According to Jack Bogle, founder of Vanguard, the mutual funds investment company, Social Security is in crisis.
Bogle said the system’s finances could get a big boost from changes that may be rejected as “politically sensitive,” including
- adopting a less-generous approach to calculating cost-of-living adjustments,
- raising the maximum annual earnings subject to Social Security tax,
- and raising the age for full retirement benefits further from the current range of ages 66 to 67.
First of all, Social Security is not in a crisis. The Fund has a reserve of $2.5 trillion that earns $180 billion in interest a year. That money is due to be used up by roughly 2036 as more and more baby boomers retire. Then Social Security can still pay 84 percent of everybody’s benefits after that.
This means it won’t take much to make up the shortfall. Currently, nobody pays social security taxes on income above $118,500. Simply eliminating this cap on taxing income would erase the future shortfall. However, we could go farther and with good reason.
Here’s what the corporate media doesn’t want you to know.
Trillions of dollars every decade earmarked for the social security trust fund are redirected from the fund into the already fat wallets of the super rich. The rich don’t pay social security taxes on capital gains and dividends. Every time a job is exported, the wages and social security contributions from that job are transformed into capital gains and dividends.
Millions of jobs have been exported. That’s hundreds of billions of dollars every year no longer heading into the Trust Fund because the difference between the old higher US wages and the new lower third world wages goes straight into the pockets of the ultra wealthy via capital gains and dividends.
Capital gains and dividend income are exempt from paying social security taxes.
So why not establish social security taxes on dividends and capital gains above a certain point, say $100,000 a year in income from those sources?
Then you could increase monthly payments to retirees while simultaneously raising the demand for goods and services, which would strengthen the economy, as well as spur job and wage growth.
Wall Street won’t like it, but millions of older folks could use the money being stolen from social security via international income redistribution scams falsely marketed as “trade agreements.”