American workers are currently paying more than they need to in Social Security taxes in order to finance tax cuts for the super rich. This is among the revelations in a new book on the tax system by a Pulitzer Prize-winning investigative reporter for the New York Times.
In the book, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich -- and Cheat Everybody Else, author David Cay Johnston warns that the drain on Social Security caused by the tax cuts for the rich could have serious consequences for retiring Baby Boomers.
Johnston explains that in 1983, Congress began asking American workers to pay 50 percent more into Social Security than the system would pay out in benefits. The explicit promise, says Johnston, was that the funds would be used to pay off the federal debt so that the government would have the borrowing capacity to pay Social Security benefits to the Baby Boomers when they began retiring. Instead, Johnston says, the surplus money has been spent on tax cuts mainly benefiting the richest one percent of the population.
"We have financed these tax cuts in good part by using the Social Security surplus," Johnston told National Public Radio host Terry Gross. "If you make about $90,000 or less, you will pay 50 percent more than needed into the Social Security system, and that money will go to finance tax cuts for the super rich."
"But you cannot go on forever spending money you don't have without serious consequences," warned Johnston, "and those consequences are likely to come due about the time the Boomers start retiring. When that happens, the Boomers may discover that there is not enough money to pay [for their] Social Security."
To listen to Terry Gross's interview with Johnston on her show, Fresh Air, click here.
To learn more about Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich -- and Cheat Everybody Else, click here.
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