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- Title
The Once and Future Social Security Tax Expenditure.
- Authors
Forman, Jonathan Barry
- Abstract
The article reports that privatization of the Social Security system could have a significant impact on the federal budget. Under the Personal Security Accounts (PSA) plan, the current Social Security system would be replaced with a two-tiered system. Under the first tier, workers under age 25 in 1998 who work at least 35 years in covered employment would receive a flat dollar benefit at age 62 equivalent to $410 monthly in 1996 dollars. These benefits would be financed by employer Social Security contributions that would continue to be excludable from the employee's income. Under tier 2, the plan would create PSAs that would be dedicated to retirement savings. These PSAs would be financed by reallocating five percentage points of the employee's already taxed share of Social Security taxes. Under a pure theoretical income tax, individuals would pay tax to the extent that their Social Security benefits exceed their already income-taxed employee Social Security contributions. Like regular savings accounts, PSAs would be financed with already income-taxed employee contributions.
- Subjects
SOCIAL security; PUBLIC spending; ECONOMIC security; EMPLOYMENT; ECONOMIC reform; INCOME tax deductions
- Publication
Benefits Quarterly, 1997, Vol 13, Issue 3, p77
- ISSN
8756-1263
- Publication type
Article