Is Social Security Tilted Toward the Rich?
Daniel Hemel

When you dig through all the fluff and chaff and flare, the issue the Time has is that one man makes $2 Million and another $30,000. In order to even make their charade work they have to make the assumption the Gardner dies at 78. I didn’t do all the complex calculations the author did, however the Times points out if the Gardner dies 8 years earlier at 78 he loses $115,000. That means his annual benefits from 66 to 86 would be $14.375 a year which means in his retirement years he would receive $287,500.

It is doubtful that his salary was $30,000 for the duration of his career but let’s assume that and let’s make another generous assumption that he worked for Mr. Moneybags from 18 to the day he retired, or 47 years. The 6% withheld for his SS over that time would amount to $30,000*.06*47=$82,600. Making the rate of return on the money HE paid in almost 350% and even accounting for the $42,300 Mr. Moneybags paid FOR him during that time frame as “his” his rate of return is 175%. It is as if he is getting his SS contributions returned AND his Federal Taxes returned to boot, something you could clearly not claim for Mr. Moneybags.

Critics of the “privatize” Social Security movement like to vent that Social Security is NOT an entitlement but simply the taxpayers money being returned to them which is clearly not the case. The same critics push to remove the ceiling at which SS taxes stop being collected AND not raising the top payout. In other words Mr. Moneybags would pay during his lifetime 6% on $2 Mil and his employers another 6%. This should mean, w/o an SS ceiling that Mr. M should get a $47,000 SS check each month but proponents don’t mean that; they mean he still gets his $2.639 and the additional $44,361 is “redistributed” to The Gardner. In other words we hide a progressive tax inside Social Security.

On the other hand, if you suggest to the same crowd a logical solution which still embodies “redistribution” of wealth, that is having a means-test on Social Security benefits so that people who reach their retirement years in good financial shape (like Mr. Moneybags) don’t collect and those funds are distributed to people who do need it you will find little support for that position among liberal/democrats. Why? Because this requires acknowledging that SS is in fact an entitlement. Yet this simple acknowledgement of reality could put more money in the Gardner’s retirement life and would probably gain support from conservatives.

Sorry for the long aside but it is Time’s articles that obfuscate the issue in the first place that make it impossible to implement obvious solutions like the one above and lead to endless debates on policies that will and should never be implemented like removing the salary cap on SS w/o raising the top benefits accordingly.