1- Make people who don’t get W2’s pay their taxes. Those of us who are salaried are subsidizing the whole country while the self-employed, the sub-s people, the “contractors”, claim expenses that don’t exist and declare no profit…therefore, they owe no taxes. Amazing. And every day, there’s another company laying off employees then bringing them back as “contractors” (no benefits, among other things), creating more people who won’t pay their fair share of taxes. This would not only increase contributions to Social Security but it would also help end the deficit.
2- Bring back the annual earnings test for Social Security benefits. It used to be that you lost $1 for every $2 you earned over the limit (now $12000) if you worked while getting Social Security. Only at age 72 (later age 70) could you receive your whole Social Security benefit no matter how much you earned. In recent years, that limit has changed. Once you’re full retirement age (65 to 67), you can get your whole Social Security benefit even though you’re not retired, no matter how much you are earning! That’s ridiculous. It’s a retirement benefit. If the Civil Service Retirement System worked under the same rules, we would already be drawing his pension even though he is still working.
Of course, the annual earnings test, in practice, mostly affects W2 employees. The self-employed have a zillion ways of getting around it…if you don’t report earnings, nothing needs to be withheld. How cool is that?
The chances that any politician will subscribe to either of the above views are zip. Elimination of the annual earnings test at an earlier age (even though people are living longer) is a big deal for older people (who vote in disproportionately high numbers). As for making people pay their taxes…that’s the real “third rail” of American politics, especially for Republicans. You can’t interfere with Americans’ “right” to cheat on their taxes.
Finally, I advise everyone to read the Social Security for Dummies that is going around on the internet.
Commenting on the 2005 Motley Fools’ article 7 Social Security Myths:
I thought the Motley Fool was about 3/4 right. One of the big problems is that Social Security was supposed to supplement private pensions…and employers are doing everything they can to cheat their employees out of them if they ever offered one. Social Security is supposed to create a guaranteed base for your retirement. It’s not supposed to be the whole thing. If it were, your Social Security taxes would have to be higher, like our Civil Service Retirement System contributions are (over 7 1/2 per cent and on top of that we pay Medicare tax–but CSRS pays very little in disability benefits and very little in survivor benefits, unlike Social Security. Note that Civil service employees hired after 1983 also pay into Social Security but have a lower retirement contributions.
-Submitted by Sheri of Georgia
- Send us your view on Social Security or any other money related issue by writing to webmaster (at) banklady.com