Social Security from 2% to 15.3% - Robbing the Poor and Middle Class since 1937

Image credit: http://commons.wikimedia.org/wiki/File:Historical_Payroll_Tax_Rates.jpg



There is no Social Security Trust Fund and every tax dollar collected was immediately spent on wars and other slop.  The SS Trust Fund was left with a worthless pile of IOU's totaling nearly $3 trillion, courtesy of thieving Congress Critters.

For decades, the Social System was nothing but a cash cow for the government because receipts far exceeded disbursements but that changed a few years ago.  The cash cow croaked and SS is running a deficit - meaning disbursements exceed receipts.  This requires the federal government to up the rate of interest it pays on the debt (treasuries) or dip into the general fund to finance SS payment obligations.

If SS was running a consistent surplus for many decades, then why did the government keep raising the tax?  It's a valid question, especially given that nearly $3 trillion vanished into the spending hole. The answer to the question is that both Republicans and Democrats plundered the SS Trust fund to finance wars.  The largest increase in the SS tax included LBJ and Reagan years; not only was the SS tax increased, the Medicare tax introduced in 1966 by LBJ at .7% but was quickly raised to 2.9%. Medicare is also bankrupt, even more bankrupt than SS because Medicare is basically an unfunded entitlement while SS is a plundered and looted entitlement that still generates significant cash.

It's interesting to note how the 2% SS tax grew from 2% to 15.3% and what presidents were responsible for the largest increases in SS-Medicare taxes. LBJ and Reagan were both ferociously loyal to the military industrial complex and both used SS-Medicare taxes to fun the MIC.

[hide]Historical Social Security Tax Rates Maximum Salary FICA and/or SECA taxes paid on[9]
Year	Maximum Earnings taxed	OASDI Tax rate	Medicare Tax Rate	Year	Maximum Earnings taxed	OASDI Tax rate	Medicare Tax Rate
1937	3,000	2%	-	1977	16,500	9.9%	1.8%
1938	3,000	2%	-	1978	17,700	10.1%	2.0%
1939	3,000	2%	-	1979	22,900	10.16%	2.1%
1940	3,000	2%	-	1980	25,900	10.16%	2.1%
1941	3,000	2%	-	1981	29,700	10.7%	2.6%
1942	3,000	2%	-	1982	32,400	10.8%	2.6%
1943	3,000	2%	-	1983	35,700	10.8%	2.6%
1944	3,000	2%	-	1984	37,800	11.4%	2.6%
1945	3,000	2%	-	1985	39,600	11.4%	2.7%
1946	3,000	2%	-	1986	42,000	11.4%	2.9%
1947	3,000	2%	-	1987	43,800	11.4%	2.9%
1948	3,000	2%	-	1988	45,000	12.12%	2.9%
1949	3,000	2%	-	1989	48,000	12.12%	2.9%
1950	3,000	3%	-	1990	51,300	12.4%	2.9%
1951	3,600	3%	-	1991	53,400	12.4%	2.9%
1952	3,600	3%	-	1992	55,500	12.4%	2.9%
1953	3,600	3%	-	1993	57,600	12.4%	2.9%
1954	3,600	4%	-	1994	60,600	12.4%	2.9%
1955	4,200	4%	-	1995	61,200	12.4%	2.9%
1956	4,200	4%	-	1996	62,700	12.4%	2.9%
1957	4,200	4.5%	-	1997	65,400	12.4%	2.9%
1958	4,200	4.5%	-	1998	68,400	12.4%	2.9%
1959	4,800	5%	-	1999	72,600	12.4%	2.9%
1960	4,800	6%	-	2000	76,200	12.4%	2.9%
1961	4,800	6%	-	2001	80,400	12.4%	2.9%
1962	4,800	6.25%	-	2002	84,900	12.4%	2.9%
1963	4,800	7.25%	-	2003	87,000	12.4%	2.9%
1964	4,800	7.25%	-	2004	87,900	12.4%	2.9%
1965	4,800	7.25%	-	2005	90,000	12.4%	2.9%
1966	6,600	7.7%	0.7%	2006	94,200	12.4%	2.9%
1967	6,600	7.8%	1.0%	2007	97,500	12.4%	2.9%
1968	7,800	7.6%	1.2%	2008	102,000	12.4%	2.9%
1969	7,800	8.4%	1.2%	2009	106,800	12.4%	2.9%
1970	7,800	8.4%	1.2%	2010	106,800	12.4%	2.9%
1971	7,800	9.2%	1.2%	2011	106,800	10.4%	2.9%
1972	9,000	9.2%	1.2%	2012	110,100	10.4%	2.9%
1973	10,800	9.7%	2.0%	2013	113,700	12.4%	2.9%
1974	13,200	9.9%	1.8%
1975	14,100	9.9%	1.8%
1976	15,300	9.9%	1.8%
Notes: Tax rate is the sum of the OASDI and Medicare rate for employers and workers. In 2011 and 2012, the OASDI tax rate on workers was set temporarily to 4.2% while the employers OASDI rate remained at 6.2% giving 10.4% total rate. Medicare taxes of 2.9% now (2013) have no taxable income ceiling. Sources: Social Security Administration, [40] and [41], accessed 7 Nov 2013

