Social Security is welfare because there is no connection between the taxes paid and the benefits received. Take two men who are the same age and have identical incomes. One works for exactly 35 years, reaches full retirement age, and then retires. The other works for 45 years, reaches full retirement age, and then retires. Since Social Security benefits are based on the average of a worker’s 35 highest years of earnings, as related above, the benefit amount that these two men receive every month will be substantially the same. The fact that each man paid vastly different amounts into the system yet received basically the same benefits is irrefutable proof that there is no connection between Social Security taxes and benefits.
Social Security is welfare because Congress may, at will, change the Social Security benefit schedule at any time. According to Title XI, section 1104 of the Social Security Act, “The right to alter, amend, or repeal any provision of this Act is hereby reserved to Congress.” That means that Social Security taxes can be changed at any time with no change in Social Security benefits; conversely, Social Security benefits can be changed at any time with no change in Social Security taxes. According to the Social Security Administration website,
• Your earnings may increase or decrease in the future.
• After you start receiving benefits, they will be adjusted for cost-of-living increases.
• Your estimated benefits are based on current law. The law governing benefit amounts may change because, by 2036, the payroll taxes collected will be enough to pay only about 77 percent of scheduled benefits.
• Your benefit amount may be affected by military service, railroad employment or pensions earned through work on which you did not pay Social Security tax.
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Social Security is welfare because there is no contractual right to receive benefits. The Supreme Court already ruled as much many years ago. In the case of
Helvering v. Davis (1937), the Court ruled that “the proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way.”
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Social Security should be considered welfare because it is not an investment with a rate of return. Roosevelt falsely promoted Social Security to Americans as a “savings account for the old age of the worker” with contributions made by employers and employees through payroll taxes “held by the government solely for the benefit of the worker in his old age.” The first beneficiary to receive a Social Security check was Ida May Fuller in 1940.
After paying in just $24.75 in Social Security taxes, she went on to collect $22,888 in benefits. According to a 2002 Congressional Research Service report on “Social Security Reform,” workers who retired at full retirement age in 1980 got back all they paid into Social Security, with interest, in 2.8 years.
On the other hand, someone can pay into the system his whole working life and, if he dies upon retirement without dependents, his “savings account” dies with him.
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Social Security is welfare because the government can tax up to 85 percent of Social Security benefits. Although Social Security benefits are generally not taxable, individuals have to pay income tax on 50 percent of their benefits if the total of one-half of their benefits and their other income (including nontaxable interest income) is between $25,000 and $34,000 ($32,000 and $44,000 if married filing jointly) and on 85 percent of their benefits if their combined income is above $34,000 ($44,000 if married filing jointly).
If an American is entitled to Social Security benefits because he earned them by paying Social Security taxes his entire working life, then what is the government doing taxing them just as it taxes unemployment benefits?