Social Security s Optimal Solution - 1437 Words

Social Security’s Optimal Solution At the forefront of many political and economic debates is social security’s insolvency. The number of social security beneficiaries compared to the number of workers is expected to rise 10% over the next 20 years (National Academy of Social Insurance). Specifically, solutions on how to find funding for the program from current workers are being discussed. Concerns about funding social security are not unknown. The unknown is how, if at all, social security can continue to remain solvent. While economists have proposed many reforms, funding social security through an asset tax on working age individuals is the best answer to the social security financing question. Funding the social security†¦show more content†¦An asset tax counteracts the declining income in the latter years of workers’ careers by converting the funding mechanism of social security into a quasi-progressive tax, generating more redistribution for the social security retirement program. Financially, as citizens can afford to fund their retirement, they would be taxed higher. Redistributing their surplus of assets to low net worth individuals who are unable to fund their retirement. Wealth redistribution would ensure more individuals have sufficient income for retirement. Currently, only the bottom quintile of income earners in the United States are purely dependent on social security, leaving the top four quintiles with a surplus of assets at death (Weinzierl 146). An asset tax would take a portion of that surplus, which would otherwise go unused, from the top four quintiles and redistribute that to the bottom quintile. A payroll tax fails to have this effect because of its exclusive approach to an individual’s income. A more holistic and effective approach is to tax an individual’s total assets. Taxing assets will consider the whole value of what an individual has to spend in retirement. Considering all of a perso n’s assets when redistributing retirement money to the bottom quintile of income earners, whereas a payroll tax only redistributes one portion of a