Wednesday, November 19, 2003

Social Security worsens poverty

The federal government today forces Americans to surrender 12.4 percent of their wages each year to finance a Social Security system that is approaching bankruptcy, with full knowledge that younger workers will receive very little in return.

Americans are prevented from putting this money into productive investments that would provide more adequately for their retirement years and would enable many low-income families to rise from poverty.

The harm to the poor from the compulsory Social Security program is particularly acute, despite a benefit structure partially slanted toward low-income recipients.

For one thing, the tax is regressive due to the income cut-off, hitting lower income people harder than rich people. As a result, a person making twice the maximum taxable Social Security income would experience half the average tax rate of a person making $ 80,400, the maximum, or less.

Consider the income one could generate for retirement if they were allowed to invest the money extracted in payroll taxes during their working years. When they died, that money then would be part of their estate and could be bequeathed to their family to lift the next generation out of poverty.

Upon the death of a Social Security recipient, the government simply swallows up, aside from modest survivor benefits, what otherwise would have been that person’s estate. Thus, for many poor families, Social Security forces the continuation of a cycle of poverty.

George E. Barthel, Jr.

Peachtree City, Ga.