From: jwh@citi.umich.edu (Jim Howe)
Subject: Re: The end of the Reagan Era
Date: Thu, 05 Nov 92 10:43:16 EST
Organization: IFS Project, University of Michigan
Distribution: usa
Reply-To: jwh@citi.umich.edu

In article <1992Nov5.023536.15372@mksol.dseg.ti.com>, mccall@mksol.dseg.ti.com (fred j mccall 575-3539) writes:
|> In <Zt-=2yB@engin.umich.edu> jwh@citi.umich.edu (Jim Howe) writes:
|> 
|> >|> 
|> >|> No, it is QUITE relevant.  It is NOT part of your salary.  The 7.5%
|> >|> they take from you is part of your salary.  The other 7.5% is part of
|> >|> a forced benefit.
|> >|> 
|> 
|> >When an employer makes you a job offer, they don't make an offer and
|> >then suddenly slap themselves on the head when they realize that
|> >they have to pay an additional 7.5% to the government in your name.
|> >The 'cost' of that 'benefit' is part of your compensation package
|> >as far as they are concerned.  It represents the cost of employing
|> >you.  If they think you are worth it, they will pay it, otherwise
|> >they won't.  The employer portion of FICA is *very much* a part
|> >of your salary.
|> 
|> No, it is a part of your COMPENSATION PACKAGE (like insurance,
|> unemployment, etc.) but it is NOT part of your salary.
|> 

Ok. I'll agree with you on that.

|> >|> >Employers
|> >|> >aren't overpaying their employees by 7.5%, they are simply redirecting
|> >|> >a portion of their compensation.  I believe that if an employee
|> >|> >is allowed to drop out of SS, he should receive the same level of
|> >|> >compensation that he was receiving.  
|> >|> 
|> >|> Ah, YOU believe, and think the gun of government should be put to
|> >|> their head to force them to do what you believe.  Very libertarian of
|> >|> you. 
|> >|> 
|> 
|> >Actually I don't really care.  You asked the question about what would
|> >happen if the employer simply kept the 7.5%.  I gave a solution.
|> >I happen to think that an employer keeping the 7.5% without notifying
|> >the employee that he is receiving a pay cut borders on fraud.
|> 
|> It's not a pay cut.  They just changed your benefit package and are
|> now putting that money into your company pension.  Or not.
|> 

Agreed.

|> >|> 
|> >|> But why do you feel it is all right to FORCE the employer to turn that
|> >|> part of the benefits package over to the employee in cash for a year
|> >|> before they are allowed to withdraw it?
|> >|> 
|> 
|> >Yes.  I don't believe that hidden mechanisms of government interference
|> >should give an employer the ability to commit fraud.  An alternative
|> >solution would be for the employer to notify the employee that his
|> >total compensation package has been reduced by 7.5%.
|> 
|> Except that it hasn't.  It has been reduced by 7.5% OF HIS SALARY.  It
|> ain't the same thing.  Funny how the 'government mandate' occurs so
|> fast to you, as an anti-government mandate libertarian, don't you think?
|> 

As to your first point, you are correct.  I mispoke.  As to your second
point, I proposed the mandated solution in response to your question about 
what would happen if the company simply kept the remainder.  I believe
that question would occur if any attempt were made to implement a
phase out of SS.  As such, the solution I proposed was simply a political
one.  It's not a perfect libertarian solution but in exchange for
getting rid of SS I, for one, would be willing to sacrifice some level
of purity to get an enormous gain.

|> >|> 
|> >|> Oh, I quite agree.  I just thought the idea that peoples' incomes
|> >|> would jump by the total of SS instead of just by their contribution to
|> >|> it was just a bit disingenuous.  After all, if SS goes away, the
|> >|> employer will have to pay out more in their own retirement plan.  Many
|> >|> of them ARE offset by SS benefits.
|> 
|> >They wouldn't have to.  The payout could be offset by the amount
|> >of income generated by the employees own retirement accounts.
|> 
|> Huh?  I'm lost.  Are you saying that the company pension would be
|> reduced by the amount that I got from MY investments?  That's WORSE
|> than Social Security!

Note that I said 'could' and you said 'would'.  It would be up to
your companies plan to decide how it wanted to operate.


James W. Howe                  internet: jwh@citi.umich.edu
University of Michigan             uucp: uunet!mailrus!citi.umich.edu!jwh
Ann Arbor, MI   48103-4943         
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