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5.4 Social Security & Payroll Taxes

5.4 Social Security & Payroll Taxes
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  • 13. Explaining Projected Dependency Ratios

    The economic dependency ratio is also called the total dependency ratio which consists of old-age dependency and youth dependency, as shown in the bar graph. When President Franklin D. Roosevelt signed the Social Security Act in 1935, the United States had a total dependency ratio of 74. Of this, 63 was attributed to youth dependency and 11 to old-age dependency.

    Why is the total dependency ratio projected to increase from 66 in 2010 to 82 in 2050? (See Example 5 and Example 6.)

    • Worked-Out Solution

      One possible reason for the total dependency ratio to increase is that people are projected to live longer.

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      ______   _    _     ______   __   __    ____    
     /_____// | || | ||  /_   _//  \ \\/ //  |  _ \\  
     `____ `  | || | ||  `-| |,-    \ ` //   | |_| || 
     /___//   | \\_/ ||    | ||      | ||    | .  //  
     `__ `     \____//     |_||      |_||    |_|\_\\  
     /_//       `---`      `-`'      `-`'    `-` --`  
     `-`                                              
    
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  • 14. Describing the Change in Dependency Ratios

    The economic dependency ratio is also called the total dependency ratio which consists of old-age dependency and youth dependency, as shown in the bar graph. When President Franklin D. Roosevelt signed the Social Security Act in 1935, the United States had a total dependency ratio of 74. Of this, 63 was attributed to youth dependency and 11 to old-age dependency.

    Use percent of increase to describe the change in the old-age dependency ratio from 2010 to 2030. (See Example 5 and Example 6.)

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       _____   _    _     _____      ___      ______  
      / ___// | || | ||  /  ___||   / _ \\   /_   _// 
      \___ \\ | || | || | // __    / //\ \\    | ||   
      /    // | \\_/ || | \\_\ || |  ___  ||  _| ||   
     /____//   \____//   \____//  |_||  |_|| /__//    
    `-----`     `---`     `---`   `-`   `-`  `--`     
                                                      
    
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  • 15. Dependency Ratios Using the Bar Graph

    The economic dependency ratio is also called the total dependency ratio which consists of old-age dependency and youth dependency, as shown in the bar graph. When President Franklin D. Roosevelt signed the Social Security Act in 1935, the United States had a total dependency ratio of 74. Of this, 63 was attributed to youth dependency and 11 to old-age dependency.

    What does the bar graph imply about the working-age population from 2010 to 2050? (See Example 5 and Example 6.)

    • Worked-Out Solution

      The number of young people is remaining relatively constant. So, the number of working-age people will also be remaining relatively constant.

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     _    _     ______   ______    __   __    ______  
    | || | ||  /_   _// |      \\  \ \\/ //  /_   _// 
    | || | ||   -| ||-  |  --  //   \ ` //     | ||   
    | \\_/ ||   _| ||_  |  --  \\    | ||     _| ||   
     \____//   /_____// |______//    |_||    /__//    
      `---`    `-----`  `------`     `-`'    `--`     
                                                      
    
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  • 16. Effects of Rising Dependency Ratios

    The economic dependency ratio is also called the total dependency ratio which consists of old-age dependency and youth dependency, as shown in the bar graph. When President Franklin D. Roosevelt signed the Social Security Act in 1935, the United States had a total dependency ratio of 74. Of this, 63 was attributed to youth dependency and 11 to old-age dependency.

    What effects do a rising economic dependency ratio have on a government? Explain your reasoning. (See Example 5 and Example 6.)

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                 ___               __   __    _____   
        ___     / _ \\      ___    \ \\/ //  /  ___|| 
       /   ||  / //\ \\    /   ||   \ ` //  | // __   
      | [] || |  ___  ||  | [] ||    | ||   | \\_\ || 
       \__ || |_||  |_||   \__ ||    |_||    \____//  
        -|_|| `-`   `-`     -|_||    `-`'     `---`   
         `-`                 `-`                      
    
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  • 17. Analyzing Dependency Ratios

    The economic dependency ratio is also called the total dependency ratio which consists of old-age dependency and youth dependency, as shown in the bar graph. When President Franklin D. Roosevelt signed the Social Security Act in 1935, the United States had a total dependency ratio of 74. Of this, 63 was attributed to youth dependency and 11 to old-age dependency.

    The total dependency ratio in 1965 was 95, with a youth dependency of 77 and an old-age dependency of 18. Would the financial burden on the Social Security system be greater in 1965 or 2050? Explain your reasoning. (See Example 5 and Example 6.)

    • Worked-Out Solution

      There will be a much greater burden on Social Security in 2050 than there was in 1965. The primary reason is that in 1965 there were more workers to support each retired person.

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      _____    __   __               ___    __    __  
     /  ___||  \ \\/ //     ___     / _ \\  \ \\ / // 
    | // __     \ ` //     /   ||  / //\ \\  \ \/ //  
    | \\_\ ||    | ||     | [] || |  ___  ||  \  //   
     \____//     |_||      \__ || |_||  |_||   \//    
      `---`      `-`'       -|_|| `-`   `-`     `     
                             `-`                      
    
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  • 18. Fixing the Social Security System

    The economic dependency ratio is also called the total dependency ratio which consists of old-age dependency and youth dependency, as shown in the bar graph. When President Franklin D. Roosevelt signed the Social Security Act in 1935, the United States had a total dependency ratio of 74. Of this, 63 was attributed to youth dependency and 11 to old-age dependency.

    Suppose you are a legislator. How would you propose to fix the imminent financial challenges of the Social Security system? (See Example 5 and Example 6.)

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      _  _     ______               ___    __    __  
     | \| ||  /_   _//     ___     / _ \\  \ \\ / // 
     |  ' ||   -| ||-     /   ||  / //\ \\  \ \/ //  
     | .  ||   _| ||_    | [] || |  ___  ||  \  //   
     |_|\_||  /_____//    \__ || |_||  |_||   \//    
     `-` -`   `-----`      -|_|| `-`   `-`     `     
                            `-`                      
    
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