From 1800 to 1929 Americans lived through 23 recessions and 4 depressions, or one every 4.8 years. After the depressions in 1929 more people began to look to the government for assistance.
In 1930 Senator Huey Long of Louisiana proposed a program called “Share the Wealth”. Here the Federal Government would “confiscate” the wealth of the nation’s rich to “guarantee” an annual income of $5,000 to every family ($5,000 in 1930 equates to $69,000 today)… Sad part of this sick idea is that once you take all the wealth from the top earners… where will the government get the money for this program in ensuing years? Duh! The whole thing sounds very Marxist!
In 1932, FDR imposed a massive government expansion focused on the “Three R’s” … relief for the poor, recovery for the economy and reform of the financial system (sounds a lot like Obama’s proposals). There were cries from Congress of socialism as it was pushed and rushed through Congress with debates over the constitutionality of the program (sounds just like the show during Obama Care). Ah, the more things change… the more they stay the same!
FDR responded to these delays by grabbing new presidential authority out of the hands of Congress, including appointing new judges he wanted in districts where the judges refused to retire. He appointed 44 lower court judges and six new justices to the Supreme Court which tipped the political scales in his favor.
FDR then resent the “Social Security” and New Deal program to the Supreme Court where it was approved. Congress is allowed to collect taxes for the “general welfare of the United State”. Hence the contributions by employees and employers were considered a tax, thus, making it constitutional. A crafty piece of illusion and similar to the court ruling on Obama Care.
In the first twelve years of the program a 1% tax was withheld from employers and employees. In 1950 the rate began to rise until it peaked at 6.2% in 1990. In 1965 Medicare was added in to the program with 0.35% tax for both sides. Presently, each side contributes 7.65% for a total of 15.3% of wages.
A major threat to the viability of Social Security in the increase in American’s longevity. Back in 1940 a 65 year old male had a life expectancy of 12.7 years (to age 77.7). A female could live to 79.7 years. A study in 2009 showed a 65 male can expect to live to 82.5 years and a female to 85.2 years. So the payout period is lasting longer. The improvement in mortality comes about by socioeconomic status. Thus upper income earners enjoy a longer life expectancy as well as improvement in longevity. The affluent have better access to health care, do not participate in excess use of illegal drugs, alcohol and nicotine products. Also, they tend to be more forward looking and goal oriented resulting in a healthier life style.
Taxation of Social Security
Prior to 1984 Social Security benefits were exempt from federal income taxes. In 1984 as much as 50% of one’s benefits became subject to tax. In 1993 a new 85% level was added.
The amount that is taxed is based on the person’s filing status and modified adjusted gross income (MAGI) also known as provisional income. The thresholds are: (1) No amount of Social Security being taxed, (2) 50% being taxed or (3) 85% being taxed. These thresholds were established years ago and are NOT indexed for inflation. This simply means more people each day are being trapped at 85% subject to tax.
If you would like to learn more about how to double your Social Security benefits while reducing your retirement taxes by more than 80% … watch my YouTube video and then request your free report. https://www.youtube.com/watch?v=ZFnxHDuyNb