Anna M. Pierce – 3/17/05

This page was last updated on March 19, 2005.

Lift the cap in 2018; Anna M. Pierce; Beaver County Times; March 17, 2005.

Below is a detailed critique of the subject letter.

“Our great senator, Rick Santorum, wrote a letter to the editor on Friday touting President Bush’s plan to reform Social Security.

“He said lifting the cap on the Social Security tax would devastate small businesses. How many small businesses do you know that have employees who make $90,000-plus a year?”

[RWC] Ms. Pierce appears to forget about the small business owners themselves. The owners pay themselves wages and those wages are subject to Socialist Security – and Medicare – taxes.

“The senator also said just because they would take in more taxes now by lifting the cap would not mean they would have more money in 2018 when the crisis is supposed to hit.

“To me, that means that no matter what we do now to fix Social Security, our elected officials have no intention of saving that money to pay benefits in 2018. Sounds like our elected officials plan on continuing spending like a bunch of drunken sailors on a two-day leave. How stupid does Sen. Santorum think we are?”

[RWC] Ms. Pierce shouldn’t have asked that last question. If Ms. Pierce had done her research, she would have learned that our Socialist Security benefits are determined in a large part by how much we as individuals pay in taxes over our working life. That is, the more taxes you pay, the greater your benefit check. Therefore, increasing the tax on those persons earning more than $90,000 would also increase the benefits that must be paid to those workers. Remember, the maximum taxed earnings cap already increases every year by law.

“All Americans are free to set up their own personal savings account. If you don’t have the discipline to put money into it each month, sign up for automatic withdrawal.”

[RWC] I agree absolutely. If FDR and his fellow travelers had understood this in 1935 we wouldn’t have been stuck with Socialist Security in the first place.

“All Bush’s plan is doing is giving employers a 4.2 percent tax break because they will not have to match your contribution to your personal savings account. There is no written guarantee that the stock market will continue to go up.”

[RWC] Where does Ms. Pierce get her info?

First, it’s a myth that employers “match” your 6.2% Socialist Security tax. The truth is the entire 12.4% comes out of your paycheck. It’s only an accounting gimmick that makes it appear employers pay part of the tax.

Second, whether you designate any of your taxes to go into a personal account will have no effect on the tax rate. You are taxed at 12.4% whether you designate some to go into a personal account or not.

Of course there’s no guarantee your investments will build wealth. Ms. Pierce appears to believe all of the offered investments will be in private stocks. That’s not the case. Again, Ms. Pierce hasn’t been paying attention. That said, history shows the stock market to be a solid long-term investment.

Ms. Pierce doesn’t appear to realize there’s also no guarantee you will collect Socialist Security benefits under SS “classic.” At least two Supreme Court rulings made that point clear.

“After reading the senator’s comments, I now feel the best thing to do is nothing until 2018 and then lift the tax cap on earnings.”

[RWC] Is Ms. Pierce serious?