Privatization of Social Security
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what is the objective of social security?
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give retirement income for worker and spouse
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what do you get when you reach retirement age?
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pension
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what should the recipient see this pension as? what should it not be seen as?
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earned entitlement, not a welfare grant
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what kind of tax is social security
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a flat tax
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for the employee social security tax is proportional to...
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wages and salary
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are there any tax deductions on social security? where is the tax withheld?
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no paycheck
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since there are no deductions with a high tax rate is the total tax large/ small
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large
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is there social security tax on any other income?
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no
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if an individual has a higher wage and salary what does he pay social security tax on?
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on the maximum income only
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what does the employer pay tax on?
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entire wages and salary
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social security benefits are progressive- -example: doubling tax
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benefits are not proportional to the social security tax paid during ones lifetime -doubling tax raises the benefit but by less than double
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social security involves a transfer of wealth between workers due to
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progressive benefits
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an employee who retires after a full career, the retirement benefit is _____ relative to _____ what is the difference?
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small, tax transfer to others
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if the social security tax would have been invested in a pension owned by the worker would the retirement benefit be higher/ lower?
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higher
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why is social security seems as a tax on the worker and only a partial pension plan
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the tax paid is so high that one would expect a higher retirement income, than income while working
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social security tax has exceeded _______ what is the difference between the two
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benefits paid government spending
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what does it mean when people say social security should be privatized? -who will gain -should one be able to manage his own fund?
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the tax from each worker should be invested in a pension fund owned by the worker and the workers pension would depend on if the fund was good or bad -someone with a longer career -no a money manager + a fee
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would \"security\" still apply under a privatized security? -someone with low wages and a short career...
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no receives a small pension
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problem: how to pay future social security benefits? - long run - short run
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-privatization would solve this since the government would no longer have to pay a pension -problem of paying the pension of the baby boomers
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characterize the social security trust fund
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having a piece of paper that says you owe yourself 1 million dollars- does this make you wealthy? no
