Further to our January 26th “Crisis, What Crisis?” posting on Social Security, a few more factoids should be interjected into the discussion. First, the Social Security payroll tax has been raised 20 times since it was imposed in 1937. It was originally 2%, a nominal amount that was unlikely to adversely affect hiring. However, after 20 increases it now stands at a whopping 12.4%. This is a crippling amount for employees and employers alike and making it even bigger will certainly be a job killer. In addition to raising the rate, the cap has steadily increased from $37,800 in 1984 to up to today’s $90,000. The National Association of Manufacturers estimates that the payroll taxes betwen 1984 and 1997 have cost Americans 1 million jobs. It should be noted that in addition to the economic and personal havoc created by the the job losses, increased payroll taxes also reduce the collection of Social Security monies due to the lower number of employed workers thereby further weakening the system. It becomes a vicious circle.

Democrats, AARP and others fighting against Social Security privatization would be on much firmer ground if they could articulate a non-privatization rescue of the system that didn’t eviscerate jobs in the process. However by alternating between “it’s not a crisis” and “we’ll just raise taxes to cover it”, they aren’t going to win over anyone looking at the hard data.

This entry was posted on Monday, January 31st, 2005 at 2:03 pm by Insider and is filed under Brilliant, but uncategorizable. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.