Evening star., 1953-10-04
Higher Tax Rates
Foreseen 10 Support
Security Benefits
By the Asseeiofed Press

Slgn1f1cant cnangeS-1ncluQ1n
much higher coStS-are mirrored
in the long-range picture of the
Federal security program in new
Government statistics which be-
came available yesterday.
The new figures indicate that
higher tax rates than now
scheduled might have to be
adopted eventually to pay the
death and retirement benefits
promised to millions of workers.
Here is the updated picture, as
estimated by Robert j. Myers and
Eugene A. Rasor. chief actuarieS
for the Social Security Admin
iStration:
Under present law, costs will
run almost 81 billion or more
per year higher than previously
expected, starting in a few years
and running on past the year
1000.
This would put a drain on the
vast social security reserve fund.
Based on VariableS.
Under present tax and benefit
schedules, and under average or
most plausible conditions, the
fund would fall far short OF the
previously expected peak Of more
than 500 billion.
Then it would drop off much
more rapidly than expected, until
it is wiped out somewhere be-
tween 1895 and 1923. At that
point, costs of the program would
be exceeding income by from
So to $6 billion annually.
Congress, however, might step
in and change the picture before
the program reached that point,
if it wanted to retain the concept
of a big trust or reserve fund. Or
could let the fund die out and
shift to a pay-as-you-go basis,
levying taxes each year to pay
for each years benefits.
Mr.. Myers cautioned, in an
Interview, that all the estimates
are based on many unknown
variables, such as economic con-
ditions and the rate Of births
and deaths far into the future.
The current figures, he noted,
are no more final than the earlier
ones.
Expected to Decline.
The original idea, when the
program was begun in 1885, was
that special social security taxes
would far exceed benefit pay
ments for many years to come,
with the surplus piling up into a
huge trust fund or reserve. This
fund already has climbed to
about $18.5 billion.
Later, as more people reached
retirement age, costs were eX-
pected to exceed tax income, but
interest from the trust fund was
expected to bridge that gap, and
keep the program self disappearing
under scheduled tax rates as far
in the future as any one could
reasonably look.
The trust fund was expected
to decline, but so very gradually
that it would be almost level
for all practical purposes.
If the trust fund fails to in
crease as previously scheduled,
its income from interest pay
rnents of course also would fall
behind, thus starting a sort of |
downward spiral.
Last year, assuming high en-
ployment and intermediate or
average costs, it was estimated
the trust fund would hit a peak
of SLOT billion in 1890 and drop
to only $106 billion by 1000.
Peak in 1890.
The new studies, however, fig
ure the trust fund under these
same assumptions will reach a
peak of $65 billion in 1890. drop
to $50 billion by 1000, and be
exhausted in 2O23. BY 2O25, ben
eft payments would exceed in
come by $6 billion a year.
The present tax is 3 per cent
on payrollS under employment
covered by the SyStem-up to a
salary of $4,000 year. Workers
pay half, and employers half.
The total tax is due to rise to
4 per cent next January, l, to
S per cent in 1860, 6 per cent in
1865. and 61a per cent in 1870
and thereafter.
This is the schedule that
might have to be raised if
present Notwithstanding up to
$127.5O monthly for a retired
II L.