Hard working, risk taking, self employed, Millenials, forced to pay full freight on both their Social Security and Medicare payroll taxes are being robbed blind by the Federal Government.
Here’s the tragic math:
- Presently workers pay 6.2% of their first $117,000 in SS taxes.
- Employers pay an additional 6.2%.
- Those working for themselves pay the total of 12.4%.
- On Medicare- employees pay 1.45% of their earnings.
- Employers pay an additional 1.45%.
- The self employed pay the combined 2.9%.
- Those running their own businesses & providing their own salaries get soaked to the tune of 15.3% of their gross earnings for Medicare and Social Security alone.
So why are young entrepreneurs being disproportionately screwed by these levies? Because the 15.3% “tribute” to Washington is going into programs that, as per most recent projections, have no chance of keeping insincere political promises made to future retirees.
Consider the following:
- Today’s 20 and 30 somethings, would begin retiring around 2045.
- Government trustees predict SS “trust funds will be completely depleted by 2033”.
- “Trustees overseeing Medicare declared…. the H1 “trust fund” will run dry in 2030.”
- 15 years before Millenials are scheduled to begin recouping some of the hundreds of thousands of dollars seized from their earnings, those funds are projected to be gone.
The looming, catastrophic fiscal impact of these failing programs on current, young, small business owners is perhaps best highlighted by following two very different scenarios. One tracks, over 31/2 decades, the 15% of “bottom line” dollars sucked up by our federal government. The second applies the same time frame and percentage, but presumes entrepreneurs drop the dough into insured investments earning an average of 4% interest, compounded quarterly.
For the sake of round numbers we’ll assume the individual’s average income over those 35 years works out to roughly, a likely too modest $100,000 annually. Deducting 15% yearly translates to over $500,000 either copped by the feds or earmarked for private accounts. We’ve outlined the ill fated destiny of that half million bucks once it comes under federal control, but what would that sum be worth if it were left working for it’s “original owner” in our private sector option?
Let’s say someone working for him or herself deposits $300 every week, receiving 4% interest compounded monthly over 35 years. That totals up to $1,189,372.06! Included is $643,372.06, just in interest! The latter mentioned return on investment alone is substantially more than the entire $500K confiscated and left to die on the Fed’s poisoned, Social Security/Medicare vine. Meanwhile, the full amount easily more than doubles what the government has put into it’s non-existent, running dry “trust funds”.
For generations, D.C. elitist, know-nothings have lectured that hard working Americans just didn’t have the fiscal foresight and money management sophistication to be trusted with their own retirement and medical savings monies. We needed their unique, intellectual skill set. See above for how that’s working out.
And no one is paying a higher price for this gross (if you did it, it would be criminal) financial mismanagement, than up and coming, self starting, self employed, millenial entrepreneurs. The Feds are stealing both their money and their future. These victims need to understand their peril, and vehemently call for a stop to this scandalous, generational theft.