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  • From: Barbara Lamar <blamar AT satx.rr.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] Social Security 2005
  • Date: Sat, 11 Dec 2004 11:55:42 -0600

clanSkeen wrote:

There is no *it* to have paid into. *It* does not nor did it ever exist.

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.

Barbara











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