31 - 3 The method of financing Social Security is not...

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3) The method of financing Social Security is not equitable because it disproportionately disadvantages lower-income wage earners. In other words, the tax is regressive : it takes a larger percentage from people with the lowest incomes. The Social Security tax has the following negative features: a) It is levied at a constant rate (i.e., everyone, rich and poor, pays the same rate). b) It applies only to wages and salaries, thus exempting income typical for the wealthy, such as interest, dividends, rents, and capital gains from the sale of property. c) It starts with the first dollar of earned income, offering no allowances or exemptions for the very poor. d) It is imposed up to a ceiling ($68,400 in 2000). Thus, in effect, in 2000 a worker making $68,400 and an executive or a ballplayer making a $5,000,000 salary paid exactly the same Social Security tax. 4) The overarching problem facing Social Security is how to finance it in the future. More people are living to age 65, and people live much longer after
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31 - 3 The method of financing Social Security is not...

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