Letter to the Editor

March 4, 2005

The lead article by Nat Weinstein on the phony debate on Social Security (Old Age and Survivors Insurance) states that the proposed fixes are foolish or an attempt to empty the ocean with a teaspoon. I disagree. The rich can afford to pay their share, and can afford it so easily, they will have to shut up and try to fool some other people. I offer two arguments.

First.

There is an enormous amount of personal income which escapes the Social Security tax. This tax is a flat tax, currently 6.2 percent of a person’s gross income and consequently regressive; it takes much more proportionally of the poor’s income than it does of the rich. Nevertheless, the income of the rich is so great that if all of it were subject to that 6.2 percent, it would provide an income boost to the Social Security Trust so great that all talk of a crisis would be just humor.

According to the Internal Revenue Service, in 2001 the total personal income of people who made more than $100,000 was $2.5 trillion, and all of that 2.5 trillion escaped Social Security taxes. Had it been taxed, there would have been a $156 billion boost in the Social Security Trust Fund, which took in $453 billion as it was. In that year, they paid out only $372 billion. Had the rich been taxed just like anybody else, they would have paid nearly half the total benefits.

Since people who make over $100,000 can well afford to pay the same tax rate that the self-employed do (13 percent), they can afford to pay ALL the Social Security tax, and leave the working people a decent paycheck. The personal income we are talking about is the adjusted gross income; i.e., capital losses, interest, etc. are already deducted.

In keeping with the old saw, “What’s sauce for the goose is sauce for the gander,” if the rich are going to flat tax us for 6.2 percent, then we’ll flat tax them for 6.2 percent. Poof! The emergency dissappears.

Second.

The employer pays the same tax as the employee. It is a mistake to forget that. If the employer could get rid of his share of the Social Security tax, 6.2 percent of his entire payroll would drop right through to the bottom line as profit. Today the employer is stuck with the tax and it hurts him competitively not only in the international market and against those who have lower payrolls in the U.S., but it lowers the average rate of profit for capital as a whole.

Every capitalist in America would like to lower or eliminate the payroll tax he pays. The “debate” is intended to muddy the waters so that when some incomprehensible, complex fix is finally announced, the employer’s portion will be cut. Since all capitalists taken together have a lot of push with Bush, that is what will happen, unless working people push back with clear arguments and an understanding of the Social Security system.

Comradely,

Rod Holt, San Francisco, CA

The Editors reply.

We are in complete agreement with the San Francisco comrade. We heartily thank him for taking the trouble to make the matter much clearer.