Quote:
Originally Posted by retiredguy123
Allowing people to opt out would end Social Security. Do the math. The system is designed so that high income people get ripped off for the benefit of low income people. So, if you can opt out, the high income people would opt out, and the system would collapse. Social Security is a cleverly designed welfare program.
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Actually it is quite the opposite. The social security part of the payroll tax is capped at an income level somewhere north of $100k; the part that covers medicare is not (although it was previously). Thus the higher your income is above the cap, the lower your effective rate of social security tax. This is known as a regressive tax, which means that the rate decreases as incomes rise. The other types of tax (in regard to their impact) are flat rate (medicare, e.g.) and progressive (the federal income tax, although it has become much less progressive than it used to be). That is why Warren Buffet decries that the effective tax rate (including all income and payroll taxes) on his income is lower that of his secretary.