THE FAIRTAX—THE BEST WAY TO ENSURE SOCIAL SECURITY IS FUNDED
It is a basic truth that no one wants to be put out of a job because they are no longer needed. This is particularly true of “smart” people who work for the various organizations in D.C. that exist to analyze and propose “learned” solutions to problems they believe exist in our society.
While they will protest that it is not so, these organizations must know that if they actually solved the problem, they would reduce the reason for their existence because their “solutions” would no longer be needed.
Consequently, they recommend band-aid solutions that they know will only partially solve the problem at best. That way, they can claim to be making progress and continue to justify paying people to make learned pronouncements but not put forth real solutions.
One of the pressing issues is the solvency of Social Security.
There are 55.8 million people over age 65, about 16.8% of the population.
According to the Social Security Fact Sheet published by the Social Security Administration:
- Nearly nine out of ten people age 65 and older were receiving a Social Security benefit as of June 30, 2023.
- Social Security benefits represent about 30% of the income of people over age 65.
- Among Social Security beneficiaries age 65 and older, 37% of men and 42% of women receive 50% or more of their income from Social Security.
- Among Social Security beneficiaries age 65 and older, 12% of men and 15% of women rely on Social Security for 90% or more of their income. *
Unlike younger people, almost all of the population over 65 does not have the same opportunity as younger people to go get a job to supplement any reduction to their Social Security payments.
The other group that is often not considered are the children and relatives of those over 65 who would be compelled to help out financially if Social Security benefits were reduced.
The 2022 Social Security Trustees report says that unless the funding problem is solved, the system will only be able to pay Social Security recipients 77% of their full benefit beginning in 2034. That would be disastrous for the many seniors who are just barely getting by on 100% of their benefit. The Social Security problem is real and is becoming more and more of a ticking time bomb.
A recent study by the Economic Policy Institute warned us that, “A record share of earnings was not subject to Social Security taxes in 2021.”
The study pointed out:
- Social Security payroll taxes are not collected on earnings over a set cap. In 2021, this cap was $142,800.
- Workers making more than this paid no Social Security taxes on their earnings in excess of this cap.
- However, rising income inequality is skewing this tax structure even further to the benefit of top earners and diminishing funding for the crucial retirement program so many Americans rely on.
- Social Security’s payroll tax—of which employees pay 6.2% and employers 6.2% each—has a cap that rises with growth in the national average wage index compiled by the Social Security Administration (SSA).
- In 2023, for example, the cap is set at $160,200. But since wage growth for top earners continues to outpace average wage growth, a growing share of total earnings is spilling over the cap and escaping taxation, thus eroding Social Security revenues.
- Significant reforms to Social Security made in 1983 set the cap at a level so that 90% of all earnings would be subject to taxes. Over time, rising inequality meant that this share shrank as more earnings for higher-wage workers spilled over the cap.
- In 2020 and 2021, the share of earnings subject to Social Security taxes hit the lowest levels since before the 1983 reform. In fact, by 2021, the share of earnings subject to Social Security taxes was at the lowest level in nearly 50 years (since 1972).
The authors of the study believe this earnings analysis is important for two reasons:
- First, Social Security is likely to be under threat in coming years as part of a general return to debates over long-run fiscal sustainability in the United States.
- Second, a recent debate on earnings inequality trends has rightly highlighted a pronounced compression of wages among the bottom 90% of workers. But the Social Security data we highlight in this brief show that growth at the very top of the earnings distribution—the top 1% and above—continues to exceed growth of the bottom 99% of the workforce. This means there has been very little (or no) compression between earnings for the bottom 90% and those at the very top of the earnings distribution.
- According to their latest research using SSA data, annual earnings rose fastest for the top 1% of earners (up 9.4%) and top 0.1% (up 18.5%), while those in the bottom 90% saw their real earnings fall 0.2% between 2020 and 2021.
