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what tax rate would make OASI stable?


A person asked what OASI tax would make OASI stable. Well it would be less than 9%. I will modify this. It is a maximum of 9% had all paid it since the begining. What is the tax rate to make OASI stable today? That is a bit hard to calculate, but I can take a preliminary stab at it. I know that it takes an 8.8% OASI tax be paid by all those over 20. However, no one 21 or under will every recieve a dime. OASI would simple fade away in 50 years. In order for them to also finance their retirement would take the 8% maximum for a total of 16.8% OASI tax.

To see what it would have been for those from 1917 to 2032 check out this analysis.

http://www.surfnet1.net/dadbill/oasi_tax_rate_requried.html

However, there is a little bit of a problem here. Using this analysis, the 8.8% has a cash flow problem around 2030 to 2040. That problem is financing. Even though mathematically the number works out, I do not think anyone will lend OASI $45 Trillion to get through the bad years. Those bad years get paid off with the 8.% being paid for 40 years past the theoretically last OASI beneficiary.

I have tried to fake my program out to speak to calculate this number. I do this by fixing the balance in 2100 to be enough such that the income in 2099 is creates a balance in 2000 is equal to expenses divided by the interest rate. The answer is a number that is very large.

Maybe one of the experts can answer your question better.

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