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Discussion Question For Economics
Please reply in a short paragraph for the discussion question below.
The responsibility for the huge and growing bills for Social Security and Medicare falls squarely on current and future workers. This is because both programs are financed by payroll taxes. Years ago, these programs were adequately financed with a payroll levy of less than 10 percent of the typical worker's earnings. Today, the tax rate exceeds 15 percent of median wages and is expected to grow rapidly. By the year 202. early baby boomers, born in the late 1940s and early 1950s will have retired. Late baby boomers, born in the early 1960s, will be nearing retirement. Both groups will leave today's college students, and their children a staggering bill to pay. For Social Security and Medicare to stay as they are, the payroll tax rate may have to rise to 25 percent of wages over the next decade. A payroll tax of 40 percent is no unlikely by the middle of the twenty-first century. Consider the number of retirees each worker must support among the college students and their successors. The burden in 1946 of one Social Security recipient was shared by forty-two workers. By 1960, nine workers had to foot the bill for each retiree's Social Security benefits. Today, roughly three workers pick up the tab for each retiree's Social Security and Medicare benefits due each recipient. A working couple will have to support not only themselves and their family but also someone outside the family who is receiving Social Security and Medicare benefits. When reviewing the "entitlement programs, President Bush claimed it was going to cost $35 billion per year, but within a couple of months, that estimate rose to over $50 billion. In fact, it is said that the benefits of the program will be less than claimed, and the costs will be even higher, because more than three quarters of senior citizens had privately funded prescription drug plans before the new law took effect.
One may wonder ways to "contribute" to social security so that it may be available for future retirees. Well let's closely consider the change in immigration laws and the effect of legal immigrants paying the FICA tax when working as Americans do in the United States. As of now, immigrants are not required to pay the FICA tax-money that is taken out of workers' paychecks to pay older Americans their Social Security retirement and Medicare (Hospital Insurance) benefits. I often see paper work flow across my desk of immigrants that sign up to work in America and with them is paperwork stating that FICA tax will not be deducted. There are many ways and suggestions to prepare and save before retirement but one must wonder if this wouldn't be a great benefit if they pay this tax as other Americans are required to do.
Miller, R. L., Benjamin, D. K., & North, D. C. (2015). The economics of public issues(19th ed.). Boston: Pearson.