When it comes to ‘Socialism’ word, it is a burdened word in
US. The United States is a country, in which capitalism is the predominant
economic system and also known as the base for government’s system. There are
different situations, where American people seek government-based programs. One
of the most popular government programs is the Social Security, which is mostly
looked at by people in USA. If you want to realize what the debate is about,
you need to look at a number of terms. If we talk about socialism in US, the
government is the solely responsible to own and leverage major industries
instead of businesses or persons.
In addition, the economy is also planned according to the central
government. As a result, it can be said that the government is considered as the
main benefactor of goods and services for people living there. On the other
hand, if we consider the capitalism, capital goods are possessed by private
businesses or persons and here, the market leverages the entire economy. Due to
the capitalism in USA, Social Security is one of the trademarks of its government
unit. It is the program, which is run by the government introduced in 1935. Whether
or not the SS may be considered as a type of socialism, needs to be clear out.
So, start reading further:
The king of the SS!
From this thing, it implies that who runs the SS system.
Rather than giving power to the businesses or individuals, it is the duty of
the government to run it. It states that the government is the king of the
social security. The government has the accountability to control the website
of the Social Security, where people comes to check the record of their
benefits. The website also shows people whether their retirement benefit
applications have been approved or not. You can also collect the taxes related
to Social Security and also allocate the retirement benefits.
It is a true fact that the government gives this
responsibility to other organizations. It states that they hire some
independent contractors to give the control of the data storage,
telecommunications, and other services to the government.
Who takes the decision of the contribution amount and when to be contributed?
It has decided by the government how much of an individual’s
paycheck is taxed to donate to the fund of the Social Security. There are
different rules for different categories of people. For a glance, in the year
of 2016, 6.2 percent of the gross pay of a person went to SS, and the employer
jerked in an equal account. But if a person earns more than $118500, then there
is no need to disburse taxes of the Social Security on any paychecks above that
amount. In any case of self-employment, a person pays the entire 12.4%, but the
amount is decreased slightly when he or she takes a tax deduction for the
employer’s part of that tax.
There is nothing irrational in considering whether, even if
a person is not self-employed, he or she is effectively paying the entire 12.4
percent, bearing the tax’s incidence. The reason is that if the employer did
not need to make SS paychecks on a person’s behalf, it could rather involve
that money in his or her earnings.
‘When to contribute’ is also decided by the government. In
case of an employee, the taxes are acquired out of each salary. When it comes
to self-employment, a person pays when he or she files the annual tax return.
Persons who have private retirement savings accounts, have
an enhanced level of control over the amount and the time of the contribution than
they do with disbursing taxes of the Social Security. Let’s see the example, if
a person is employed in a company that provides with a 401(k) plan, then he or
she can take a decision of what percentage of every salary to forward to that
account, even though the regulations of the government put some restrictions on
the amount of money a person can contribute.
In the year of 2016, the 401(k) contribution’s limit was
$18,000, except a person was 50 or older. In that situation, a person was
permitted to donate up to 6000 dollars or more, for a total sum of 24000
dollars. In addition, a person could not donate to a Roth IRA, if the adjusted
gross salary extended 132000 dollars in the case of a single person and 194000
dollars if the person is married and he or she is filing the application on the
combined basis.
Can anyone withdraw?
There are a few taxpayers, who can exempt themselves from
paying into the SS system. Groups like The Amish, Mennonites, and a number of
other religious groups can sometimes an exemption from getting involved into
this system due to the religion, as long as they also don’t qualify to receive,
or receive, any SS benefits from it. In any case, if a person has received any
SS benefits, then he or she may still be eligible for a religious exemption if
they repay them. A person, who renounces his or her US citizenship, can
withdraw. Of course, some non-resident people do not need to get into this
system, according to the type of visa they own. Other categories who can enjoy
the exemption includes the foreign government employees residing in US, and
also the college students having an employment by their university.
The process of managing the money
There is one collective pot, where all of the SS
contributions go in. the setup of the system has been done in the form of an inter generational wealth transfer- the SS taxes. Of course, the government
gathers from current employees pay for SS benefits of people, who have currently
retired. Based on when a person retires, how much he or she earned, and the
marital status they have, a person may get the return according to the
investment and the contributions. This is why most of the people apprehend the
benefits of the SS and want to opt for it.
