From: jfh@rpp386 (John F. Haugh II)
Subject: Re: Social Security
Reply-To: jfh@rpp386.cactus.org (John F. Haugh II)
Organization: Los Tejanos SCUBA Club and Beer Joint, Austin, Tejas
Distribution: tx
Date: Sun, 27 Dec 1992 19:05:01 GMT

In article <Bzvw5J.1KEo@austin.ibm.com> curt@ekhadafi.austin.ibm.com (Curt Finch 903 2F021 curt@aixwiz.austin.ibm.com 512-838-2806) writes:
>Social Security benefits the wealthy far more than the poor.  The
>richer you are at retirement, the bigger your monthly check.  It's
>reverse welfare.  It's extra regressive.  The wealthy are taxed less
>(as a percentage of total income - it stops at 59k gross salary or
>whatever) and receive more benefits when they retire.

This is simply false, and I wish you would either back it up or stop
writing it.

The wealthy are taxed the same percentage as a fraction of taxable
income.  They then receive benefits which DECLINE as the taxable
fraction of their income increases.  I recently posted tabular data
directly from the Social Security administration which shows that,
based only on FICA income, a person making an average of $20K per
year will receive approximately twice the benefits of a person making
$55K.  (The exact ratio, which is calculated below, is about 8 to 5).

A person making $55K (which is the actual cutoff point, it would be
nice if you had the facts straight when you go to make an argument)
average over their lifetime at the current FICA rates will pay in
$7150 per year, or $336,050 if they work 47 years (age 20 to age 67).
The same person making $20K will pay in only $122,200.  The monthly
benefits for the first person will be approximately $1,491 and the
second $878.  (From SSA Pub No. 05-10024).  Using an average life
expectancy of 75 (average of male and female life expectancies),
the total retirement benefit of the first person is $143,136 and for
the second it is $84,288.  The first person receives $.43 per dollar
of contribution, and the second person receives $.69 per dollar of
contribution.

Furthermore, the rich may lose all benefits if their income exceeds
$63,676 (ages 65 through 69) or $7,440 if they are below age 65.  I
would dare say that considering a single retiree with income above
$41,608 "poor" is kinda dumb, but that's where our "poor" person
loses all of their benefits.

>It's a little perverse isn't it?  The richest segment of our
>population, the aged, receive continuous handouts from young wage
>earners far in excess of their own contributions when those same young
>people have not a prayer of ever collecting this freebie themselves.

This is also not correct.  The rich, under the current funding arrangement,
will receive 43 cents on the dollar.  The poor, while still screwed, will
receive 69 cents on the dollar.  The ratio is 1.6 to 1 - in favor of
the poor.

>The problem with our federal government is not that it spends too much
>on the poor - far from it.  The problem is that we spend too much on
>middle and upper middle class 65 year olds with two homes and a fancy
>car.

Again, no true.  Do the math.  If you are "truly" rich, you will lose
all of your benefits.  After $10,200, you lose 33 cents for every dollar
of income you earn.  I wouldn't call a single retiree with only $10K
per year of income "rich".  Would you?

>Isn't it odd that Democrats, supposedly the party of the down-trodden,
>are so completely in favor - almost to the point of unanimity - of this
>twisted state of affairs.  (My apologies to Mr. Tsongas.)

If you'd stop the political posturing for a second, you'd see that the
rich are already being screwed, in typical Democratic party fashion.  The
"twisted state of affairs" doesn't exist.  The $10,200 floor on income is
a straight "progressive" play.  It lets the poor keep more of their SS
benefits, while having a built-in bias against the rich.

The rich fund it but don't receive benefits.  This is how it really works.
And you shouldn't be surprised - this is Democratic party politics at its
finest.
-- 
John F. Haugh II                  [  TSAKC  ] !'s: ...!cs.utexas.edu!rpp386!jfh
Ma Bell: (512) 251-2151           [ DoF #17 ]        @'s: jfh@rpp386.cactus.org
Newsgroups: tx.politics