Retirement system
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If the Social Security retirement system was a private retirement system, it would be declared bankrupt. Discuss why this is so and why the Social Security system can continue to pay benefits despite the fact that it can be considered bankrupt. Discuss why the Social Security tax rate has increased so much in recent years. What measures could be taken to reduce the Social Security payroll tax rate?
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Solution Summary
This solution clearly explains the measures that could be taken to reduce social security payroll taxes. The reason as to why the social security system can continue to pay benefits even though it is bankrupt is explained, along with why social security taxes have increased so much in recent years. Detailed explanations are provided for each part of this question.
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Social security would be bankrupt simply because there's not enough money in social security, even right now, to continue funding social security recipients in the way that it was designed to. Social security is in dire straits for money due to the current situation that has been created, and if this were a private investment, it would have been shut down due to a lack of proper funding. One of the main factors that we have to consider, which is now one of the main causes of this problem, is that back decades ago, the economy was at a higher point than it is now. There was an influx of workers in the economy that were on payroll, paying into social security, being productive, and making money. You would look through the newspaper during this time and there were at least 20+ pages of job openings waiting to be filled. All of these people were then paying into social ...
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