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November 26, 2013

Don't like math?

Don't worry.

Walter Williams has done the figuring for us and it figures that Americans prefer to be deceived.

Simply stated, you pay your half of Social Security taxes directly to the government.

The other half you pay indirectly to the government through your employer.

You pay both.

Do Americans prefer to be deceived?

Walter Williams in SunHerald.com

There's more to the deceit and dishonesty about Social Security and Medicare discussed in my recent columns.

Congress tells us that one-half (6.2 percent) of the Social Security tax is paid by employees and that the other half is paid by employers, for a total of 12.4 percent. Similarly, we are told that a Medicare tax of 1.45 percent is levied on employees and that another 1.45 percent is levied on employers.

The truth of the matter is that the burden of both taxes is borne by employees.

In other words, we pay both the employee and the so-called employer share.

You say, "Williams, that's nonsense! Just look at what it says on my pay stub."

OK, let's look at it.

Pretend you are my employer and agree to pay me $50,000 a year, out of which you're going to send $3,100 to Washington as my share of Social Security tax (6.2 percent of $50,000), as well as $725 for my share of Medicare (1.45 percent of $50,000), a total of $3,825 for the year. To this you must add your half of Social Security and Medicare taxes, which is also $3,825 for the year. Your cost to hire me is $53,825.

If it costs you $53,825 a year to hire me, how much value must I produce for it to be profitable for you to keep me? Is it our agreed salary of $50,000 … or $53,825?

If you said $53,825, you'd be absolutely right.

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