The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1936-02-20

lie health service, the blind, children's
and material welfare, and similar pub
lie responsibilities. There is no doubt
about the constitutional nature Of these
grants-in-aid, for they have been made
to states in the past for education, road
building and other purposes.
By 1912, these grants-in-aid will be
replaced, or at least will be far sur
passed in Importance, by the second
old age provision of the law. While
the first provision is ''non-contributOry"
the second. which is an old age pension
system operated entirely by the fed
eral government, will be paid. for by
employers and employees, with no
financial aid from the federal govern
ment.
Tax Starts in 1887.
The tax will begin to be felt in 1887,
when every employer of one or more
persons becomes liable for I per cent
tax on his pay roll. After three years.
the rate will become IL per cent; it
will increase y of l per cent each
three years until in 1919 ii will be 3
per cent. The employees will be re-
quired to pay a tax on their earnings
which increases on the same scale,
making the total tax per cent for
employer and employee together by
1919.
The states play no part in this oper-
alton, for the money goes directly TO
the United States treasury. The pen
sions which will be paid to employees
under this arrangement will bear no
relation to the employees needs in his
old age; he will simply be paid the
amount due him in his contract. Such
an arrangement will of course require
a vast amount of accounting on the
part of the federal government, for
pay roll records will have to be kept
on every individual.
The following types Of employers and
employees are exempted from the tax:
Governmental units; railroads; nom
profit, religious. charitable, scientific,
literary and educational organizations;
agricultural labor; domestic service;
casual labor, and employment Oh ship
board
No benefits will begin TO be paid
upon this contributory insurance until
1912. when the fund will have had the
chance TO assume a little body. Then
all persons sixty-five or older who have
contributed will become eligible to re-
ceive payments monthly for the rest
of their lives. These payments will be
based upon the amounts paid to the
credit of the beneficiaries.
How Payments Are Computed.
Monthly benefit payments viii be
computed on the total wages paid the
contributing worker from the time the
plan goes into effect until the time he
becomes sixty-fve years old His
monthly benefit will be equal to one
half of i per cent of the first $1,000 he
earned during those years. plus one
twelfth of 1 per cent of the next S42.-
900 (Which must be earned over peri
cd of IA years or more-wages over
s., 900 in one year viii not be counted),
plus one-twenty-fourth of the next S42,-
600. However, the benefit to the insured
will in no instance be allowed to ex-
coed SIS a month, or 81 900 year.
Since the death rate in the United
States is declining year by year. there
are annually more old people in pro-
portion TO the number of wage-earners.
This prsportionate number, it is be-
lieved, will increase through the COM
ing decades, so that the heaviest pay
ments Of the federal pension system
will not come for, say. about forty-odd
years. Against this time ii is the plan
of the social security act TO build up
a reserve fund which viii crowd the
$50. 100000 mark by 1880.
One of the stipulations of the act is
that this fund be invested in United
States government obligations. But
never have these obligations reached
total of anything like $4,000. 600, 600,
and with the national debt now stand
ing at a record high, il is TO be sup
posed Tor ar least hoped) that the ten
dency in future years will be to reduce
these obligations rather than add TO
them. To turn sufficient of its out