Evening star., 1950-01-01
|Workers, Employers
Now Pay 50% More
Social Security Tax
By the Associated Press

IJVIIoI 9CIuIHy IoA
By the Associotsd Press
A so per cent rise in the social
security tax-adding up to almost
three quarters of a billion dollars
more in 1950-went into effect
with the New Years whistles.
The payroll tax. which has
stayed at l per cent for nearly 13
years. rose to 1l2 per cent. It
is levied alike on workers and their
bosses, for total of 3 per cent.
About 35,O0O,0 900 jobs are af-
fected. Also a few million car
riers of social security cards may
work in the insured industries
part of the year and get some
further credit toward an old age
pension at IS. e
There will be no rise in the
pensions or the benefits paid to
widows and children if the wage
Garner dies-not, at least, until
Congress completes action on a
bill which, as passed by the House,
would boost them around 70 per
cent.
Senate Approval Expected.
The Senate is expected to ap-
prove the measure, though perhaps
in latered form. Both parties have
pledged improved" benefits, and
this is an election year.
If the house bill is passed and
signed by President Truman, it
will bring this much added secur-
ity to Americans
/. The lowest pension, now $40
for a single retired worker. would
rise to $25 a month. The top
pension for an aged couple, now
$85, would be $126. An increase
would occur along the line be-
tween, depending on salary and
length of service.
2. About 100000 more jobs
would be affected. Self employed
persons like small storekeepers
would be brought in, as well as
domestic servants and local gov
ernment employees.
8. The tax would be applied
on the first $4,000 of income, in
stead of on the first $4,000 as at
present. 1t would rise to 2 per
cent next New Years, instead Of
in 1852 as under present law.
The Federal Security Agency
expects to collect $2.424,0 900. 900
in 1850 even with no change in
the laws coverage. That COM
pares with an estimated $780,
000,00 in 1949.
Pensions Average S26.
Because the law has been in
effect only since 1887, pensions
now average only $26. Including
widows, children and parents who
received survivors benefits, FSA
had 2,673.888 benef1ciaries in Oc-
tober, the last month for which
figures are available. OF these,
almost 1.250,000 are retired work.
ers and their wives.
The tax in 1949 brought in
almost $1,000 100000 more than
was paid out in the form of PEN
sions and insurance benefits. #!
This profit. very temporary
one, was added to the social sec
iurity trust fund and brought Il
Ito $11 .859. 900 900. The fund
!. which is invested in Fedora
bonds, is being accumulated t.
meet the needs of future year
when the number Of pensioner
. and size Of pensions will ris'
steeply.
/ The reserve accumulation actu.
tally is about $1,000. .000. 900 belov
/ the level which is needed to keel
;. the Government insurance on ,
paying basis.
An FSA spokesman said, how
ever. that if the planned schedule
of tax increases is adhered TO-
If the government bonds continu,
to pay at least 2 percent interes
the fund by 1870 will be in shap.
to handle all requirements from
that time forward.
Postponed For 10 Years.
Congress has shown reluctance
in the past to increase the pay.
roll tax. It was supposed to rise
to ia percent in 1910. Congress
postponed the increase from year
to year. Not until 1947 did /,
pass the law under which the
1850 increase takes place.
| The present schedule of increase
would bring the tax to 3A per cent
each on employees and manage
4 ment in 1870, or Ga per cent in
total.
/ If Congress does not hold ap-
proximately to that schedule, FSA
will have to seek an outright ap-
preparation in some future year.
In other words, the system would
cease to be solely an insurance
plan and would be financed partly
out OF income taxes, business lev
les and other revenues.
The trust fund now is earning
, 2ls per cent interest on the spe-
cial-type Government securities
which it buys. That is the average
rate of return paid to private in
vestors on all types of Government
| securities, although short term
notes pay less and long-term bonds
pay more.