In Monday’s post, we discussed several positive aspects of Social Security and its financial situation, which is not as bad as some make it out to be. As we have seen, much of the problem with reforming Social Security lies with politicians who are unable to come together to work out a solution. In looking at the history of Social Security’s finances, politicians also share some of the blame for putting Social Security under financial strain in the first place.
Taxes and Social Security
Beginning in the 1980s, the types of taxes and their shares of the country’s gross domestic product (“GDP”) started changing dramatically. Social Security taxes, income taxes and corporate taxes had been in the same ballpark until that decade. From then until now, Social Security taxes have grown at twice the rate of income taxes and at nearly seven times the rate of corporate taxes. Thus, revenue from the latter two types of taxes dropped, while revenue from Social Security taxes went up to make up the difference.
The idea was to use the extra money from extra Social Security taxes for other purposes like investing to pay down debt. The maximum income on which you pay Social Security taxes, however, is $110,100, a figure below which the vast majority of Americans falls. Income over that amount is not subject to any Social Security taxes, so those earning below that amount have had to finance a system that has had to increasingly do more over the years due to an aging population and increases in healthcare costs. A simple fix to Social Security’s projected financial problems, some have suggested, is to reverse some of these changes from 30 years ago.
Without reform, disability beneficiaries will face the toughest time. They comprise about 20 percent of Social Security beneficiaries, and their source of benefits is expected to run dry well before the rest of Social Security. More information on eligibility for SSDI or SSI benefits is available from a Tulsa OK Social Security disability attorney.
Have you benefited from any of Social Security’s programs? What did you have to do in order to qualify for that help?
Troutman & Troutman, P.C. – Tulsa Social Security disability lawyers