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5.4 Social Security & Payroll Taxes

5.4 Social Security & Payroll Taxes
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  • Math Help

    The Social Security Board of Trustees is comprised of six trustees: the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, the Commissioner of Social Security, and two Public Trustees. The two Public Trustees are nominated by the President, confirmed by the Senate, and serve four-year terms. These positions were established by the 1983 Social Security amendments so two people outside of the federal government could review the financial projections. The annual reports are required by law under Section 201 of the Social Security Act. The primary purpose is to report to Congress on the financial status of the Social Security and Medicare Trust Funds. The Social Security report evaluates the finances of the Old-Age and Survivors Insurance (OASI) Trust Fund, the Disability Insurance (DI) Trust Fund, and the combined (OASDI) Trust Funds. The Medicare report covers the Hospital Insurance (HI) Trust Fund and the Supplementary Insurance (SMI) Trust Fund. Some of the conclusions from the 2011 Annual Report:

    • "Under current law, the cost of Social Security will generally increase faster than the program's income because of the aging of the baby-boom generation, continuing low fertility compared to the baby-boom period, and increasing life expectancy."
    • "Based on the Trustees' best estimate, program cost will exceed non-interest income in 2011, as it did in 2010, and remain higher throughout the remainder of the 75-year projection period."
    • "... the DI Trust Fund is projected to become exhausted in 2018."
    • " The projected trust fund shortfalls should be addressed in a timely way so that necessary changes can be phased in gradually and workers and beneficiaries can be given time to adjust to them. "

    If you are interested in reading more about the Social Security Board of Trustees, visit www.economics21.org

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  • Checkpoint Solution

    A 1% COLA costs the federal government

    in increased Social Security benefits.

    Hopefully, the taxes paid by working people increased by at least 1% to cover this additional cost. Otherwise, this COLA will further erode the Social Security trust fund that is already in danger of default in the near future.

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    system user
    Guest   6 years ago |
    The reason that the Social Security system will be running out of money is that almost 25% of Social Security payments are made to people who claim disability. It the money was used only for retired people, the system would be financially sound.
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