By Al Norman
In mid September, the Occupy Wall Street movement celebrated its one-year anniversary. This is the movement that made popular the expression “We are the 99 percent.”
But right in the middle of that celebration, a film of presidential candidate Mitt Romney created another quotable percentage: “We are the 47 percent.”
Romney was secretly taped at a Boca Raton fundraiser as saying, “There are 47 percent of the people … who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them … These are people who pay no income tax … (My) job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”
It turns out that Romney was, in large part, talking about the elderly. According to the Center on Budget and Policy Priorities, 22 percent of people who did not pay federal income taxes in 2009 were people aged 65 or older who had modest incomes and did not have earnings. Many seniors won’t owe income taxes because of elderly tax benefits, which include the extra standard deduction for the elderly, the exclusion of some Social Security benefits from taxable income, and the credit for the elderly.
People on Social Security don’t think they are getting an entitlement. They see the program as an earned benefit. Consider the real case of a 66-year-old, who first started paying payroll tax into Social Security in 1963. Every dollar she paid into Social Security over half a century went to pay for current retirees. Now, in 2013, she retires, and begins collecting $2,388 a month. Over her lifetime of earnings, she paid $124,183 into the Social Security System, and her employer roughly matched that amount at $126,777. This worker’s contribution into the Trust Funds came to $250,960.
This retiree will collect $28,656 a year in Social Security benefits. It will take her almost 9 years to get back what she and her employer put into the system. If she dies before turning age 75, she loses money on the deal. If she lives beyond 75, she will receive more than she put in. If she keeps working past age 66, she will have to pay federal income taxes on her Social Security benefits if she files a federal tax return and has total income of more than $25,000, or $32,000 for a joint return.
This is how Social Security works. Today’s workers pay for today’s retirees, and no one is entitled to get back what they put in, because it’s a pool of benefits drawn down based on how long you live and your salary history. This same worker and her employer also paid $69,204 into the Medicare Trust Fund.
Mitt Romney may believe that seniors feel “government should give it to them,” but Social Security is not welfare, and today’s retirees paid into the Trust for decades. Gov. Romney should know that low- and moderate-income people pay a much larger share of their incomes in federal payroll taxes than high-income people do — and unearned income — such as profit made from the stock market — is not even taxed for Social Security purposes, and is taxed by the IRS at a lower rate than for earned income.
Romney admitted he could have stated his beliefs more “elegantly” — but he couldn’t find an uglier way to describe half the country.
Al Norman is the executive director of Mass Home Care. He can be reached at info@masshomecare.org, or at 978-502-3794.