Source of chart: http://en.wikipedia.org/wiki/Social_Security_(United_States)

Social Security and Medicare taxes are like property taxes - you have the tax rates plus the base or assessment on which they were assessed. 

Medicare did not exist until LBJ created it in 1966 with a tax rate of .6 that was quickly raised to 1.2% by LBJ.  This was on top of LBJ's 16% increase in the SS tax from 7.25% to 8.4%.  Even worse, LBJ raised the base a whopping 63% from $4,800 to $7,800.   It's how LBJ funded the Vietnam War.

But the prize for the biggest SS tax hikes in history go to Reagan who raised the SS tax from 10.16% to 12.12%, in addition to raising the Medicare tax from 2.1% to 2.9%.  But Reagan also raised the base from $25,700 to $48,000, nearly doubling the taxable base by a whopping 86%.

These taxes fell squarely on the poor and middle class who obviously pay the brunt of SS and Medicare taxes. 

Reagan's SS-Medicare tax hikes combined with the increase in the wage base on which these taxes were paid constituted the biggest tax hike on the poor and middle class in US history, AFTER the Federal Reserves' wholesale robbery of the purchasing power of the dollar.

 

After Nixon de-tethered the dollar from gold in 1971, the purchasing power of the dollar rapidly declined and was permanently decimated.  During the Reagan years, the poor and middle class were hit with monster SS and Medicare tax on wage dollars that were buying less and less.  Still, every president and congress since SS was enacted has plundered the SS Trust Fund and left a worthless pile of IOU's.  Reagan, with bipartisan support, managed to royally screw the poor and middle class on a level unheard of in US history.

To put SS tax rates into perspective especially as it pertains to both the rate and the ever increasing  base, the best example is Teresa Heinz Kerry who disclosed her tax returns when hubby John Kerry ran for president.  Teresa Heinz Kerry, who is worth $200 million according to celebritynetworth.com, paid a paltry federal tax rate of 12% on unearned income (dividends and interest) in excess of $5 million, here and here, in 2003.

When the richest folks in America pays much lower tax rates than the poor and middle class, something is radically wrong. 

In America, the minimum tax rate for the poor and middle class starts with a floor of 15.3%, a rate that doesn't include federal taxes, state taxes, sales taxes and various other taxes designed to gouge ordinary working stiffs and the poor.

And if the ordinary folks think that the government is saving their money for them and their future retirement, they are brain dead and delusional.  Yeah, it's an absolute tragedy that damn few Americans even know what the government did with their so-called retirement savings.  Spending SS and Medicare taxes on wars and other slop is just another pathetic example of the thieving powers of government whose only goal is to plunder the people. And plundering the people is the only thing that government is good at.

It's time to FOCUS on Restoring the GOP to the Party of Liberty

The crushing defeat of the Republican Party on election day has obviously unleashed a barrage of questions and commentary. Where did the GOP go wrong? In my humble opinion, the Republican Party failed miserably at distinguishing itself from the Democratic Party. Moreover, the baggage of the intolerant social conservatives, the Republican addiction to spending and the label of being the War Party weighed heavily in the GOP's defeat. The Republican Party is a turn off for voters and the GOP was hit especially hard on demographics by losing the youth vote, the female vote and the minority vote.  In many ways, the GOP is viewed as the party of old, white, gray and dying establishment Republicans as noted in a piece titled GOP Challenge: How to Transcend Aging White Base.

One thing is clear. The GOP has BIG problems that were succinctly and accurately summarized by a Facebook friend.  

The GOP is now made up of 3 factions. The old guard, which I completely reject, the Tea Party, which I almost completely reject due to their batshit crazy tendencies, and the Libertarian wing which I fully endorse.

