Social Security and Medicare for the Bourgeois
March 4, 2010
In about seven years from now, Social Security is expected to start paying out more than it collects in payroll taxes, according to the 2009 Annual Report from the Social Security and Medicare Board of Trustees. We hear there is currently a surplus, which will be gone by 2037. The well is running dry.
“We won’t have a crisis,” quoth Michael Astrue, Commish of the Social Security Administration. “2037 is a long way off and there is no reason to panic, but this is a serious issue we need to resolve. ”
And where did Tom Firey, managing editor of the Cato Institute magazine come from? CNBC notes that Firey has been whining for ten years about how “Generation Xers” are getting the short end of the stick on all of this, suffering at the hands of all of us greedy Boomers.
“Ever since we Gen-X/Yers began working, we’ve paid 12.4 percent of our earnings to Social Security. In contrast, the Boomers will get a bargain. When they entered the workforce in the late 1960s, they paid only 6.5 percent of their earnings to Social Security. Only from 1990 on, when the boomers had earned paychecks for a quarter-century, did they start paying 12.4 percent to Social Security, the same percentage we gen-X/Yers have paid our whole lives.”
What a whiner! Shall we compare what Boomers have been paying for 40 years or so with what folks started paying into this fiscal fiasco when Roosevelt cooked it up?
And who among us will find anything to celebrate in Obama’s most recent proposed health care fix, when it comes to the new taxes he wants to pile on to not just workers, but retirees and savers, ostensibly to save Medicare.
“Under current law, workers who earn a salary pay a flat tax of 1.45 percent of their wages to support the Medicare Hospital Insurance trust fund, but those who have substantial unearned income do not, raising issues of fairness,” notes the summary to his so-called plan. “The Act will include an additional 0.9 percentage point Hospital Insurance tax for households with incomes exceeding $200,000 for singles and $250,000 for married couples filing jointly. In addition, it would add a 2.9 percent tax for such high-income households to unearned income including interest, dividends, annuities, royalties and rents.”
So does all of this redistributionist logic remind you of a little history? Sounds to us a little like the infamous views of a guy named Marx (not Groucho), who once opined that to divide what remains according to productive input (labor time) is a “bourgeois” formula for equitable distribution….thus to right the defect of bourgeois society, namely, that mere physical or mental superiority makes one man richer than another, distribution should be “from each according to his ability, to each according to his needs.”
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He is also a contributor to the recently published 13th edition of Tax Savvy for Small Business, published by Nolo. He can be reached at 831-7288, and welcomes comments below.