Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
ECON SS PRIVATE
PART 2
| Term | Definition |
|---|---|
| Privatization | The elimination of Social Security, turning over the Social Security Trust Funds to private companies, and forcing everyone to invest on their own. |
| The Appeal of Privatization | • Lower taxes • Self-control • Higher returns • Self-interest • Greater national savings • Greater business investment |
| Lower Taxes | – Don’t have to pay pesky Social Security taxes – Neither does employer |
| Self-control | – In charge of your money: you pick stocks or other investments – No one else has hand on your money – You are your own boss |
| • High returns | – You will be smart enough to always have high rates of return – You will be smart enough to outsmart the market – Market always rises, or at least, your returns will always grow |
| Self-interest | – Don’t have to pay taxes to take care of others you don’t like |
| Increase national savings | Since more people will have more money, they will save it by investing in the stock market. |
| • Greater business investment. | Since we lower taxes on businesses, they can take the money and invest it, to create new jobs and new products. - In addition, the flow of money to the stock market will mean more funds to business. |
| Why Not Privatize? | A. Transition Costs B. Won’t Necessarily Create Jobs C. Record of Privatization is Poor D. Bad for Ordinary Americans |
| Transition Costs | Will be very large transition costs: – $100 to $200 billion – Funds necessary to take care of the elderly after the Social Security Trust Fund is out of money. Another few hundred billion dollars need to be found |
| Privatize Women | Unfair to women because: – Women work fewer years, and fewer hours – And in general, women work at lower wages • Therefore, on average, women cannot save the way men can |
| Why Not Privatize? | • People who become injured or disabled, and can no longer work, or work at the same income levels. • Families who lose an income earner from death or disability |
| Why Not Privatize? | • People who are not financially savvy will lose all or some of their investments. • Reality check: how many people rate themselves as good to excellent drivers? |
| Why Not Privatize? | • An appeal to racism, ethnic prejudices and dislike of women • An appeal to our more selfish instincts |
| appeal Privatize | • An appeal to racism, ethnic prejudices and dislike of women • An appeal to our more selfish instincts |
| The Progressive Alternative | • Raise the income ceiling. • Make the tax genuinely progressive. • Tax all types of income, not just wages. • Add in all employees and all employers. |
| Raise the income ceiling. | – Currently, we pay taxes only up to $168,600 in income. Currently, the tax is 6.20% on all incomes. – Why not make the tax rate lower on lower incomes, and higher on higher income – This would shift the tax burden up the social scale. |
| The Ball Plan | Proposes a series of minor changes, and one major change. • The minor changes would increase taxes slightly. • The major change would alter how Social Security invests its money. |
| The Ball Plan: Minor Changes | Bring all employees and employers into the system. – Currently certain workers, such as state employees, don’t pay taxes into Social Security. • Raise the ceiling on what is taxable income. |
| the Ball Plan: Minor Changes | • Put an inheritance tax on estates worth at least $3.5 million and send the money to Social Security. |
| The Ball Plan: Major Change | • Social Security currently invests its surplus only in U. S. Treasury bonds. • Have Social Security purchase stocks. – Phase in the purchases slowly, so as to not upset the market. – No more than 50% of total trust funds |
| Arguments in Favor of the Ball Plan | Investing 50% of the funds would boost overall rates of return to the Social Security Trust fund. • All other changes are minor adjustments. • Would maintain the existing system, which is working well. |
| Arguments Against the Ball Plan | • Do we want the U. S. government in the business of investing in stocks? – How to prevent favoritism and corruption? – How to pick good stocks? • If you believe that there is a major crises, this is only a band-aid solution. |
| Arguments Against the Ball Plan | Then there are the arguments against taxation of the wealthy. – It has been argued that taxation of the wealthy punishes smart and hardworking people. |
Created by:
bellam08
Popular Business sets