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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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