Increasing Taxes to Bail Out Social Security
In 1935 the United States was in the throws of the worst economic depression our country had ever seen. The President at the time was Franklin Roosevelt. As part of Roosevelt's "New Deal", he instituted Social Security, which established an old-age pension system, to be administered by the federal government, and financed by taxes on both employers and employees. This system was to help the older citizens and dependents of workers of the U.S. However, since its inception, Social Security has been turned into a retirement plan of sorts. Many retired and older citizens rely solely on Social Security benefits to live. The program has been successful for the last 64 years, but in the near future Social Security might run out of resources unless some drastic measures are taken to preserve it. The program will be collecting less than it is paying out by the year 2012 and be insolvent by 2030. Something must be done.
Social Security has been a safe and reliable source of income for the old for the last 64 years. Some 42 % of elderly citizens rely on social security as a large part of their income. Every month, millions of people over the age of 65 receive a check in the mail. The preceding fact is one of the main reasons that Social Security is in trouble. When Social Security was first instituted, the percent of the population that lived past 70 was much lower than it was today. Recent discoveries in the medical field, and new attitudes towards eating and exercise have extended the life span of Americans much longer than in 1935. This means that there will be much more people receiving Social Security and they will be receiving it for a much longer time. The next problem with the system has to do with a change in demographics. Currently there are millions of baby boomers in the U.S. Once the baby boomers retire, there will be far more retirees drawing benefits than workers to support them. Right now the ratio of workers exceeds the number of beneficiaries. In the year 2030 it will be even less. In less that 2 decades, the taxes that the government will collect from the workers will not cover the benefits that they are paying out. This will cause the government to either stop Social Security, dip more into debt by continuing to pay, or institute a plan.
In light of the problem that our country is faced with, there have been many suggestions of ways to fix Social Security. The proposals include ideas such as raising taxes, increasing the age to collect, cutting benefits, and privatization in stocks. The probable first step to be taken by the government would be to increase the payroll tax. The government has proposed a 2 percent payroll tax increase, which would bring it to about 14.5 percent. They have also thought about increasing the amount of money that can be taxed (currently $68,400). This would generate a vast amount of money, however it would raise the taxes of the middle class to an...