Saturday, March 12, 2005

The True Costs Of Social Security 

United States (free-market) Economist Laureate Walter Williams sets the record straight on the true costs of social security payroll taxes:

Suppose you hire me at $6 an hour. From that $6 an hour, you must deduct 35
cents in Social Security tax and add 35 cents of so-called employer
contribution. Here's the big question: What is your hourly cost to hire me? If
you said $6.35, go to the head of the class. Now comes the bigger question. If
it cost you $6.35 an hour to hire me, what must be the minimum value of my
contribution to your company's output? If you said $6.35, again, go to the head
of the class. If you said that the value of my hourly output had to be $6, our
agreed-upon wage, you'd be losing money and soon would be out of business
because my hourly cost would exceed my hourly output.

The Mackinac Center for Public Policy has proposed for years that instead of paychecks listing an employee's hourly rate it include the total expense of having the individual on staff, including social security taxes, Medicare taxes, unemployment insurance, and health insurance.

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