Chicago Tuesday AM 13 July 2010
Editors, The Wall Street Journal
The Wall Street Journal OpEd “Obama's Entitlement Opportunity” of Monday 12 July opens with a reference to “payroll taxes paid by individuals into the Social Security system.” Nearly all of those 'individuals' are wage earners, and no wage earner has ever written a check for even one cent to cover his contribution to Social Security. Do you think FDR trusted 50 million individuals to mail in 1% of their gross pay every week? Except for an occasional check from the self-employed, all money sent to Social Security has come from employer bank accounts. Social Security has been a tax on employers from its 1935 inception. If the funds don't get to Washington, the employer goes to jail, never the wage earner.
But not to worry, employers are required by law to state on the pay stub that if the feds were not requiring this tax, the employer would have given the money to the wage earner. Even better, unlike the wage earner, the employer can add the tax cost to the price of his product, transforming the Social Security contribution to a silent, painless national sales tax. According to the 2010 Statistical Abstract of te US [table 463 page 308] in 2008 this tax amounted to $900.2 billion – 35% of the entire 2008 federal tax receipts of $2,524.3 billion.
These facts, inconvenient as they may be, were clearly explained by the United States Supreme Court in its 1961 Flemming vs Nestor Decision:
"The noncontractual interest of an employee covered by the [Social Security] Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments. To engraft upon the Social Security System a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands and which Congress probably had in mind when it expressly reserved the right to alter, amend or repeal any provision of the Act.”
Arnold H Nelson