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.

America Already Has Socialized Medicine - A Trillion for Medicare & Medicaid and Another Trillion for Obamacare Subsidies

America already has socialized medicine and Medicare and Medicaid now cover the heathcare costs of nearly 60% of Americans to the tune of a trillion bucks a year.  Under Obamacare, direct insurance company subsidies are estimated to cost another trillion.  By the time Medicare, Medicaid and Obamacare subsidies kick in, it's doubtful that there will be many left in America who won't have heavily subsidized or totally cost free healthcare.

Medicare and Medicaid Entitlements

USA Today reported that Medicare and Medicaid costs were $992 billion in 2010 and expected to grow by $90 billion in 2011, here.

Medicare and Medicaid spending rose 10% in the second quarter from a year earlier to a combined annual rate of almost $992 billion, according to new data from the Bureau of Economic Analysis (BEA). The two programs are on track to rise $90 billion in 2011 and crack the $1 trillion milestone for the first time.

The jump in health care spending is the biggest since the Medicare prescription drug benefit was added five years ago and ends a brief lull in the spending increases that occurred during the economic downturn.....

Medicare and Medicaid paid a record 57.5% of patient bills for hospital, doctors, drugs and other care in the last quarter, up from 49.3% in 2005.

Both Medicare and Medicaid are expected to grow significantly.  Forbes reports that there are already 50 million folks enrolled in Medicaid. They pay nothing and get free medical care.  The Kaiser Family foundation reports that there are currently over 49 million folks enrolled in Medicare, here.   Obamacare is expected to increase Medicaid enrollees by 20 million, here.

Expanding Medicaid, which is funded jointly by states and the federal government, is a key part of President Obama’s signature legislative achievement, the Affordable Care Act. And though the U.S. Supreme Court last year largely upheld the law, it did allow state governors to opt out of expanding Medicaid coverage to more Americans.

Still, the Medicaid expansion should bring 5 million Americans into the expanded Medicaid coverage next year and eventually up to 10 million more newly insured Americans by 2017, Avalere’s Stento said. Before the Supreme Court ruling, Avalere projected there would be 11 million new Medicaid enrollees in 2014 “with that phasing up to 20 million by 2017 and 21 million by 2019,” Avalere said.

Already, there are about 50 million Americans enrolled in Medicaid health insurance for the poor or affiliated health coverage programs like the State Children’s Health Insurance Programs (SCHIP).

Although Medicaid was originally sold to the states as a federally funded entitlement and revenue generator for the states, eventually the cost of the program was approximately split between the states and federal government at about 50:50.  Medicaid is a huge tax burden on the states.  Similarly, Obamacare has also been sold to the states as revenue generators because the states "agreeing to go along with the Medicaid expansion are taking advantage of a cash infusion of more than $900 billion in federal dollars from 2014 to 2022 under the health law." according to the above referenced Forbes article.

Medicaid and Medicare costs do not include the cost of subsidized Obamacare plans, although the expansion of Medicaid is part of Obamacare.  Who is eligible for Medicaid and Obamacare subsidies? According to the Kaiser Family Foundation, eligibility depends on family income and dependents.

Beginning in October 2013, middle-income people under age 65, who are not eligible for coverage through their employer, Medicaid, or Medicare, can apply for tax credit subsidies available through state-based exchanges.

Additionally, states have the option to expand their Medicaid programs to cover all people making up to 138% of the federal poverty level (which is about $33,000 for a family of four). In states that opt out of expanding Medicaid, some people making below this amount will still be eligible for Medicaid, some will be eligible for subsidized coverage through Marketplaces, and others will not be eligible for subsidies.

Like any federal program, subsidies and eligibility are complicated formulas.  How much will Obamacare subsidies cost?

Obamacare Subsidies

CNN explained the Obamacare subsidies fairly simply and in a manner that promotes Obamacare as very beneficial to the middle class.

Millions eligible for Obamacare subsidies, but most don't know it

Nearly 26 million Americans could be eligible for health insurance subsidies next year, but most don't know it.

