...
Decker, some people criticize programs like welfare, medicaid, WIC, ect because there is so much abuse in the system. I see it first hand every day working in medicine. Some people really need it, whether its temporary or permanent because of age or disability...but a large % of people are abusing the system. I have a lot of first hand experience with this unfortunately. There's also a viscious cycle of dependency that is hard to break because of how the system is structured.
YOu're correct, there is abuse out there. I don't think there's enough abuse to justify eliminating those safety net programs. There are ways for resourceful people to address those problems.
About social security...Everyone gets the same amount when they qualify, correct? So, by paying a flat rate, people who make more, still pay more into the system but get the same amount when it pays out. That means they are helping to fund others. Is that right? (I'm not 65...haha). If thats true, then it does not exactly favor the rich, even if its capped at $105,000...its just not a progressive, graduated tax like income tax.
The benefit is based on a formula that takes into account years of service and compensation earned among other things.
http://assets.aarp.org/rgcenter/econ/fs59r_ssbenefit.pdf So the benefit amount will vary. The $105,000 is a cap on the amount of compensation considered from which the payroll tax is taken. It's not a cap on the benefit payout.
We're not supposed to think of this as an investment like a 401k plan. It's supposed to be social insurance keeping our old people from becoming street people. It's worked pretty well.
