Washington politicians are setting the stage for political warfare between the young and old. They’re increasing Social Security and Medicare benefits without regard to those who pay and those who will never see a similar benefit.
Social Security and Medicare are funded by what is known as the payroll tax. The current payroll tax rate is 15.3%. Some politicians claim the rate is only 7.65%, but they ignore the amount being paid by the employer. Ask self employed contractors how much payroll tax they pay.
The Congressional Budget Office says 42% of American working families pay more payroll taxes than income taxes. This does not include the amount being paid by the employer. The truth is: the American population is aging; Congress cannot control their urge to give away other people’s money; and we cannot control Congress. Unless Congress gets serious about fixing Social Security and Medicare, the pressure to raise payroll taxes will mount.
According to a Boston University study, an 18 year old earning average income in 2003 will pay $723,591 in payroll taxes during his or her lifetime. Unfortunately they will only receive $140,000 in benefits. Only government can perpetuate this type of fraud without going to jail.
Eventually, those being robbed will decide they have had enough. Please let me know if you can find an 18, 19, or 20 year old—anywhere–that will give you $723 for $140 in return. Congress is setting the stage for bitter political warfare between young working tax payers and retired elderly Americans. Both groups will end up frustrated, disappointed, and angry.
Please remember this article every time you hear a politician boast about how hard they work to meet your every need. Also remember that everything government gives you must first be taken from someone else. Those of you that support this legal theft should begin to search your soul and be prepared to justify your receipt of stolen goods. Pray for us all.
The Forgotten Payroll Tax
From the Mises Institute by Gregory Bresiger