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But your employer is perfectly capable of doing accounting. So they pass through their 6.2% to you. In practice the mechanism is that every employer figures it

by avn2109 10y ago

But your employer is perfectly capable of doing accounting. So they pass through their 6.2% to you. In practice the mechanism is that every employer figures it in to their offers, such that every offer you ever receive is ~6.2% lower than it would be if SS didn't exist.

merpnderp 10y ago
My employer also calculates health care and 401k matching, ie the full cost of employment to the department who will be bearing the cost. A salary of $100k is really a cost of ~$125k. [EDIT] With health care costs being fixed at crazy high amounts (in the US at least.)
pc86 10y ago
> such that every offer you ever receive is ~6.2% lower than it would be if SS didn't exist Every offer is up to 6.2% lower. I have a business with employees but their pay is sufficiently low (compared to the revenue of the business; their pay is above market for the jobs they do) that SS does not enter into our calculations. If the employer portion of SS was eliminated tomorrow we would not give anyone a 6.2% raise, nor would future employees get offers 6.2% greater. I'm sure somewhere there is an employee whose salary is a big piece of a business's income and they would have gotten a little more money had that tax not been there. But I'm pretty sure that's the exception rather than the rule, if for no other reason than SS taxes are capped so you reach a point where more salary does not equal more SS tax.
- kgwgk 10y ago
  Maybe you will have to give them a raise when they notice that pay elsewhere has gone up. Of course if they already get 6% more than they would at the next comparable job today there is no economic reason to give them the raise, but there is not economic reason to pay them so much currently either.
- bogomipz 10y ago
  >" if for no other reason than SS taxes are capped so you reach a point where more salary does not equal more SS tax." Indeed, social security isn't taxed on anything above 118K.
jellicle 10y ago
In practice, every employer pays what it needs to get employees, and nothing more. Unless something changes the number of employees available, salaries don't change. Tax cuts go straight into the employer's pocket, as the employer will happily tell you to your face: https://theintercept.com/2017/01/05/corporations-prepare-to-gorge-on-tax-cuts-trump-claims-will-create-jobs/ https://theintercept.com/2017/01/05/corporations-prepare-to-... Sure, it's theoretically possible that the employer could pass all tax cuts to its suppliers. McDonald's could call up and offer to pay more for frozen hamburgers and fries. Walmart could tell its Chinese shoe makers that it plans to pay double for all future pairs, just because. But, why would that happen as opposed to rewarding the shareholders?
bogomipz 10y ago
I don't believe for a minute that if it Social Security were to be phased out everyone would see their salary rise 6.2%.

by avn2109 10y ago

merpnderp 10y ago

My employer also calculates health care and 401k matching, ie the full cost of employment to the department who will be bearing the cost. A salary of $100k is really a cost of ~$125k. [EDIT] With health care costs being fixed at crazy high amounts (in the US at least.)

pc86 10y ago

> such that every offer you ever receive is ~6.2% lower than it would be if SS didn't exist Every offer is up to 6.2% lower. I have a business with employees but their pay is sufficiently low (compared to the revenue of the business; their pay is above market for the jobs they do) that SS does not enter into our calculations. If the employer portion of SS was eliminated tomorrow we would not give anyone a 6.2% raise, nor would future employees get offers 6.2% greater. I'm sure somewhere there is an employee whose salary is a big piece of a business's income and they would have gotten a little more money had that tax not been there. But I'm pretty sure that's the exception rather than the rule, if for no other reason than SS taxes are capped so you reach a point where more salary does not equal more SS tax.

kgwgk 10y ago
Maybe you will have to give them a raise when they notice that pay elsewhere has gone up. Of course if they already get 6% more than they would at the next comparable job today there is no economic reason to give them the raise, but there is not economic reason to pay them so much currently either.
bogomipz 10y ago
>" if for no other reason than SS taxes are capped so you reach a point where more salary does not equal more SS tax." Indeed, social security isn't taxed on anything above 118K.

jellicle 10y ago

In practice, every employer pays what it needs to get employees, and nothing more. Unless something changes the number of employees available, salaries don't change. Tax cuts go straight into the employer's pocket, as the employer will happily tell you to your face: https://theintercept.com/2017/01/05/corporations-prepare-to-gorge-on-tax-cuts-trump-claims-will-create-jobs/ https://theintercept.com/2017/01/05/corporations-prepare-to-... Sure, it's theoretically possible that the employer could pass all tax cuts to its suppliers. McDonald's could call up and offer to pay more for frozen hamburgers and fries. Walmart could tell its Chinese shoe makers that it plans to pay double for all future pairs, just because. But, why would that happen as opposed to rewarding the shareholders?

bogomipz 10y ago

I don't believe for a minute that if it Social Security were to be phased out everyone would see their salary rise 6.2%.