12 May 2010

Social Security and Medicare in the 21st Century

If you're age 55 or over, nothing changes. You get full benefits and continue paying the Social Security and Medicare (SS&M) taxes as under the current contract, or law.

If you're age 40 to 55, you have an option:
  • pay 67% of current SS&M taxes and receive 50% benefits, or
  • pay no more SS&M taxes, get a one-time refundable tax credit of 50% of those paid so far, and receive no benefits
If you're under age 40, you get a one-time refundable tax credit of all the SS&M taxes you've paid, and you are released from the contract. No more SS&M taxes, no benefits.

The percentages can be tweaked, but these seem pretty fair to me, and we all know that, even now, the benefits payable under these programs bear no relationship to the revenues collected as payroll taxes.