That's because relatively few people are familiar with provisions in the Affordable Care Act, aka "Obamacare," that will provide tax credits to low- and middle-income consumers to help them purchase health coverage through state-run insurance exchanges.

Most of those who will be able to claim the subsidies are in working families with annual earnings between $47,100 and $94,200, according to a recent analysis by Families USA, a consumer advocacy group. More than a third of those eligible will be young adults between ages 18 and 34....

Here's how the subsidies will work:

Starting in October, those looking to buy individual health insurance can enroll in plans offered through state-based exchanges, with coverage beginning in January. Consumers buying individual plans will be able to choose between four levels of coverage: platinum, gold, silver and bronze. The plans will differ in their premiums and out-of-pocket expense burdens.
People who are not in a government health insurance program, such as Medicaid or Medicare, and do not have access to an affordable plan at work may be eligible for help paying their premiums.

The assistance is available to those with incomes of up to four times the federal poverty level -- this year, that's $45,960 for an individual or $94,200 for a family of four -- and will be scaled to ensure that folks don't pay more than a designated percentage (the exact target varies by income level) of their earnings toward the premium. The subsidy will be paid directly to the insurance company.

It all sounds so spectacularly wonderful - another government gift that rains like manna from the heavens upon the people beneath!  The poor will get free healthcare and middle class families earning nearly $100,000 a year will get subsidized affordable healthcare.  Of course, Obamacare's official name, The Patient Protection and Affordable Care Act, was a critically important propaganda talking point in the selling the world's most expensive healthcare system in human history.

The Obamacare subsidies are now projected to far exceed initial estimates.  American Thinker reports:

According to the new White House budget, from the time the exchanges open in 2014 to 2021, the administration expects to spend about $606 billion on subsidies, a massive commitment of federal resources. That's about 27 percent more than the $478 billion projected in the president's budget last year, and 65 percent more than the $367 billion for the same period in the 2012 budget.... The Congressional Budget Office estimates that it will cost about $9,000 in subsidies for a person who would have qualified for Medicaid under the expansion -- compared to $6,000 for Medicaid coverage.....

...the CBO jacked up its estimate again:

The CBO significantly hiked the amount of money needed to fund the subsidies available through Obamacare's exchanges, hiking them by $233 billion. IBD explains: "The CBO's new baseline estimate shows that ObamaCare subsidies offered through the insurance exchanges -- which are supposed to be up and running by next January -- will total more than $1 trillion through 2022, up from $814 billion over those same years in its budget forecast made a year ago. That's an increase of nearly 29%. The CBO upped the 10-year subsidy cost by $32 billion since just last August." Part of that is expecting more people in the exchanges thanks to employer dumping and more limited Medicaid expansion, but "The rest is largely the result of the CBO's sharp increase in what it expects the average subsidy will be. Last year, the CBO said the average exchange subsidy for those getting federal help when ObamaCare goes into effect next year would be $4,780. Its latest estimate raised that to $5,510 -- a 15% increase. All these numbers are up even more from the CBO's original forecast made in 2010, which had the first-year subsidy average at $3,970."

Going once, going twice, SOLD.  On top of the trillion dollars currently being spent on Medicare and Medicaid, Obamacare subsidies are now projected to cost another trillion.  Medicaid is expected by grow by at least 20 million  new enrollments and Medicare will undoubted grow substantially as the Baby Boomers retire and expect Medicare.

There's only one problem.  America can't afford Medicare and Medicaid and hardly anybody in the working stiff social strata can afford Obamacare without a subsidy because the US economy is increasingly becoming a minimum wage economy, here.  Businesses are especially hard hit by the sticker shock of Obamacare and are firing full time workers or reducing their hours to part-time status because businesses can't afford the cost of the entitlement of the century. Of course, the economic carnage of Obamacare will drive more folks into Medicaid because bad economies create more poor folks.   Obamacare will impose such huge costs on businesses that it will ravage our already ravaged and ailing economy.

