Should the United States Privatize Social Security?

By Henry J. Aaron; John B. Shoven et al. | Go to book overview
2.
Most of the improvement is probably due to behavioral changes (less smoking and drinking, better diets, more prevalent use of seat belts, etc.) while only a minority of the gain can be attributed to progress in medical treatments.
3.
Why saving is suboptimal is a huge topic itself. There are undoubtedly multiple reasons, including a failure of our education system to aid people in making lifecycle consumption decisions to the tax system which in some cases double and triple taxes on saving. The triple taxation argument would be that some investments are initially made with after-tax money-- so the first level of tax occurs before the investment is made. With a consumption tax, that would be it. Corporate equity investments in the United States, however, face two more levels of taxation, one at the corporate level (the corporate income tax) and one at the individual level (the personal income tax on dividends and realized capital gains).
4.
Since one is either eligible for Medicare benefits or not, there is zero marginal benefit from additional payments of the Medicare portion of the payroll tax.
5.
The distinction between employer and employee contributions is overblown any way you look at it. In terms of who sends the money into the Treasury, all of the checks come from employers. For those not self- employed, the distinction is whether or not the payroll tax deduction shows up on the weekly or monthly paycheck (or on the annual W-2 form). Only half of the money sent to the Treasury for OASDHI is shown on these forms, with the other half hidden from workers. Whether it was hidden or not would not make any difference whatsoever if the personal income tax did not treat the "employer" and the employee contribution differently. The employee half (the half that shows up on the paycheck stub and the W-2 form) is subject to personal income taxation whereas the "employer" half is not.
6.
A cashable income tax credit directly lowers one's personal income tax bill. The cashability feature means that if you do not owe as much taxes as the credit, you can still receive it in the form of a refund check from the government.

References

Aaron, Henry J. 1998. "Social Security: Tune It Up, Don't Trade It In." Paper presented at the Alvin Hansen Lecture, Harvard University, April 27.

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Should the United States Privatize Social Security?
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Introduction vii
  • Note xii
  • 1: Social Security Reform: Two Tiers Are Better Than One 1
  • Notes 51
  • References 52
  • 2: Social Security: Tune It Up, Don'T Trade It In 55
  • Conclusion 108
  • Notes 109
  • References 111
  • 3: Comments 113
  • Note 123
  • Summary 132
  • Summary 132
  • References 133
  • Alicia H. Munnell 133
  • Conclusion 144
  • References 145
  • 4: Responses 155
  • Note 159
  • Note 168
  • 5: Rejoinder 169
  • Contributors 171
  • Index 173
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