Evening star., 1949-04-24


But politicians normally shy away
from raising taxes, unless there is
absolutely no way out of 1t.
When the Social Security Law
was enacted in 1885, it carried a
timetable for gradual increase
in taxes, to be divided evenly be-
tween employers and employees.
Payroll deductions started in 1887
and the schedule called for a 2 per
cent tax until 1910. a 3 per cent
tax until 1943. 4 per cent tax
until 1916, a 5 per cent tax until
the end Of 1948, and 6 per cent
tax this year.
But we nave not lived up to this
timetable. Congress has repeat
edly deferred the scheduled tax
hikes, and the rate still is 2 per
cent. AS the law now stands. the
tax is due to rise to 3 per cent on
January /, 1850, and 4 per cent
on January /, 1852. unless there
are further deferments.
But while it has put of the tax
increases deemed necessary when
the law was passed in 1885. Con-
gress has been liberal with
changes in the original intent OF
the act.
The law, as originally enacted,
provided for monthly benefits for
retired workers alone and speci-
fed that such benefits start in
1912. The idea was that the in
surance fund should be allowed
to build up sufficient backlog be-
fore insured workers began to
draw payments. In 1899 Congress
went ahead and decided to pay
benefits not only to workers when
they retire after reaching IS, but
also to their wives, widows, minor
children and, in some cases, aged
parents. At the same time it
ordered that benefit payments
start in 1910 instead of 1912.
Old-age benefit payments now
are running at the rate Of $780,
.000, 900 a year, while employer and
employe tax contributions are
being collected at an annual rate
of 81 800, ,000, 900. The reserve now
amounts to nearly $l1. ZOO, 10000.
Population Trend
If the system has been and is
collecting so much more than it
has paid out, why is it in hole?
The answer is that in such
system the costs are relatively
insignificant at the start, but keep
on pyramiding as people get older
and die. An insurance system can
not be considered solvent simply
because 1t has a large reserve in
its early years. The vital question
is whether payments into the fund
are sufficient to build up a re-
serve adequate to meet payments
out of the fund anywhere from
10 to so years, when virtually all
those now insured and many
members of their families will be
eligible to collect benefits.
The present reserve Of the old
age insurance system is definitely
not big enough to meet these fu-
ture obligations. and the present
payments into the fund are we'll
under the level needed to build
such a reserve.
There are now 100000 per-
sons in the United States who are
65 or older. This is ~ per cent
of the population. BY 1860 the
number of such aged people may
reach 14,900,000. BY 1880 1t is
officially estimated by Government
population experts. there may be
as many as 22,800.000 men and
women 65 and over. BY the year
2000-this may seem like looking
awfully far ahead, but 1t isn't
when you're considering an fnsur-
ance problem-the number Of
those 65 and over may mount to
28, 500, 900, or los per cent of the
population.
That's why benefit disburse-
ments under the old-age and sur
vivors' insurance program are ex-
pected to pyramid through the
years. Already, such benefit pay
mentS have almost doubled in the
past three years.
Even@under the present law, with
its extremely low benefit rates,
disbursements are expected by
Government statisticians to dou-
BILE again and possibly treble
within 10 years and to increase
from four to five times their cur
rent level within the next 20
years.
Present Financing
The old-age and survivors in
surance program is now financed
by a tax of 2 per cent Of payrolls
up to $4,000 q year. divided evenly
between employer and employe.
Revenue from this tax is now be-
ing collected at the rate of 81 $780,
600, 900 a year.
While the proposed legislation
would hike old-age and survivors
insurance taxes to $5.740. 600. 900
q year. such an increase would
still be inadequate to pay the costs
anticipated In the years to come.
Spokesman for the Social Secur-
|ity Administration assert that
there is plenty Of justification for
dipping into general tax funds to
help pay for old-age and survivors
insurance. Their arguments in
clude these:
The trust fund already is ST.
600, ,000, 900 behind what it should
be, because of the action of Con-
gress in repeatedly freezing the
tax rate at 2 per cent. Wnder
the original schedule. the rate
should have been 8 per cent by
now. It is unfair to saddle this
backlog on payroll taxes0
It is equally unfair to impose
on payroll taxes alone the huge
a. H. k.k kI~ d. 49, A~rk -A