Proposals

Truth About Social Security ("TASS") Plan
Employer Contributions

The employer's share of the SS tax is unchanged with one exception. As with today's Social Security, the employer pays one half of the combined tax, with the removal of the cap on subject salary and the introduction of a "temporary" surtax to fund the transition, the rate will rise from 6.2% of the first $90,000 to 7.1% of total payroll. The combined effect on employers will depend on the percentage of payroll that exceeds the $90,000 cap.

Potential Long-term Changes

Once individual accounts become fully established (on the retirement of the first workers to be eligible for them throughout their careers, or approximately 40 years after the changes are implemented), employer contributions will be used, almost exclusively, to fund the benefits for those receiving the alternative minimum benefit and the supplemental coverages. Because we have not (at this time) calculated the costs of various components of Social Security independently, it may be that the employer contributions are in excess of the amounts necessary. (In fact, we project an overall surplus of 1%-2% of payroll.) Because the employee contributions will be used, in large part, to fund individual accounts, it may prove that the most effective way to avoid the accumulation of independent reserves is to abandon the equal split and reduce the employer's contribution, alone. Such a change would be politically viable, as more and more employees come to see their contributions as remaining "their" money.

Next: Alternative Tax Base