If you are getting a paycheck from an employer you may have noticed a huge proportion is taken out for the entitlement spending known as Social Security and Medicare. The Social Security Administration released their long tern projections of births and mortality and what it means for Social Security in 2022.
Like other G7 members there is not a replacement level of births and mortality (at least until 2019) has been declining, so there are fewer future tax payers paying into the system and more people at the tail end reaping what was promised to them. In a similar report the OASDI (Old Age, Survivors, and Disability Insurance) was shown to have a hard landing by 2035 with current revenue misses for funding the current retirees, which basically proves what researchers Hobijn and Lagakos modeled in 2003.
You might be thinking “didn’t Biden increase the limits”? Well there is a litany of proposed increases (E1.1-E3.19), most of which fall flat on their face by 2040 except a proposed increase from 12.4% (6.2% individual, 6.2% business) to 16% to payroll tax contributions, which allegedly keeps this ponzi scheme going past 2090. For reference, in it’s inception the tax rate was 2%. Will our children pay upwards of 20%? Where dues this revenue miss spiral stop with these spotty projections? Let’s say none of these proposals go through, what will for a fact happen?
As it stands earners making $160,200 or more stand to pay $9,932.40 to entitlement programs, a maximum taxable earnings increase of ~9.5%, which amounts to $818.40 more to Uncle Sam per year for a program you very well may never see the benefit of! Perhaps there is something more malicious to the placement of Covid-19 patients in nursing homes than sheer incompetence. If increased taxes and higher mortality is necessary for something which barely keeps the elderly treading water is it worth the endeavor at all? Should we perhaps inform people due for retirement after 2035 the scam is up and they need to take matters in to their own hands with inflation resistant assets and innovative solutions?
The wolf in the hen house says taxes need to go up and worldwide to solve the revenue and COLA gap during big rate increases; without even mentioning the average rate of inflation resolution is about 10 years, but at least it’s respectfully said.
