Imperial Valley press., 1935-12-24
Written for The Press
BY DALE cox
Financial Writer of Cleveland Plain Dealer


No staggering sum of money is as yet being
paid out in old age pensions by the states In
1884 only SS1,000000 paid out TO the aged.
Should the states have matched the entire S49-
100000 appropriated by the federal government
this year, payments would not have been more
than Sl00000000.
As yet, these pensions are being paid out of
various types of taxes levied by the states The
federal government this year made its appro-
priation of S490O0O00 out of its general fund
So, except for the states share the taxpayers
are not yet contributing heavily for old age
pensions.
The much more important section of the
Social Security act is that (which deals with the
plan for permanent old age pensions or annuities
which is to replace the present state federal
PLAN
No Benefits Before 1912
Beginning Jan. I, 1887. all employers and en-
ployes under 65. begin contributing taxes toward
this plan. No benefit payments are to be made
until 1912, the intervening years being used for
the accumulation of an old age pension reserve
fund.
Several classes of employees are exempted
from the old age pension plan starting next
year. If you are engaged in any of these groups
of workers. you viii have to depend upon your
own efforts to provide security for your old age.
The exempt groups are farm laborers, domestic
servants, casual workers, seamen, employees of
the federal, state, county, city or any other
unit of government, including the schools, Ii
braries, etc, and employees of religious charit-
What Employees Pay
Beginning January l. all employees qualifying
under the act will pay per cent of their annual
wages as tax for old age pensions. They will
pay the same percentage of their annual wage
up till 1870 For the years 1910 to 1912 they will
pay IL per cent Of their annual wage; for the
years 1913 to l945 they will pay per cent;
from 1916 to l948, payments will be 2la per cent,
and from l949 on payments will be per cent.
Assume that workers annual wage is 81 500.
irSr three hp 1Iril1
tax for the next three years. S22.50; for the
next three, $50; for the next three, S42.50, and
after 1919 he will pay an annual tax OF S45.
Same for Employer
His employer, in every case will pay the
tax that the employee pays on his payroll
The tax for both the employer and employe will
be paid by the employer, to the internal revenue
collectors. The employees tax is to be deducted
from his pay envelope.
If an employee makes more than 3d. 900 year,
the amount in excess of that figure shall not
be considered for purposes of taxation man
with a $1,000 annual salary, therefore, can have
old age pension only the basis of $4,000
annual salary.
The act sets up many restrictions and quail
ifications for the receipt of benefit payments.
In order to be eligible for old age pension
after 1912, for example, worker must have re-
ceived at least $1,000 in wages between Dec. 81,
1886, and jan l. 1912, and the wage must have
been paid in each five calendar years.
Range of Pensions
Onuer Ine plan SET up IN TIE oOCldI otCuIIly
act old age pensions for workers over IS, be-
ginning in 1912 will range from SIS month up
to a maximum of S85 per month. The monthly
pension to which worker will be entitled will
be based, of course, upon the amount of his
monthly salary and the number of years in
which he has paid taxes for contributions Thus,
a worker who has earned only s25 month, and
has paid contributions for ten years, will be
paid SIS month upon reaching IS. person
who has earned $3.50 month and has paid con-
tribu:ions for IS years. will receive an old age
pension of S85 per month.
This system Of payments shows that any
worker now in middle life will not be able to
pay contributions for enough years to bring
him a very high monthly pension when ne
reaches the age of S. A good average pension
for all workers now from IS to 40 years of age,
under this plan will be around $40 month.
Quite far cry from the 5000 month advocated
by the Townsend planl
Next If an EmplOye Dies.
+Io t.iryo1 lie of 4bat 1e-fnnt