As greater amounts of wealth gets transferred to the top, this income is being excluded more from Medicare and Social Security taxes. Workers wages have also stagnated or declined, resulting in less earnings being taxed by the government.
As a result, trillion of dollars avoid being transferred to these vital programs that prevent poverty. Social Security and Medicare are paid by workers through a separate tax rate that is different than income tax. Corporations do not pay this tax to fund these social program and the wealthy contribute a small percentage in relation to the income earned. The taxes they do pay are income or capital gains taxes which do not fund these social programs at all.
Additionally offshoring of jobs that was done by an American worker results in a Chinese or Mexican employee that earns a wage that is not taxed by Social Security or Medicare. Meanwhile workers in the United States are spending longer bouts of time unemployed, not earning a wage, and not contributing to these funds. Their earnings has also become suppressed, resulting in diminished amount of wages being taxed.
The result are these Social programs being projected to run out of money to cover benefits being paid. The spin that the media will try to use on the public is that people are living longer to justify raising the retirement age and not increasing taxes on the wealthy. I have written in the past about our increase in life expectancy is due to a significant reduction in infant/child mortality and not adults living longer. The U.S. has a greater population of people being born, paying taxes into Social Security and Medicare, and living into old age; rather than dying as a child or infant.
Your spending more time unemployed because of jobs going to low wage countries. During bouts of unemployment, you are contributing nothing to the Social Security or Medicare funds at all. Just think, during the recession, millions of people became unemployed and paid nothing into Social Security or Medicare, meanwhile these programs paid trillions of dollars in benefits to people.
Because there are more unemployed, employers are reducing or stagnating the wages of workers. This reduces the taxable income of these Social Programs. Finally, the wealthy contribute very little, because the amount that can be taxed is limited to $106,000. All of this will lead to a calamity that the government will not be able to fix down the road turning the U.S. into another Greece.
We will be told misinformation by the Corporate Media posing as conservative or liberal that we are living longer and the solution is to raise the retirement age. This misinformation is to ensure that people accept having the retirement age increased, rather than increase taxes on the wealthy. If citizens are told that bad trade policy and wealth distribution caused the problem, people would demand that taxes be increased on the wealthy to fund these programs.
http://bber.unm.edu/econ/us-tpi.htm
Total Personal Income ($000s),
Area 2011
U.S. $12,949,905,000
The wealthy are getting a bigger slice of the total personal of income of 13 trillion by about 10 percent which is 1.3 trillion dollars more. This would be taxed at around 10-15% for Social Security if wealth distribution was similar to 1979.
Now $100 billion escapes going to the Social Security trust fund in one year! This is a fund that collects 700 billion a year, this loss of revenue is cumulative and substantial just for Social Security! This does not include the effect of offshoring that has been going on for years.
Last edited: