Everybody is 22 once, and each generation would benefit from the exemption when it was young. However, those who were older than 25 when the exemption was introduced would never have an opportunity to take the exemption. This small benefit for youth may be warranted, given that young people are facing the unprecedented cost of supporting the baby boom generation when it retires. Smoothing Consumption Over the Life Cycle Ever since Joseph advised the Pharaoh to store grain to prepare for the seven lean years, sound financial planning has involved saving during good times to prepare for bad times. However, this logic does not justify transferring resources from youth to retirement.
Many people have less income when they are just starting their careers than when they retire.
Retirement needs should be financed by workers in their prime-earning years, rather than by young people who are often even poorer than retirees. Of course, some young people have adequate income and anticipate that in their prime-earning years they will have greater needs, such as providing for children. These people can always transfer resources to their prime-earning years through private savings. At best, forcing young people to transfer resources to retirement through taxes is unnecessary. So far, I have lumped together the employer and employee portions of Social Security taxes, under the assumption that employers simply pass taxes on to employees in the form of lower wages.