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Jewish World Review March 9, 2005 /28 Adar I, 5765
Walter Williams
More Social Security deceit
http://www.NewsAndOpinion.com |
A fortnight ago, I explained some of the congressional deceit
that has become part and parcel of Social Security. One was the 1936 promise
of maximum wages subject to Social Security tax of three percent
$3,000 which, controlling for inflation, comes to roughly $22,000 in
2005. The promise would have meant that $700 would be today's maximum
so-called employee Social Security tax.
Another lie was that there was a Social Security account with
your money in it to which you had rights. There's no such account, plus,
according to two U.S. Supreme Court cases Helvering v. Davis (1937) and
Fleming v. Nestor (1960) you have no legal right, in the sense of a
contract, to Social Security payments.
There's more to the deceit and dishonesty about Social Security.
Congress tells us that one half (6.2 percent) of the Social Security tax is
paid by employees and the other half paid by employers. The truth of the
matter is that all of it (12.4 percent) is paid by employees. You say,
"What! It says on my pay stub that I pay 6.2 percent." Let's look at it.
Suppose you hire me at $6 an hour. From that $6 an hour, you
must deduct 35 cents in Social Security tax and add 35 cents of so-called
employer contribution. Here's the big question: What is your hourly cost to
hire me? If you said $6.35, go to the head of the class. Now comes the
bigger question. If it cost you $6.35 an hour to hire me, what must be the
minimum value of my contribution to your company's output? If you said
$6.35, again, go to the head of the class. If you said that the value of my
hourly output had to be $6, our agreed-upon wage, you'd be losing money and
soon would be out of business because my hourly cost would exceed my hourly
output.
The fiction that employees and employers each pay half of Social
Security taxes has survived since 1936 for two reasons. First, it was meant
to disguise the true tax imposed, and second, it promises something for
nothing a free lunch. And, when it comes to the promise of a free lunch,
employers paying half, gullibility reigns supreme.
There's more deceit and dishonesty. In 1950, I was 14 years old
and applied for a work permit for an after-school job. One of the
requirements was to obtain a Social Security card. In bold letters on my
Social Security card are the words: "For Social Security Purposes Not For
Identification." According to the Social Security administration website,
"This legend was removed as part of the design changes for the 18th version
of the card, issued beginning in 1972." That statement assumes that we're
idiots. We're asked to believe that the sole purpose of the removal was for
design purposes. The fact that our Social Security number was going to
become a major identification tool had nothing to do with getting rid of the
legend.
There's a moral dimension to Social Security that few have the
guts to address. What moral principle, consistent with liberty, justifies
forcing a person to set aside a certain portion of his weekly earnings for
retirement and jailing him if he fails to comply? Retirement isn't the only
important item for which we should budget. How about a congressional mandate
that we set aside a certain portion of our weekly earnings for housing,
food, entertainment or our children's education? Were Congress to propose a
measure that would require each American to set aside a portion of his
weekly earnings for these items, most of us would see it as tyranny. Pray
tell, what's the difference in principle for a congressional mandate that
requires setting aside earnings for retirement versus a mandate setting
aside earnings for housing or our children's
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