Social Security Taxes and You
Published on November 10, 2004 By erichelp In Politics

Will you receive a retirement benefit as originally promised by our Government? How can you make an intelligent decision to support or not support the Social Security System Reform issue if not provided with accurate information? What would you do to reform this system? Do you really give a shit one way or another?

What follows is information that will not be addressed in the political debate that will be forthcoming over the next year or two as President Bush moves his Social Security System reform agenda before the American public. In March of this year, I sent a letter to President Bush (no response yet) expressing my concerns with the existing system which is basically what I will be presenting in this article. For those of you who want know the unknown facts about the Social Security System, read on. I would appreciate your feedback (the good with the bad) to help me measure public opinion on what I’m presenting in this article. For those who don’t give a shit have a good life, as those in political power continue to dump on you without your knowledge:

This article focuses on two deceptive pieces of Congressional legislation unknown to the American public. The legislation is a direct result of why the Social Security System will fail to meet the expectations for you and future generations of Americans. The information provided is based on my knowledge as a payroll manager and research. I'm confident you will find the content of this article informative as well as provocative.

What do the majority of working or retired Americans really know about the Social Security System other than having required taxes withheld from their paychecks and the Government's guarantee of providing a retirement benefit after 40 plus years of working? In answer to this question that's basically all the Government really wants them to know. The youth of this nation and those who are currently in the work force are now hearing the Social Security System will become insolvent in the not to distant future. Their concerns are well justified, not because of the political rhetoric or news reporting they occasionally hear, but rather of deceptive legislation that has been purposely suppressed from public knowledge by Congress. There are no long term solutions to fixing this system whether reformed or not without raising taxes. What follows is an explanation of how the Government created this problem:

Deception One:
Individual taxpayers have looked at their pay stub and seen two distinct Federal Tax withholdings, Federal Income taxes and Social Security taxes. Inasmuch as they are computed separately, more than likely they believe these taxes are reported into the Internal Revenue Service separately when paid by their employers, not so! The legislation requires employers, including the self-employed, to co-mingle (combine) Social Security taxes with Federal Income taxes (IRS form 8109) when their employers report and pay these taxes through the Federal Banking System. This legislation purposely prevents the IRS from separately reporting and transferring into the U. S. Treasury the actual monthly deposited Social Security taxes. It also purposely prevents the U. S. Treasury ability to record the actual deposited Social Security taxes directly into the Social Security Trust Fund, from which retiree benefits are to be paid and tax surplus contributions are to be retained. Secondly, because of the co-mingling tax legislation, the law required the U. S. Treasury to fund the Social Security Trust Fund on an estimated basis requiring funding on the first working day following the close of each month, but even this element of funding has been repealed by Congress which is further explained as follows:

Deception Two:
Individual taxpayers and their employers who are required by law to match the amount of tax withheld from their employees, are also unaware of a 1990 Social Security Tax Act Amendment that specifically states; " estimated funding would be used only if the Trust Fund drops to such a low level that advance transfers are needed to pay retiree benefits". This Amendment is reflected on pages 36 and 37 of the 1995 Board of Trustee Report to Congress. The purpose of this amendment gives Congress the authority not to fund the Social Security Trust Fund as long as the Social Security System generates tax surplus revenues which it always has. Social Security tax revenues, and the U. S. Businesses share of these taxes, are now part of the Government’s annual Unified spending budget. This fits very nicely into what the Government now considers the Social Security System a (Pay-As-You-Go) system meaning; funding of monthly retirement benefits are done from the General Fund of the U. S. Treasury, not from the Social Security Trust Fund, and the surplus tax contributions are retained in the General Fund of the U. S. Treasury for Congress spending and not retained in the Social Security Trust Fund. One portion of the previous funding law under the Social Security Tax Act was the Government was strictly prohibited from borrowing tax contributions that had been reported and deposited into the Social Security Trust Fund. To circumvent this portion of the law, Congress used estimated funding, and the 1990 Amendment basically eliminated any funding to the Social Security Trust Fund, and has basically rendered the Social Security Trust Fund as dysfunctional.

In essence, estimated funding and the 1990 amendment has created a Government “Slush Fund” by giving Congress the authority of borrowing and spending surplus Social Security contributions on other Government programs, including pork barrel projects by dishonest Congressional members. This deception is done so at the expense of an unknowing American tax paying public. Congressional borrowing and spending of tax surplus contributions is fast approaching the one trillion dollar level, and the on-going borrowing and spending just adds to our nation’s already enormous 7 trillion dollar debt.

To counter what I have explained above, the Government claims the Social Security Trust Fund holds U. S. Treasury bonds that have been secured by tax surplus contributions and are backed by the full faith and trust of the Government. What cash value do these bonds have if the Government has already spent the tax surplus contributions under the Unified budget spending process? Could Congress have at least considered lowering the 6.2% tax rate on the American taxpayer or increased retiree benefits as opposed to its borrowing and spending Social Security surplus contributions on unrelated Government programs? Think about it!


Final Comments:
The co-mingling and the 1990 Amendment legislation has purposely been inter-linked by Congress for deceptive reasons and has accelerated the date the Social Security System will be rendered insolvent, and both must be repealed by Congress to keep the System solvent. If nothing is done by Congress in this regard, the Social Security System could become insolvent by as early as the year 2018 as millions of the "Baby Boomer Generation" becomes eligible for retiree benefits. Senator John McCain, who has earned my respect and trust, introduced legislation S 1168 in the year 2000 that would have protected surplus contributions from Congress borrowing and spending, but unfortunately was never enacted into law. Why?

Any recommended legislation to reform the Social Security System, such as the partial privatizing of the System, would be band-aid legislation without Congress first repealing the legislation as stated in this article.

Current and future working Americans and the businesses that support the Social Security System are entitled to the highest level of trustworthy legislation from those who serve us in our Government. The words "Truth and Trust" and their meaning should never be diminished in the political arena which includes the news media. I have made repeated attempts over the years to have my Congressional representatives and news organizations respond to the concerns I have addressed in this article, but to no avail. It’s my opinion, the continuing deception, pilfering, and the spending by Congress of tax surplus contributions not related to the Social Security System is the greatest injustice ever imposed on the American taxpayer, and gives rise to the undermining of our Democracy not enhancing it. It’s not you the taxpayer who is at fault for the pending insolvency of the Social Security System, it’s the fault of the Government’s created “Slush Fund” that is responsible. Unfortunately, it will be you the taxpayer who at sometime in the near future will assume a greater tax burden in an attempt by those in power (past and current) to cover-up their own mistakes.

My goal in writing this article is an attempt to bring public awareness of how those in political power have misused the Social Security tax surplus revenues (your tax dollars) through deceptive legislation. Reforming the Social Security System must 1) include “locking up” the billions of dollars of tax surplus revenues in the Trust Fund that will be generated by this system going forward. 2) The taxable wage cap must be removed from law, in the coming year of 2005 wages earned over $90,000 are not taxable 3) A gradual increase of the existing 6.2% tax rate will also be required and 4) The retirement age to receive benefits must be raised. Without these changes the “Promises That Can’t Be Kept” will materialize. President Bush’s reform package is not a cure for what ails this system, but could be at sometime in the future if Government spending is brought under control.

Your valued opinion on the content of this article is very much welcomed.

Erichelp

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