Class Notes 041408 Social Security Tax and Benefit Basics

Class Notes 041408 Social Security Tax and Benefit Basics -...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
4/14/08 Social Security 4 lectures: 1. Tax and benefit basics. Use example earner spreadsheets from project 2. 3. Framework for analyzing social security tying together individual tax & benefit aspects with macro budget; discuss uncertainty 4. Proposed reform, including specific project reforms Social Security Basics Pay tax when working, get benefits when retired/disabled Been around since 1935, disability added in 1951 OASI —Old Age, Survivor’s Insurance o Usual retirement benefit o Covers workers and dependents Spouse can get 50% Widow/widower gets 100% Retirement age o Earliest 62 o “normal” 66, (67 for us) o Oldest 70 Amount adjusted based on when you retire: (actuarial adjustment) DI =disability adjustment
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: o Qualify after 5 years o Given DI ruling, get normal benefits OASDI Taxes (FICA) o 6.2% each employer/employee up to $102,000 (2008, rises) o Self employed pay 12.4% Is Social Security regressive? 12.4% up to 108k 0% after o Benefit only based on earnings up to $108k also, o Turns out, very progressive . OASDI Benefit o Best way to show is through example o Benefit is based on your average lifetime earnings, adjusted for inflation and real wage growth o Benefit rises with average earnings, but at a declining rate When is a tax not a tax? When the government takes something away from you and gives you back the same amount Present-Value ratio INSERT FIGURE A FROM NOTES...
View Full Document

This note was uploaded on 04/28/2008 for the course ECON 401 taught by Professor Sabelhaus during the Spring '08 term at Maryland.

Page1 / 2

Class Notes 041408 Social Security Tax and Benefit Basics -...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online