Poll: 41% Of Small Businesses Froze Hiring Due To Obamacare, 19% Have Laid Off Employees Mediaite

In fact, Obamacare is such a freaking nightmare that the bureaucracy established by the government to implement Obamacare and create call centers to explain it to folks isn't even hiring full time employees and has resorted to part-time job offers.

Obamacare Call Center Will Not Offer Healthcare Benefits to Employees National Review

There are also the labor unions that were wildly supportive of Obamacare because they sensed a freebie or at least lower cost healthcare.  Labor unions are running from Obamacare.

Labor unions turn on ObamaCare, fear losing coverage Fox News

Obamacare is so horrifying that even the Congress Critters who passed it and their supporting staff want to be exempt from it.

Now Congress Wants to Exempt Itself from Obamacare Heritage Foundation

To add insult to injury,  IRS employees who are tasked with enforcing the collection of the myriad of new Obamacare taxes is bitching and moaning that they shouldn't be subjected to Obamacare.

IRS employees union: Please don’t make us enroll in Obamacare The Daily Caller

About all that free or low cost healthcare that sent CNN into a whopper of statist orgasm?  I can't wait for CNN's next spin on the glories of government healthcare, especially when we really do go "Greek" literally and figuratively and it dawns on some policy wonks and media idiots that there really is no money......

One thing is certain.  Whenever the government steps in to solve any real or imagined problem, the problem then grows exponentially and grows so horridly insufferable that the only possible solution is the death of government because government can never fix a gosh darn thing and shouldn't even try.

The Government Subsidizes Junk Food and the Costly Lifestyle Diseases Resulting from Poor Nutrition

If there ever was a defining characteristic of insanity, it's got to be the US government. Only in America are taxpayers forced to subsidized unhealthy bad food that results in expensive to maintain lifestyle diseases that are also publicly funded. The Big Food and Big Pharm lobbies are determined to perpetually guarantee big profits through mandates and subsidies. The marriage of big government and big business has churned Americans into fat pharmaceutical dependent blimps.

Cato has a fascinating piece on this issue.

How Uncle Sam's Making Us Fat

The US Department of Agriculture is Exhibit A for foolish, wasteful federal policymaking: It spends billions subsidizing the same unhealthy foods it tells us to avoid.

This year, the USDA will spend more than $1 billion subsidizing the growth of four common food additives: corn syrup, high-fructose corn syrup, corn starch and soy oils (hydrogenated vegetable oil).

These additives "provide a cheap dose of sweetness and fat to a wide variety of junk food products," warns the US Public Interest Research Group. PIRG found that the USDA spent $18.2 billion from 1995 to 2011 to subsidize junk-food additives.

Yet, while some of your tax dollars pay for these junk-food additives, more pay for public-health education campaigns that strive to convince us to eat less and to eat better.

The USDA lectures and hectors us to avoid anything that's fatty, salty, sugary or filled with processed ingredients — like the ones our tax dollars subsidize.

Clearly, the Agriculture Department puts the D in double standard: The bureacuracy's left hand is at war with its right.

The government doesn't just subsidize nasty things like the manufacture of HFCS and hydrogenated oils, it also subsidizes the retail sale of these nasty products with food stamp subsidies.  Food stamps have been renamed SNAP, Supplemental Nutritional Assistance Program, although there's nothing nutritious about the program.  Even liberal organizations are waking up to the stone cold reality that the government subsidizes junk food that makes folks sick and unhealthy. The farm bill passed by Congress is loaded with all kinds of subsidy horrors

Farm Bill Jackpot – How Much do Corporations Benefit from SNAP?

* Powerful food industry lobbying groups such as the American Beverage Association and the Snack Food Association teamed up to oppose health-oriented improvements to SNAP, at times working with anti-hunger groups

* At least nine states have proposed bills to make health-oriented improvements to SNAP, but none have passed, in part due to opposition from the food industry In one year, nine Walmart Supercenters in Massachusetts together received more than $33 million in SNAP dollars—over four times the SNAP money spent at farmers markets nationwide

*In two years, Walmart received about half of the one billion dollars in SNAP expenditures in Oklahoma

* J.P. Morgan Chase holds contracts in 24 states to administer SNAP benefits, indicating concentrated power and a lack of competition

*In New York, a seven-year deal originally paid J.P. Morgan Chase $112 million for EBT services, and was recently amended to add $14.3 million—an increase of 13 percent States are seeing unexpected increases in administrative costs, while banks and other private contractors are reaping significant windfalls from the economic downturn and increasing SNAP participation.