The war for the soul of the Republican Party has begun. If the Libertarian wing doesn't prevail, the GOP is headed straight to the trash heap of permanent extinction because of a vanishing base. While the Washington Post came out with Republican Party begins election review to find out what went wrong, a far more interesting analysis lays out what needs to be done.

Tea Party: No More Doles, McCains, Romneys

Following President Barack Obama’s re-election victory on Tuesday, one Tea Party group is vowing “no retreat” in its quest to find candidates with “clear conservative records” instead of “weak-kneed” Republicans.

“We’ve had Bob Dole, we’ve had (Gerald) Ford, we had (John) McCain, and now we did (Mitt) Romney, and they lost…because those guys do not necessarily reflect what I think the majority of conservatives, probably the majority of Americans, truly believe,” said Scottie Hughes, news director for the Tea Party News Network.

Hughes added that a desirable conservative candidate is someone who advocates “core principles,” such as liberty, freedom, and limited government, which were so important to the Founding Fathers.

Todd Cefaratti, a TPNN editor, says he knows what conservatives need to do to regain control of the White House: “The Tea Party has not yet begun to fight. It’s time for a wholesale reassessment of the D.C. establishment politicians and party grandees who have no commitment or courage to reduce the size of government,” Cefaratti said.

“[But] unfortunately, time and time again the establishment Republican Party continually keeps putting these candidates [forward], saying, ‘This is who we need to support.’ And most of the time those are usually not the folks who represent true conservative Republican values,” said Hughes.

Hughes said that if conservative and libertarian groups found a way to combine forces, they might be able to settle on a candidate who could win without the need to appeal to moderates.

Bingo!

Therein lies the hope for resurrecting the GOP from the utter destruction wrought upon it by the arrogant party elites who hold the will of the conservative base in the highest contempt.  Also, Republican salvation definitely won't be coming from theocratic candidates like Michelle Bachmann or Rick Santorum.  The Republican Party needs to ditch its 'bat shit crazies' who advocate for theocracy, social intolerance, endless wars and a military empire.  The theocon/neocon axis must be broken and consigned to the trash heap of history.

Conservatives are different than Democrats. A Democrat will vote for any idiot their party runs but conservatives absolutely will not. Conservatives will gleefully and vigorously punish their party for running big government and big spending Republican statists, and that's precisely what happened on election night.

For decades conservatives have been voting for what they perceived as less government but all they ever got was more Republican spending, more deficits and a big pile of debt. The crop of Tea Party Republicans that won big in 2010 ended up spending more than the Democrats they replaced, here.  The decline and fall of the Republican Party dates all the way back to the Reagan era.

What Went Wrong with the Republican Party? Reagan Ruined the Republican Party and Fiscal Conservatism

Lew Rockwell published this gem of a 1992 piece by Murray Rothbard describing the fall of the Republican Party as fiscal conservatives. The article documents the turning point of the Republican Party under Reagan. Frankly, I never understood why Reagan is so revered by Republicans. Reagan massively increased spending and taxes. In many way, the Reagan era paved the way for the Republican Party nightmare that currently exists - nothing but a party of one big socialist spending orgy. As it turns out, the Gipper was one big graft machine who loved big government.

Repudiating the National Debt

In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of $1 trillion. They cried because all of their lives they had voted against an increase in public debt, and now they were being asked, by their own party and their own movement, to violate their lifelong principles. The White House and its leadership assured them that this breach in principle would be their last: that it was necessary for one last increase in the debt limit to give President Reagan a chance to bring about a balanced budget and to begin to reduce the debt. Many of these Republicans tearfully announced that they were taking this fateful step because they deeply trusted their president, who would not let them down.

Famous last words. In a sense, the Reagan handlers were right: there were no more tears, no more complaints, because the principles themselves were quickly forgotten, swept into the dustbin of history.

On Tuesday night, November 6, 2012, true conservatives just couldn't take it any longer. They were sick to death of years and decades of lies, spending, deficits and debt. Conservatives finally found the courage to just let the Republican Party loose, something that was long overdue.

Frankly, I'm proud of conservatives for finally doing something they should have done a long time ago. They finally had the testicular fortitude to fire their own damn party because the lesser of the two evils is still evil.

It's time for We the People to take back the Republican Party and toss out the frauds and traitors who betrayed the constitution and the principles of federalism and limited federal powers.