Show Social Security Security Our Our Biggest Tax Bill I I c I 5 r- r y t p n 1 A a k r t J Jl p ti l yi J J y i i. i y q Y Y r iA President Roosevelt signs the Social Security act as left to right Rep Robert L L. L Doughton N. N C. C Ci U U. U S. S Sen Sens Robert F Wagner N. N Y Secretary of Labor Frances Perkins and U. U S. S Sen Pat Harrison Miss look on on The inset shows the late Sen Huey P P. P Long whose famous filibuster last summer prevented the passage passage pas pas- sage of the deficiency bill which would have provided for the first payments under the Social Security Act By WILLIAM C. C UTLEY Y THE TilE end of June approximately approximately By B American citizens more than sixty-five sixty years old will be receiving pension checks from funds created by state and federal co co operation This will be the beginning of the benefit payments under one of or the most spectacular pieces of ot legislation legislation legislation legisla legisla- tion ever attempted In the United States the Wagner Lewis social security security security se se- act The act signed b by President Roosevelt Roosevelt Roose noose velt August 14 1 1935 35 providing protection protection pro pro- against extreme poverty In old age and Insurance against unemployment unemployment un un- un- un employment Is the largest tax bill ever passed Unless It Is amended or the Supreme court declares It unconstitutional unconstitutional un un- un- un constitutional It will collect In taxes this year ear The levy which witch Is a pro progressive one and grows to Its maximum In about twelve welve years jears may maj ultimately reach a jear year The fund ul ultimately to be accumulated will swell to nearly In do 1 1950 80 a total about half again as ns large as the present record national debt Old age p pensions be began an In Europe Europe Europe Eu Eu- rope as early as 1763 and unemployment plo ment Insurance has been heen In practice for more than forty years jears enis By r the social security act the United United United Unit Unit- ed States Is attempting In a single le stroke to go o far beyond what the nations of Europe have hn been heen several sev sev- several eral de decades In developing dc HI Right ht now there Is a far flung far filing drive under wa way to get et states to submit old a age e plans which willbe will he be accept acceptable ible to the rule social security board and Its Frank Trank Bane Dime T ent Twenty live rhe suites states s have already sub sub- muted plans films which have met or soon Senn will meet with the hoards hoard's ap rip- They arc are Delaware Idaho Iowa Milne M line Maryland Michigan Michi Michi- grin gan Mississippi lIs Missouri Nebraska ka In New I Hampshire Vermont Wisconsin Wisconsin Wis Wis- Wyoming Alabama Colorado Colorado Colo Colo- rado Connecticut Florida Kansas Kant Kan Ran t sos sas Massachusetts Montana Ohio I Rhode Island Utah Washington ton and anel the he District of Columbia m Eighteen other states have ha enacted enacted enact enact- ed legislation which will enable them to apply for federal aid at some future date Only Georgia In Louisiana New Mexico Nort North l Carolina Car olina South Dakota South Carolina Carolina Car Car- olina Tennessee and antI Virginia are nrc without old age pension laws but such legislation It I Is believed will be presented to the next session session session ses ses- sion of the state legislature In each New Deficiency Bill The house appropriations committee commit commit- tee has recommended the appropriation tion of lr r 00 OO for fur social securIty security security ity In the new deficiency bill which It Is expected will soon be passed This Tills will replace the one which was defeated by hy the filibuster of the late Lon Long In the senate last sum sum sum- I mer Included in tn this appropriation appropriation tion will he of old age I assistance to June 30 for tor forthe forthe the aid of dependent children and I for the care of the blind From a political point of view ItIs It ItIs itis Is proba probably ly the old a age e pensions which are aro the most Important part of the act at the present time Certainly Certainly Certainly the spread of publicity concerning concerning concerning con con- the thc Townsend plan has emphasized em- em cd the necessity for caring for the aged whose earning power has declined or vanished And It Is the old age pensions which first go Into effect The rhe act makes two provisions for old age In the first of ot these provisions provisions provisions pro pro- visions the one now In effect the federal government O matches delbar dollar dollar dol- dol lar bar for dollar the old age pension I systems of the states up to the point where persons of seventy se or more ar are being paid 15 by the state nail and 15 by the federal govern govern- ment These payments would be be financed out of ot the treasury's general general general gen gen- eral fund and the cost would be borne by all the taxpayers It Is possible that a beneficiary may pay nothing toward his own pension Similar federal grants grants aid In-ald In given for public health service the blind childrens children's rens ren's and maternal welfare and similar pu public lle responsibilities There Is no doubt about the constitutional nature of or these grants grants aid In-ald In for tor they have been made to states In Inthe Inthe inthe the past for education road rond building build build- ing lag and other purposes By ny 1012 these grants In aid will willbe willbe be replaced or at nt least will be far surpassed In Importance by the second old age provision of the law While the first provision is non noncontributory non con con con- the second which Is an anold anold anold old age uge pension system operated entirely en en- by the federal government o will be paid for by employers and employees ees with no financial aid from the federal government Tax Starts In 1937 The tax will begin to be felt In 1 1937 37 when efer every employer er of one or more persons becomes liable for fora or orn a n 1 per cent tax on his pay roll roil After three years the rate will be become become come ls per cent It will Increase Mi k of 1 per cent per cent each ench three years ears until In it 19 It will be 3 per cent The fhe employees ees will wiH he be required to pay a n tax on their earnings s which Increases on the same scale making making mak mak- hl ing the total tax G per cent for employer employer em em- plo er and emlo employee ee together by byI I 1919 I The states play no part In this operation for the mone money goes oes directly directly directly di di- to the lie United States treasury treas treas- ur ury The pensions which will be paid to employees ees under