwell.com and please visit his website "Vance Publications"!!