Social Security benefits are determined by a complex formula that is rarely discussed publicly but the information is available on the Social Security Administration's website
A recipient's lifetime earnings is indexed and averaged over the highest 35 years of earnings to obtain an Average Monthly Indexed Earnings amount (AIME). If Social Security benefits begin at age 65 to 67, the monthly benefit in 2007 is 90% of the first $680 of AIME, 32% of AIME above $680 and less than $4100, and only 15% of AIME in excess of $4100 . For example, an individual whose indexed earnings were at the poverty level of $10,200/year would receive 78.4% of that in benefits, while an average earner of $37,000/year would receive only 44.8% of that in benefits, and individual's with above average earnings receive an even lower proportion in benefits. Using this information how could one argue that the payroll tax is not regressive?
The fact that much of this tax comes back to the lower wage earner in the form of income tends to reduce the regressivity of the tax. Also, much smaller benefits are returned to those who earn higher incomes.
You might also like to view...
Using Figure 10.2 determine the number of workers that a representative firm would wish to hire. Explain your answer
What will be an ideal response?
A bond is
A. a claim on the assets of a corporation such that the purchaser has an ownership right in the corporation. B. anything of value to which the firm has a legal claim. C. a means of assuring that the business firm will pay its debts or fulfill other legal obligations. D. a promise to pay for the use of someone else's money.
Has world trade increased continually over the 60 years?
What will be an ideal response?
The concept that suggests the consumption of the first few units of any good tends to bring a higher level of utility to a person than consumption of later units is the:
a. law of diminishing marginal utility. b. law of supply. c. law of demand. d. law of consumption.