The Democratic Origins of Social Security Under Franklin D. Roosevelt–Fiction!
Summary of eRumor:
The eRumor lists several things about Social Security as it was supposed to have been instituted under the Democratic presidency of Franklin D. Roosevelt:
1. That contributions to Social Security were voluntary.
2. That it would cost only one percent of the first $1,400 of annual income.
3. That the contributions into Social Security would be tax deductible.
4. That the money would go into a trust fund dedicated to Social Security and not be used to pay other federal bills.
5. That annuity payments to retirees would not be taxed.
Let’s take them one at a time.
That participation in the Program would be completely voluntary-Fiction!
According to the Social Security Administration (SSA), the Social Security (FICA) contribution is a payroll tax and, like all taxes, has never been voluntary.
That the participants would only have to pay 1 % of the first $1,400 of their annual incomes into the Program-Fiction!
SSA says the original tax rate was 1% on the employer and the employee on the first $3,000 of annual wages.
That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year-Fiction!
The 1935 law prevented Social Security contributions from being tax deductible and they never have been.
That the money the participants put into the independent “Trust Fund” rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program…-Truth!
This one gets a little complex.
According to the SSA, the way that Social Security is financed has not changed since it was enacted in 1939.
Social Security payroll taxes are deposited into The Social Security Trust Fund. The SSA says that those funds have never been taken out and put into a “general fund.”
There was an accounting change in 1968, however, that listed the Trust Fund under something called the “unified budget” along with all other federal programs.
In 1990, there was another accounting change that took the Trust Fund out from under that umbrella, but according to the SSA, it was merely a matter of accounting practices, not the function of the fund itself.
That the annuity payments to the retirees would never be taxed as income-Fiction!
There was no guarantee that Social Security payments would never be taxed. Originally, they were not taxed, but in 1983, Congress passed a law that did include Social Security payments as taxable income.