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View Diary: Social Security by the Numbers (73 comments)

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  •  Response part 2 (2+ / 0-)
    Recommended by:
    MarciaJ720, Liberal Thinking
    Funding Social Security with a payroll tax makes all employers pay at least enough for the worker to survive disability (should it occur) and retirement (when, we hope, it does).
    Employers pay the payroll tax in the legal sense, but in an economic sense it is employees that actually pay both sides of the social security tax, which is 12.4 percent. Employees pay the Social Security tax through lower wages. When the CBO calculates tax burden, it uses that assumption.

    Throughout my entire public career I have followed the personal philosophy that I am a free man, an American, a public servant, and a member of my party, in that order always and only." -- LBJ

    by moderatemajority on Sat Mar 30, 2013 at 12:51:49 PM PDT

    •  I Don't Agree With This (0+ / 0-)

      I don't think you can say that either the worker or the company pays the tax in an economic sense. Yes, the worker has to work harder to be able to cover the costs of this tax, but equally the firm can't extract as much profit for its investment. I think, in economic terms, it comes from both.

      As for lower wages, the employee must get enough money out of their take home pay to survive. There is a point (at the bottom of the wage scale) where they can't take less because they can't survive. At that point it all comes from profits.

      If you take away this tax then the company is only obligated to pay enough for the worker to survive while they are working. The minimum wage would cover this, except it isn't high enough to cover the lifetime living wages of most workers. In smaller cities it's around $15/hour and goes up to around $28/hour in the most expensive (San Francisco). The majority of workers in the U.S. don't have disposable income to put into retirement savings, and without the OASI tax they wouldn't save at all.

      I'm talking about groups and the general economics of this, so YMMV. But I think I'm on very solid ground to claim that Social Security (and Medicare) are part of the minimum wage system in this country.

      •  At that point (0+ / 0-)

        we're talking about such a small portion of the population to become irrelevant.

        Only 4 percent of workers earn the minimum wage. Also, one of the myths about the minimum wage which discredits the living wage movement is that many of the people working at or near minimum wage are not breadwinners, but teenagers and college students working part-time.

        In 2010, according to the Bureau of Labor Statistics, 4.4 million American workers were paid at the federal minimum wage or lower (some jobs are exempt). More than half of those workers are younger than 25, which means they’re likely teenagers and college students with part-time and summer jobs during school. Minimum-wage earners are a relative small slice of the American economy: of all workers who are paid by the hour, only 4 percent make minimum wage or less.
        http://www.thedailybeast.com/...

        Again, everyone from the left-leaning CBPP to the nonpartisan CBO , to the right-leaning Tax Foundation says that payroll taxes are paid economically from the employee.

        Throughout my entire public career I have followed the personal philosophy that I am a free man, an American, a public servant, and a member of my party, in that order always and only." -- LBJ

        by moderatemajority on Sun Mar 31, 2013 at 12:21:26 PM PDT

        [ Parent ]

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