RE: Is FICA Tax too low? or too high?

[Michael Jones <powderfinger99@yahoo.com>]

<<<<
The initial SS legislation provided for the FICA tax to begin in
1937 but no retirement benefits were to be paid till 1942 (although
it was later moved up to 1940).
>>>>

I was referring to the theory. Not the implementation.

<<<
Domestic discretionary spending increased less than 1%
total over the next 3 years after the 84 FICA increase 
(in nominal dollars, not constant dollars i.e. actually
a decrease in constant dollars). In fact, total gov't 
spending (except for interest payments) as a percent of
GNP went from 18.5% to 21% in the 5 years BEFORE the 1984 
FICA tax increase, but declined from 19.9% to 18.2% in 
the 5 years after the 1984 FICA increase. Exactly the 
opposite of what you claim.
>>>

The fact remains that since the tax increase of 1983,
the Social Security trust fund has accumulated 800B
worth of notes. The other debt accumulated from the
operating budget is about 3.7T. 

I am not an expert on the federal budget. However, common
sense tells you that the total debt is about 4.5T. If the
government did not spend the 800B on other spending,
the total debt would be 800B lower than it is today.
This is a fact. The Trust Fund does not help the solvency
of the system unless the excess FICA taxes pay down debt.

The spending as a percentage of GDP IS important (currently,
it is about 20% today, much too high). However, in the context
of debt and interest payments, it is not relevant.

<<<<
Actually, you are trying to have it both ways. If you only collected
enough to SS tax every year to pay for the costs of the program,
the tax would need to increase long before 2012. That is merely
the year when it would equal the current rate. And then it would
have to go up the next year, because there would be no trust fund
to take us to 2034.
>>>>

True. The tax rate would need to be reduced a point or two now
and gradually increased as payments increase. I am not defending
the pay-as-you-go system, but this would seem to be the only
responsible way to fund the system under such a scheme.

Michael