They advocate increasing, or even eliminating, the cap on earnings so that more of the costs of Social Security are paid with taxes on higher earners. Obviously, the increase in revenue to the Social Security system will help but it doesn’t solve the problem and doesn’t address a more fundamental issue—the declining number of workers having to support the increasing number of people receiving Social Security.
So, this is just another band-aid, not a real solution.
CONCLUSION
THE SOLUTION—PASS THE FAIRTAX!
With the FAIRtax, the Social Security trust fund is no longer funded by the decreasing number of workers but by a tax on the consumption of new retail goods and retail services by everyone who purchases products in the U.S.
Why doesn’t Congress eagerly embrace this easy solution?
The more cynical among us may suspect that Congress and D.C.:
- Like the idea of having 56 million people dependent on them if Social Security starts going broke;
- Like the idea that they are able to keep the corrupt federal income tax in place and present themselves as our protectors against abuses by the IRS while at the same time providing much greater funding to the IRS;
- Like the idea that talking about problems rather than actually solving them will keep many “smart people” and bureaucrats employed that might not be needed if a real solution was implemented.
President Biden and Congress, why not pass the FAIRtax and:
- Do the right thing for the people of America and fix the broken income/payroll tax system?
- Go down in history as the ones who made Social Security solvent for all present and future Americans.
- Transfer power back to the American people over how much tax they pay!
D.C. hates that the FAIRtax will be enforced by the states—not the IRS and not by D.C. bureaucrats.
Members of Congress hate that they will not be able to get huge contributions by threatening to eliminate a tax break for wealthy taxpayers.
The FAIRtax transfers power from Congress and the bureaucrats to the people. We, not D.C., decide how much federal tax we pay.
Only businesses or people who sell new retail goods and provide retail services will have to collect the FAIRtax and remit it to the government.
Since less than 10% of the retailers account for 90% of retail purchases, there will be much less opportunity for evasion.
Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations? The only way that they will is if the rest of us demand it!
Isn’t it time to end this ludicrous tax collection system and the IRS?
There is going to be a vote on the FAIRtax in the House of Representatives. McCarthy and the other elites didn’t want it, but it was forced on them.
We now have the opportunity to force all Members of the House to show where they stand. They can:
- Vote for the present income/payroll tax system or for the FAIRtax.
- Support the corrupt income tax and the IRS or eliminate it. It can’t be any simpler than that.
- Hide the true cost of their government or pass the FAIRtax and show everyone the true cost of government on each retail receipt.
- Support the largest transfer of power from government to the people, the FAIRtax, or not.
If Members think that the FAIRtax needs to be amended to address a problem, then they can propose the change. Don’t let reject the entire bill because it has a perceived “flaw” that can be addressed.
Please stand with us and demand that your representative support a much fairer, much simpler and much more efficient way to fund the government—the FAIRtax!
The FAIRtax doesn’t pick winners and losers. Because it taxes spending, not earnings, the FAIRtax lets everyone save for their retirement tax free.
The FAIRtax will allow us to TAKE BACK CONTROL.
The income/payroll tax system is broken and no longer working—we can’t repair it but we can replace it with the FAIRTAX!
Join us and TAKE BACK CONTROL OF OUR COUNTRY AND OUR LIVES—NOT WITH BULLETS BUT WITH THE ELIMINATION OF ONE OF THE BIGGEST THREATS TO OUR LIBERTY AND ECONOMIC PROSPERITY—THE INCOME/PAYROLL TAX.
We all should remember Edmund Burke’s warning that applies to our efforts to TAKE BACK CONTROL,
“Nobody made a greater mistake than he who did nothing because he could do only a little.”
We should also remember this quote from George Orwell's 1984, which, if we do nothing, may foretell your and your children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO?
We can write letters and make calls to our elected representatives and attend Zoom town hall meetings demanding that if they really want to allow Americans to “TAKE BACK CONTROL”, the first step is to eliminate the income/payroll tax system and enact the FAIRTAX!
TAKE BACK CONTROL! Help us PASS THE FAIRTAX!
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