About Social Security
In 1967, I brought home my first paycheck. I remember asking the payroll person at the hospital what the FICA deduction was. She told me it was my “retirement”. That sounded great. I was told many other things about this “retirement” plan. Things like: "The government is keeping your money in a trust fund", and "You'll be able to retire when you get old because they will give it back to you with interest"', and “You'll never have to worry about not having enough for what you need to live just because you get old”. Not that any of those people meant to lie to me, they really believed the things they said. It was supposed to be true, that's what they had been told.
The Federal government wanted to be sure that every person reaching the age of 65 would be able to retire and still have the financial security to have a good life. Too many people didn't plan properly for their retirement, so the government - with good intentions - had arranged to do it for them. (I've told you how dangerous good intentions can be!) The government would take money from every paycheck they received, put it in an account for them and pay interest. Then when they retired, the government would give them back their money with the interest. Problem is that this was a myth. JFK was right when he said,
"The great enemy of truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and
Once I started looking into the Social Security program, it didn't take me long to realize that even back in '67 that certainly didn't describe the program my money was being taken for!
So what happened to the program FDR started in 1935? Slowly but surely Congress made changes. They changed it from a voluntary program to a mandatory program. By increments, the percentage they remove has risen to 15.30%. If you are employed, you pay half and your employer pays half. If you are self-employed, you pay the whole amount.
By increments, Congress also increased the amount of your annual income that has FICA taken out. That maximum income taxed is now $106,800 – you don't pay FICA on amounts over the maximum, and the maximum annual contribution is $6,621.60 (employer) and $4485.60 (employee).
FICA now includes Social Security, Disability and Medicare. In 2011, the FICA tax rate for employees was temporarily lowered to 5.65%. The
employer's tax rate remained
Under Jimmy Carter, another Democrat president, another Democrat- controlled Congress voted to give Social Security payments to immigrants who moved into this country, when they reached 65, even if they had never paid into the system.
Finally, Bill Clinton, yet another Democrat president, and yet another Democrat-controlled Congress, eliminated the income tax deduction for Social Security (FICA) withholding. Also, they started taxing the Social Security payments to seniors and the disabled. Vice President Al Gore, a Democrat, cast the tie-breaking vote. (The Vice President acts as President of the Senate and only votes in the event of a tie.)
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