http://www.ncpa.org/pub/ba662
Future Payroll Tax Burdens. Currently, a 12.4 percent payroll tax on wages funds Social Security and a 2.9 percent payroll tax funds Medicare Part A (Hospital Insurance). But if payroll tax rates rise to meet unfunded obligations:
* When today's college students reach retirement (about 2054), Social Security alone will require a 16.6 percent payroll tax, one-third greater than today's rate.
* When Medicare Part A is included, the payroll tax burden will rise to 25.7 percent - more than one of every four dollars workers will earn that year.
* If Medicare Part B (physician services) and Part D are included, the total Social Security/Medicare burden will climb to 37 percent of payroll by 2054 - one in three dollars of taxable payroll, and twice the size of today's payroll tax burden!
Thus, more than one-third of the wages workers earn in 2054 will need to be committed to pay benefits promised under current law. That is before any bridges or highways are built and before any teachers' or police officers' salaries are paid.
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D - wow.
How do Canadian stats stack up?
How would you feel if the Canadian government sent you a letter suggesting you owe an extra $150,000?
No doubt few, if any, Canadians would welcome that news. But that's the situation facing Canadian taxpayers as each of us is on the hook for another $150,211 in liabilities that our governments have racked up in debt and unfunded program obligations.
Unless immediate action is taken to reduce Canada's liabilities, young Canadians will be hit with a significantly larger tax bill in the future.
D - debt needs to be understood to be an intergenerational issue.
The Boomers are on a date with Gen XYZ. They leave early after ordering the lobster and champagne. And leave the bill. We don't even get to grasp a knee under the table for it! (!)
http://www.canada.com/story_print.html?id=d254af34-6191-4989-8d36-54a3b23be2ce&sponsor=
Consider the Old Age Security (OAS) program, the "cornerstone" of Canada's retirement income system. Old Age Security pensions are available to all Canadian citizens and legal residents 65 years and older, providing they have lived in Canada for a minimum of 10 years of their adult lives.
The problem with Old Age Security benefits is they are paid for out of current federal tax revenue.
At their inception, programs like OAS were based on the assumption that the demographics prevailing in the 1960s would persist. It was considered favourable social and economic policy to transfer a small amount of money from a large group of younger workers to benefit a small group of relatively poor retirees.
D: we've known for a very long time this assumption is incorrect.
So why no reform?
Easy. Boomers wait to retire. Then leave nearly the entire bill to the younglings.
In 1956, only 7.7 per cent of Canadians were over 65 years old. That proportion increased to 13.3 per cent in 2006 and is expected to rise to 26.5 per cent by 2040.
Adding the unfunded liabilities of the Old Age Security program and Medicare to that of the Canada Pension Plan ($538 billion) puts total Canadian unfunded liabilities at $1.3 trillion.
Further, these unfunded liabilities have increased by more than 20 per cent over the most recent five years for which data are available (2000-2004).
Unfunded liabilities, coupled with the national debt, put Canadians on the hook for liabilities totalling $2.4 trillion or approximately $150,000 per taxpayer.
