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Jim IB Headshot

Inside Views - October 2015
The coming retirement crisis: thank God for social security




When talking about who pays for our government, the argument is often made that a disproportionate share of the cost falls upon the wealthy.


The top 1 percent of income earners pay about 40 percent of all the personal income taxes collected while the top 25 percent pay almost 90 percent. The bottom 50 percent account for only 3 percent of the income taxes that the IRS collects.


The counter argument is that when you factor in employment taxes, which are primarily for Social Security and Medicare, the percentage of taxes paid as a part of total household income is actually higher for low income earners. Therefore, lower income earners pay more than their fair share.


This argument, however, lies on a flawed premise. Employment taxes are not really taxes; they actually are forced savings. Because we are forced to pay them, they are available to us when we retire. One way to think of it is that the dollars are put into a savings account, actually called the Social Security Trust Fund and the Medicare Hospital Insurance Trust Fund, and we get them back when we retire.


Read the rest of Jim's column here!