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| SSP No. 19 |
April 19, 2000
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Property Rights: The Hidden Issue of Social Security Reform
by Charles E. Rounds Jr.
Charles E. Rounds Jr. is a professor of law at Suffolk University in Boston, Massachusetts.
Executive Summary
One of the most enduring myths of Social Security is that a worker has a legal
right to his Social Security benefits. Many workers assume that, if they pay
Social Security taxes into the system, they have some sort of legal guarantee
to the system’s benefits. The truth is exactly the opposite. It has long been
law that there is no legal right to Social Security. In two important cases,
Helvering v. Davis and Flemming v. Nestor, the U.S. Supreme Court ruled that
Social Security taxes are simply taxes and convey no property or contractual
rights to Social Security benefits.
As a result, a worker’s retirement security is entirely dependent on the political
decisions of the president and Congress. Benefits may be reduced or even eliminated
at any time. Given the program’s looming financial crisis, benefit cutbacks
are increasingly likely. Therefore, the entirely political nature of Social
Security places workers’ retirement security at considerable risk. Indeed, Congress
has already arbitrarily reduced Social Security benefits of some groups of workers.
Moreover, because Social Security benefits are not a worker’s property, they
are not inheritable.
In contrast, a privatized Social Security system, based on individual accounts,
would provide workers with the benefits and the safeguards of true ownership.
Index of Social Security Choice Papers
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