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Social Security Falsehoods
June 3, 2000
In a column printed in the May 26 Washington Times, economist Walter
Williams details how the promises made by Social Security in good times turned
out not to be promises at all. For instance, Williams cites a 1936 government
Social Security pamphlet, which said:
"After the first three years -- that is to say, beginning in 1940 -- you will
pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000
a year. . . . Beginning in 1943, you will pay 2 cents, and so will your employer,
for every dollar you earn for the next three years. . . . And finally, beginning
in 1949, 12 years from now, you and your employer will each pay 3 cents on each
dollar you earn, up to $3,000 a year. That is the most you will ever pay."
As most of us know, the payroll tax for Social Security now stands at 12.4
percent of the first $76,200 earned. Williams says, "Had Congress lived up to
its promise, our maximum Social Security tax this year would be $90 instead
of more than $6,000. The Social Security Act of 1935 would have never been enacted
had Americans back then known that we would be subject to a $6,000 tax."
A second Social Security pamphlet declares that, "Beginning Nov. 24, 1936,
the United States government will set up a Social Security account for you.
. . . The checks will come to you as a right." As we now know, no accounts were
ever set up. And the Supreme Court itself ruled that, unlike a true insurance
program, workers have no right to benefits earned under Social Security.
In Fleming v. Nestor (1960), the court said, "To engraft upon Social
Security system a concept of 'accrued property rights' would deprive it of the
flexibility and boldness in adjustment to ever-changing conditions which it
demands."
To learn more about property rights under Social Security, and how a system
of personal accounts could give enhance workers' retirement security, see Property
Rights: The Hidden Issue of Social Security Reform, by Charles E. Rounds
Jr.
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