Jewish World Review
March 31, 2000 /24 Adar II, 5760
http://www.jewishworldreview.com -- IT'S UNANIMOUS: Elderly people should be allowed to work and keep their retirement benefits, too. Chalk up another legislative victory for the great geezer lobby.
The U.S. Senate voted 100-0 last week to repeal the so-called earnings limit. Under current law, for every $3 earned by workers between the ages of 65 and 69 who make more than $17,000 a year, $1 in Social Security benefits is taken away. About 800,000 people lost some or all of their benefits last year because they exceeded the limit.
The popular legislation repealing this outdated Depression-era rule is retroactive to Jan. 1. Final passage will come this week in the House; President Clinton said he will sign the bill. Some 415,000 people can expect to get reimbursement checks averaging $3,500. That's a $1.4 billion election-year windfall to compensate the working old. Over the next 10 years, the repeal will cost the government $22.7 billion.
Don't get me wrong: Anything government does to discourage people from working should be thrown out the window. But what about the working young? Where are our retroactive paychecks? Who will abolish Depression-era employment rules that punish us in our prime?
Don't we deserve the same "freedom to earn" as our grandparents?
Supporters of the earnings-limit repeal show selective concern about work disincentives - which are created by benefit phase-outs in all means-tested programs. One wonders, for example, why Congress has demonstrated such little legislative consideration for those in my generation, who lose one dollar in Social Security payroll taxes for every seven we earn from the moment we clock in.
Under the Federal Insurance Contributions Act (FICA), working Americans pay 6.2 percent on their first $62,700 of gross income to fund the Old Age and Survivors Insurance and Disability Insurance program. Employers must match those taxes, which ultimately come from every employee's paycheck as well. As a self-employed person, I fork over the whole 12.4 percent chunk of FICA payroll taxes on my own.
Another 2.9 percent tax on all wages goes to Hospital Insurance (Medicare Part A). Add it all up and the result is 15.3 percent of total income automatically confiscated by the government from able-bodied working people. That's more than $4,500 a year for someone who has a salary of $30,000.
What do we get for our forced contributions? The return on our "investment," pardon my MTV vocabulary, sucks. Most retirees this year can expect to receive about what they put in, plus interest. But the payback is dwindling over time because benefits will have to be cut or taxes raised - or both - to address an impending shortfall caused by the retirement of the baby boomers.
We hear a lot about fairness and tax cuts and "supporting workers" and "keeping the economy strong" from political leaders on both sides of the aisle. Yet, structural reform of the nation's unjust, anti-worker, budget-busting entitlement system has gone nowhere. And neither major-party presidential nominee has uttered a word about slashing our payroll taxes or repealing unfair exemptions from this mandatory wealth-transfer scheme.
Above $62,700 of gross income, for example, earnings are exempt from the retirement portion of Social Security taxes. Why not cut the payroll tax rate and apply it to all earned income? If the high-earner exemption were abolished, it would lower the Social Security tax rate without reducing payroll tax receipts; everyone earning less than $82,000 (which means all but 3 percent of all working Americans) would get a tax break. What could be a better work incentive than that? What could be more equitable than everyone paying the same flat rate?
Moreover, if Congress were so concerned about nonsensical Depression-era rules, it would raise the standard retirement age immediately to reflect increases in life expectancy that have occurred since the 1930s when Social Security was enacted.
The old farts in Washington, however, are unanimous in their opposition to
real Social Security reform. So much for doing it for the children.
Somebody's gotta pay for your ticket to Leisure World,
03/28/00: Declaring war on HOV lanes