Social Security taxes are routinely taken out of employee’s paychecks, with the employer also contributing the same share, of which this is applicable upon tens of millions of those workers – because those Social Security payroll taxes are a mandated requirement imposed by Federal law. Because Social Security taxes have been around since 1937, there is a tendency for a lot of folks to believe that whatever taxation that employees and employers are paying in the present day, must be around what it was back at the inception of such a tax, but this isn’t true at all.
In 1937, Social Security taxes for a given employee was a total of just 1%, and was subject to a maximum income of just $3,000, before that tax was thereby phased out. Of course, since 1937, we have had an awful lot of inflation, but to blame inflation for the rise in Social Security amounts so being collected, would be disingenuous, for the current amount of income before the Social Security tax is phased out for employees in 2022, is now $147,000; in addition, to the salient fact that today’s employees and employers are responsible for a significantly higher percentage amount so being extracted from each paycheck, to wit, of 6.2% for Social Security, along with 1.45% being so allocated to Medicare. In other words, the Medicare allocation of these taxes, is at a higher percentage than the original complete Social Security tax was when first enacted.
So too, the amount of money being collected by the Federal government in regards to Social Security taxes so being collected, is as reported by cbpp.org, “35.9 percent of all federal revenues” for 2019; whereas, in 1950 that percentage was a mere 5% of all federal revenues. This presupposes that fundamentally the Social Security tax has been transformed over the ensuing years; in which, more and more, that Social Security tax represents for each individual their contribution, in essence, to their individual retirement, even though the structure of Social Security stipulates that the funds so being extracted from individuals for Social Security taxes, basically does not ever represent a personal account, but really represents, their portion so being allocated for Social Security reserves, which each individual, thereof, has a future claim upon, subject to their lifetime earnings, disability, and other factors.
One of the most egregious problems with Social Security is that the structure of it, to begin with, made the fatal error, of making each individual, no matter how little that they earned or how much, subject to that taxation, from the very first dollar so earned. A far better way to have addressed, a program that was earmarked to be of benefit for the elderly and disabled as an economic security safety net, would have been to see that all earnings below a living wage, so indexed to inflation, would not have been subject to that Social Security tax, whatsoever; and only those earnings on a yearly basis above a living wage, would have been subject to such, of which all those earnings above that given threshold, would then thus be subject to no taxable maximum.
The bottom line is this, the people that need Social Security benefits the most, and can afford the least to have their taxable income subject to such, are all those that have struggled to make their mark in this land, and the least that any government of any legitimacy can do for the very people that it is supposed to promote the general welfare of, is to do exactly that.