Homestead mailing list

[Barbara Lamar <blamar AT satx.rr.com>]

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