this arrangement arrangement arrange arrange- ment will bear hear no relation to the employees employee's needs In his old a age e he hc will simply be he paid the amount due clue him In his contract Such an nn arrangement will of it course rt require a vast ast amount of accounting on the part of the federal government go for pay roll records will have t to be kept on every cry Individual The following types of employers and employees are arc exempted ft-em ft the tax Governmental units railroads railroads rail rail- roads nonprofit religious charita charita- charitable ble hIe scientific literary and ami educational educational agricultural labor domestic service casual labor labor la la- bor bore and employment on shipboard No benefits will begin to be paid upon this insurance until until until un un- un- un til 1942 1042 when the fund will have had the lie chance to assume a little tittle body Then all aU persons sixty-five sixty or orol ol older er who have contributed will become become become be be- come ell eligible ihle to receive pa payments ments monthly for the rest o their lives These Thes payments will be based upon the amounts paid to the credit of the beneficiaries How Payments Are Computed Monthly benefit payments will bo he computed on the total wages wag paid the contributing worker from the time the plan goes Into effect until the time he becomes sixty five years jears ears old Ills monthly benefit will be equal to one half of 1 per cent of the first he earned during those years ears plus one twelfth one twelfth of 1 per cent of the thc next nest which must be earned over a period of 11 lt years or more wages more wages over 1000 In one year rear will not be counted Vent onet of the next plus one twenty fourth 4 However the thc benefit to the Insured will In no Instance be al allowed allowed nl- nl lowed to exceed 85 a n month or 1020 a 11 3 year car Since the thc death rate In the United States State Is declining year by year jear there are annually more old people In proportion to tire the number of wa wage This proportionate number It Is believed el will increase through the coming decades so that thit the lie heaviest lest payments of the federal pension s system stem will not come for say about forty old forty odd years jears ears A Against this time it Is the tho plea plan of or the so so- cial security act to build up a reserve reserve re re- re- re serve sere fund which will crow crowd the tho mark by IDSO 1950 One of at the stipulations of the lie act net actIs actis netIs Is that this fund be Invested In UnIted United United Unit UnIt- ed States government go obligations But nut never have these obligations reached a n total of anything like Jle and with the thc national nation nation- al debt now standing at a record high It Is to be bc supposed or at nt least hoped that the tendency In future years will be to reduce these obligations ns rather than lion add to them To t turn rn sufficient of Its outstanding outstanding outstanding out out- standing Issues over to the fund the thc government In that case would 1 ha have ve to buy them back from Crom the banks banis and even write out more promises pay to to pay with Interest To realize on such a n fund Cund it would 1 he be necessary for th the treasury to sell Its notes to the public and the banks again a slow and laborious operation Aids Naturalization There Is one way that the lie social i security act ma may benefit the countr country country coun coun- tr try In addition to the thc manner mann r In which Its sponsors believe It will help to solve tile the unemployment problem Daniel C C. C MacCormack commissioner of Immigration and ald naturalization atlon says that the prospect prospect prospect pros pros- of benefits to b be paid has lent Impetus to a n large Increase in the number of aliens applying for naturalization naturalisation nat nat- throughout the country So much for old uge pensions now for unemployment Insurance Two model plans have ve been heen suggested suggested suggested sug sug- for States b bj by the social security seem se sc- se- se em Ity board One Is called the lie pooled reserve resene plan and one the employer reserve plan Contributions ui u- u i ions undo under the first hist plan are deposited deposited de de- I posited in tile the United States treasury's treasury's treas trens- ury's unemployment trust fund I Benefits are paid with all contributions contributions undivided In the states where this plan Is operating benefits would be he e paid to each etch unemployed person who was ell eligible without regard regard regard re re- re- re gard for tor his employers employer's benefit and contribution experience For Tor rating purposes records would be kept on n all alt employers ers I In the states where the employer er I reserve plan is adopted separate accounts are arc kept for each employer employ employ- er with his contributions being credited only to his own reserve I account Thus an employees employee's benefits benefits benefits bene bene- fits would be he limited by hy the lie amount of ot his employers employer's ers reserve account and amI the employers ers reserve could be charged ed only with benefits paid to his own employees ees All corporations or Individuals In Inthe Inthe inthe the United States who employ eight or more persons for 20 0 weeks with the lie same exemptions t as s are provided provided pro pro- vided In the old age pension plan are subject to the tax which will support the benefit payments for tor unemployment Insurance This tax will be e paid entirely b bj by employers It wI will amount to 9 D per pel cent of payrolls pay pay- rolls roUs for this his year jear car 18 15 per cent for l 1937 37 and 27 7 per cent for 1938 1933 Forcing Sta State e Co operation Co The social security act tho the federal government go with a club for forcing the states to adopt one of Its recommended plans Employers In lu states which adopt the pooled reserve or the employer reserve or any plan approved by the social security board are permitted a refund refund re m. re- re I fund of 00 90 per Ier cent of the tho tax The Tho i encouraging agent Is obvious It If Ifa ifa a state doesn't fall In line nearly 3 per cent ent of all aU Its payrolls goes out of the state and doesn't return Unemployment ment Insurance acts have ha been ben passed h bj by 11 states and arid tho thu I district of Columbia most of them In 1935 1030 In anticipation of the fe fed el J Jeral eral legislation although h in WI Vi Wis cousin unemployment Insurance hai 1111 been In effect for man ninny many years cars t H t i I possible that fl n a few tes states will yin i the ranks this year rear m f Western N Nw i |