Are taxes a zero-sum game? Before we resolve that, let’s consider this…
While the Social Security administration originally lied to the American people, stating that each SS contributor was to have an account from where he or she would be issued a check – “The checks will come to you as a right” – that lie has, subsequently, been abandoned. Both the courts and the SS administration state that the payment of Social Security taxes does not obligate the government to its payees in any way. A year after the SS Act passed, it was challenged in the Supreme Court and the SCOTUS held that SS was not an insurance program.
“The proceeds of both employee and employer taxes are to be paid into the Treasury like any other revenue generally, and are not earmarked in any way.”
“To engraft upon the Social Security system a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.”
So, while the tax might have originally been levied to create a fund, that idea has been completely abandoned and the SS tax has become just another means of funding government programs. And make no mistake, both Social Security and Medicare are nothing more than government programs. Each year after all Social Security liabilities have been satisfied, the remaining SS receipts are handed over to Congress to apply to the budget, never to be seen or heard from again. Any accrued funds from excess payments were taken long ago and replaced with a government IOU that there is no intention to ever pay.
At its inception, there were 159.4 SS contributors to every SS recipient. In 2013, that ratio was 2.8 to 1. The first SS check was cut to Ida Fuller in 1940. She had paid in only $24.75 before becoming an SS recipient and, subsequently, collected a total of $22,888.92 in benefits, receiving back her total SS investment in the first month. Do you begin to see a problem here?
Now, as to the question of a zero-sum game… To be clear, SS and Medicare, both employee and employer, contributions have morphed from payments dedicated to SS and Medicare into general taxes. Why not call the taxes what they are? Because the American population is ignorant and the Congress wants to keep it that way.
How would people react if they realized that their income taxes were a total of 7.45% higher than they’d been told (it’s actually double that, but we’ll get to that), and furthermore, that 7.45% was not figured into their total tax liability and juxtaposed to what was being charged against their income? In other words, when one’s tax liability is calculated, based on one’s taxable income, only federal income taxes already withheld offset what one’s total tax liability is and SS and Medicare taxes, known as payroll taxes, are not credited to one’s income tax liability. So, to understand one’s total tax liability., consider that tax liability is based on income minus taxes previously withheld, and then the 7.45% tax can be added to that, not subject to any refund.
In other words, if someone earns $100,000 and the tax liability is calculated to be 20%, $20,000 in taxes is levied against that income stream. If $30,000 had already been withheld, an income tax refund of $10,000 is due. However, unbeknownst to most, the additional $7,650.00 of payroll taxes do not figure into the income tax withheld or any refund due. Huh? So while one’s income tax liability, in this case, is based on an income of $100,000.00, the real income of this person is only $92,350.00, reflecting what was paid in payroll taxes.
Okay, you might know something about this and say, “Wait, I only pay 6.2% SS tax and 1.45% Medicare tax, for a total of 7.65% payroll taxes. My employer pays the other 7.65%.”
Seriously? Who pays all taxes? Are taxes a zero-sum game? If your employer was not paying that other 7.65% of your payroll taxes to government, where would it go?
When an employee is hired for $100,000.00, the employer did not think he/she was paying out $100,000.00 that needed to be recouped before that employee would turn from a liability into an asset. No, the employer knew from the get-go that he/she would have to overcome a $107,650.00 liability before the employee became profitable.
Hopefully this clears things up about the SS and Medicare Ponzi schemes and the lies we are told everyday about taxation. After all, taxation is, essentially, slavery.
Go ahead, Change My Mind!
PostScript: It should be noted that in retirement, the Medicare tax does not expire. A monthly Medicare premium is deducted from each Social Security payment. Additionally, most retirees who re able, purchase some kind of Medicare GAP or Medicare Advantage insurance to pay costs that Medicare does not cover. Furthermore, depending on a retiree’s financial situation, Social Security payments might also be taxed. Hey, great work if you can get it, right?
If I’ve got something wrong here, please, by all means, correct me.
(I am indebted to Dr. Walter Williams for much of this information and would highly recommend that you read anything you come across by Dr. Williams, as well as his many published books.)
Change My Mind! 