There are many issues with so called “entitlements”, i.e. Social Security and Medicare.  Solvency. Legality. Morality. But today I don’t intend to address (or debate) any of those issues.  Instead, I’d like to propose changes to the system that simply provide clarity to the voting public. Instead of obscuring the real cost and benefit of the system, take steps so the electorate can see how they’re really affected by the system.

Some of these proposals with offend those on the left.  Others will offend those on the right. Some people will reject any and all changes as being an attack on their rightfully earned property.  But these are really provided to reveal what the programs really costs. I’ll also end with what I think the actual benefit is.

My first proposal is to get rid of the employer portion.  This simply exists to hide some of the tax governments are placing on workers’ wages.  Right now workers believe the government is taking about 7.5% of their wages in payroll taxes when in reality, they’re taking about 15%.  They just hide 7.5% from their paycheck by having employers provide this directly.  Employees need to see the full tax to begin to appreciate what is happening.  I know some think that somehow making this change would help the employer and harm the employee, but how much an employer pays to utilize an employee’s labor is a function of the market.  Where those funds go doesn’t matter one bit to the employer.

The second proposal would get rid of the fiction that there is a trust fund.  That thing where the government borrowed money from itself many years ago and will now pay itself back.  Try that with your own retirement.  Save all your income and then borrow it back with a promise to restore the debt when retirement comes.  That’s what the trust fund represents.  If the fund needs to be used, it’s the same taxpayers whose payroll tax is being taken that will need to honor the fund with different taxes.  So the proposal is that the rate will go up (and maybe down) based on the amount of revenue required.  That way, wage earners can see every paycheck (based on period for recalculation) what they’re really paying.

The final proposal that would help clarify cost is to remove the cap.  I don’t like progressive taxation, but I’m no fan of regressive taxation either.  In my opinion, both are just market distortions that actually make the cost of government for each citizen harder to calculate.  The first dollar would be taxed the same as the millionth.

Passing these 3 proposals would clarify the cost of entitlements which help clarify the cost and benefit of any changes to the system.  However, one final order of business doesn’t need to be passed at all.  It just needs to be explained to the general public.  What is the benefit of Social Security and Medicare.  It’s not an insurance program. Not legally or in practice.  It’s not a pension.  They aren’t putting your money into a fund that grows and will later be drawn upon for surviving members.  It is, in reality, a transfer of wealth from the relatively poorer demographic of the young to the relatively wealthier demographic of the old.  Yes. Some of the young are wealthier and can well afford the tax.  And yes. Some of the old are poor and indeed need assistance.  But, in general, transfer of wealth from young working people to older retired people is the benefit.  Nothing more.