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One of the proposal of the current
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administration is to remove the social
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security tax. So this is a tax paid on
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social security benefits by high income
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Americans to fund social security. Now
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there is a question of who is going to
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benefit and who is going to be ear by
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this policy choice. So there is no free
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lunch like all the benefits that are
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paid to current retirees are funded by
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the wages of current workers. So
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effectively if you increase social
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security benefits this will reduce the
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income of current workers. So
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effectively this such a policy would
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redistribute wealth from younger courts
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to older courts. When you look at the
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bottom 90% of the wealth distribution
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more than half of their wealth is the
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value of the social security benefit
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that they have already acrewed by
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contributing into the system. Whereas if
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you look at the top one or the top 10%
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most of their wealth is either real
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estate or financial wealth. So when you
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choose not to include social security
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benefit in your measure of wealth, you
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are vastly underestimating the wealth of
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the bottom 90% without underestimating
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the wealth of the top 10%. And this
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choice fundamentally affect your measure
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of wealth inequality.
