[Homestead] Social Security 2005
blamar at satx.rr.com
Sat Dec 11 12:55:42 EST 2004
> There is no *it* to have paid into. *It* does not nor did it ever
I believe there has been an *it* from time to time. Promises were made
and broken. But, practically speaking, the social security tax is just
another tax, and the money is not kept in a real trust fund. It has been
used, in fact, along with fancy accounting maneuvers, to disguise the
true extent of the federal governmen't deficit.
What amazes me is that low-income people would be in favor of keeping
the social security system the way it is. It must be a knee-jerk
reaction against the Bush administration, because the social security
tax is quite regressive -- that is to say, it falls much harder on low
income people than on high-income people.
The earned income credit helps alleviate some of the more egregious
situations caused by the social security tax. But here's a not uncommon
example of social security at its worst:
I do a certain amount of what you might call pro-bono work (I very
seldom work completely for free -- I've found that when I work for free,
the recipient of my efforts doesn't value my work, tends to want to take
up huge amounts of my time whining rather than doing something
constructive, and therefore does not ultimately get the full benefit of
my work). A 78 year old woman came in with a Notice of Deficiency from
IRS. Seems she had done some part time work cleaning floors in a nursing
home and had not reported the income. IRS caught the woman when the
nursing home filed Form 1099. This client of mine was a woman who could
have sat back and whined that the world owed her a living because she
was old and worn-out, but instead she went out and worked, earned her
own way. She paid the $50 I asked for my fee (I never let on that this
was not my normal fee) and would ask from time to time if I needed more.
She was not the sort to ask for handouts.
She didn't make enough money to owe income tax, but of course the
"self-employment" tax (the self-employed person's form of the social
security/medicare tax) hit her almost from the first dollar, and IRS had
assessed tax, penalties, and interest of several thousand dollars. And,
sadly, the woman was too old to qualify for the earned income credit.
This is especially poignant since social security was originally
intended as a safety net for the elderly.
I have other clients, wealthy ones living off their investments, to whom
their social security benefits are just a little extra pocket change.
Low and middle income people should be the champions of social security
reform rather than scrambling to hold onto a system that penalizes them.
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