While food stamps supporting liberals are not exactly recognizing that the government freebies that they so cherish are unhealthy, they are beginning to wake up to the reality and some of them are lobbying for nutritional improvement in the junk food laden food stamp program.

As a Libertarian, I oppose the food stamp program.  That said, I don't believe it will ever vanish.  However, it can be vastly improved by restricting food stamp use to fruits, vegetable, meats and dairy. Food stamp users are notorious for loading up with junk food, sugary cereals for their kids and soda.  They don't have the common sense to eat sensibly which is precisely why junk food needs to be banned from the food stamp program.

But there's a hugely expensive companion problem to the food stamp insanity and junk food subsidies.  Bad food results in lifestyle diseases that are very expensive to treat.  Not only are American taxpayers forced to pay for the junk food that makes folks sick with lifestyle diseases, they are also forced to pay for their healthcare.  In fact, Medicare and Medicaid are costing American taxpayers near $1 trillion a year, here.

With 60% of the American people already on some form of taxpayer subsidized healthcare, America is already a socialist nation and most Americans absolutely do demand government provided healthcare and other entitlements.  Support for Medicare, Medicaid and other government programs remains quite strong. Americans are just like everybody else – they want something for free (translation: at the expense of somebody else) but there is no such thing as a free anything and anything the government does is very costly, inefficient and life threatening.

America spends more on healthcare than any industrialized nation and by a very wide margin.

Also, there is no corresponding increase in American longevity considering the huge amount of money we pour into health care. In fact, we keep going backwards, 3rd world nations are surpassing us and we ranked 42nd in longevity.

U.S. ranks just 42nd in life expectancy

Americans are living longer than ever, but not as long as people in 41 other countries. For decades, the United States has been slipping in international rankings of life expectancy, as other countries improve health care, nutrition and lifestyles...

Among the other factors:

•Adults in the United States have one of the highest obesity rates in the world. Nearly a third of U.S. adults 20 years and older are obese, while about two-thirds are overweight, according to the National Center for Health Statistics.

•“The U.S. has the resources that allow people to get fat and lazy,” said Paul Terry, an assistant professor of epidemiology at Emory University in Atlanta. “We have the luxury of choosing a bad lifestyle as opposed to having one imposed on us by hard times.”

Tragically, American is a nation swimming with fat entitlement dependent pigs. Of course, the government itself is responsible for this nightmare by doling out freebies, free junk food and free healthcare to those who simply refuse to eat or live responsibly.

Kids are eating high calorie, low nutrition diets that primarily consist of simple carbohydrates, sugar, corn syrup, fats and sodium. Much of what kids eat in the schools is taxpayer funded garbage. Even more horrifying is that Migration Information reported that schools actually sell advertising to junk food purveyors by signing “"pouring rights" contracts that permit snack and soft drink companies to advertise to children on school vending machines, scoreboards, book covers, t-shirts, and news programs shown on televisions in the classroom., here.

Only in America do we kill our kids for profit and do it with our tax dollars!!

A group called Healthyamericans.org reported in June 2009 that "Today, we spend nearly $800 billion on health problems that are directly linked to lifestyle and poor health habits each year-about one third of our total health care spending…” and that article was quoting a congress critter, here.

America can't begin to solve its immense economic and fiscal problems because we remain a nation of spoiled rotten morons, from the political class and all the way down to the people who vote to hire the police powers of the state to forcibly steal from somebody else to give them what they think they want or deserve.  So long as folks are allowed to vote for politicians who will keep them fat, lazy, sick and entitlement dependent, the soul of a once proud, independent, prosperous and responsible people will continue to die and morph into something so vile that neither America nor Americans will ever be restored to our glorious legacy of being the the strongest, most prosperous and freest people in human history.