a post by coberly
ONE OF THE LESS NOTICED PASSAGES IN THE TRUSTEES REPORT…
… reveals something rather interesting:
On page 12, it says, “Social Security’s scheduled tax revenue is projected to decline from its current level of about 5.0 percent of GDP, reaching 4.4% by 2083.”
That’s odd… Decline? That should make you wonder: The cost of Social Security is going up, but the tax revenue is declining? How can this be?
“Income from payroll taxes declines generally in relation to GDP in the future because an increasing share of employee compensation is assumed to be
provided in fringe benefits, making wages a shrinking share of GDP.”
In other words, because you and your boss are going to hide your wages from taxes, the taxes you pay will go down by about 12%.
The payroll tax is 12.4%, so if it declines by 12% of that, it will go down about 1.5% of payroll. The employees share would be 0.74% of payroll.
You may recall it was going to cost you about 2.2% of payroll to keep your full Social Security benefit for a longer life expectancy in retirement.
So it turns out a third of that was just to make up for the taxes you avoided by taking your income in “fringe benefits.”
What kind of a game are they playing here?